Business Credit Cards

When small business owners need to make purchases, cover day-to-day expenses, or manage cash flow, business credit cards can be one of the most flexible and accessible tools available. Though they may seem simple on the surface, it’s important to understand how business credit cards work, how they compare to other forms of financing, and what terms, costs, and benefits to expect before applying for or using one.

Why Have a Credit Card for Use in Your Business?

One of the key advantages of business credit cards is that they are often available to business owners at nearly any stage of business development. Because these cards may be approved based on the applicant’s personal credit profile, they are generally easier to obtain than a traditional small business loan or line of credit.

Beyond accessibility, a business credit card offers other benefits. It allows you to separate personal and business expenses, which simplifies accounting and improves financial clarity. It also helps build business credit—particularly if you select a card that reports activity to the major business credit bureaus.

Maintaining a separate business credit profile also helps protect your personal credit. Many small business owners initially rely on personal credit cards, home equity, or personal loans to fund their companies. If the business struggles, these personal accounts can suffer. A business credit card helps create a protective wall between personal finances and business obligations.

Additional benefits include:

• Streamlined payments, returns, and exchanges

• Built-in fraud protection

• Automatic spending summaries, often with year-end reporting tools

• Rewards programs, including cashback, travel points, or discounts on specific purchases

• Purchase protections, extended warranties, and travel-related insurance

When to Get a Business Credit Card

Even if you already use a personal card for business purchases, it’s smart to get a dedicated card solely for your business. This becomes even more important if:

• You have formed an LLC, S-corp, or C-corp

• You have employees making business purchases

• You want to establish business credit

While the term “credit card” typically refers to a revolving line of credit that allows pay-over-time functionality, some cards are actually charge cards, requiring payment in full each month. However, the term “business credit card” is now commonly used for both types.

How a Business Credit Card Can Help Build Business Credit

Business credit cards can be an effective tool for building your business credit profile, especially if used responsibly. Not all card issuers report business activity to credit bureaus, so it’s important to choose a card that does. Major issuers such as American Express, Chase, and Capital One may report to credit bureaus like:

• Equifax Business

• Experian Business

• Dun & Bradstreet

Regular on-time payments, low credit utilization, and a solid payment history can help your business qualify for better financing options down the road, such as larger credit lines, lower interest rates, or more flexible payment terms.

Qualifying for a Business Credit Card

The qualification process for a business credit card is similar to applying for a personal credit card. You’ll typically need:

• Basic business information (business name, address, industry)

• Business tax ID or Employer Identification Number (EIN)—though sole proprietors may apply using a Social Security Number

• Estimated annual business revenue

• Number of employees (if any)

• Personal credit information

Lenders may base approval primarily on your personal credit score, particularly if your business is new or lacks established credit. If your personal credit score is strong, you can often qualify even if your business doesn’t yet generate consistent revenue.

Personal Credit Scores vs. Business Credit Profiles

Even if the card is branded for business use, your personal credit may still be considered for approval—and may also be impacted by how the business card is used. For example:

• Missed payments on your business card could hurt your personal credit score

• On-time payments and responsible use can improve both your personal and business credit standing

If your credit score is low or you’re just starting out, you may still qualify for a secured business credit card, a low-limit card, or a charge card that requires full monthly payment. These options can help you build a track record over time.

How Not to Use a Business Credit Card

Business credit cards are flexible tools but aren’t appropriate for every business expense. They are typically best suited for:

• Travel

• Office supplies

• Marketing and advertising

• Subscription services or recurring expenses

However, you should not use business credit cards for:

• Payroll – inconsistent payments or high balances can cause cash flow issues

• Debt consolidation – credit card interest is usually higher than most business loan rates

• Equipment purchases – large purchases may be better financed with equipment loans, which can also offer tax advantages or vendor-based financing terms

Additionally, some business credit cards carry usage restrictions or require vendor verification for certain categories.

Business Credit Cards and Bookkeeping

One of the most helpful features of business credit cards is their ability to simplify record-keeping. Using a dedicated card for business purchases automatically separates business and personal expenses, reducing the risk of commingling funds.

Credit card statements also provide a useful audit trail for:

• Reconciling monthly financial records

• Categorizing expenses for tax reporting

• Tracking employee spending (especially with employee cards)

Interest, annual fees, and certain other card costs are generally considered deductible business expenses.

Choosing a Business Credit Card: What to Know

When selecting a credit card for your business, consider these factors:

• Card Network Acceptance: Choose cards that are widely accepted by your vendors and service providers. Visa and Mastercard are most widely accepted, while some businesses may not accept American Express.

• Annual Fees: Some cards are free; others may charge $30–$100 per year. Premium cards with travel perks may charge $250 or more.

• Interest Rates: Cards may offer introductory 0% APR for the first 6–12 months. After that, rates typically range from 10% to 24% APR based on creditworthiness.

• Rewards Programs: Look for cards offering cashback or rewards that align with your business spending patterns (e.g., travel, fuel, software).

• Employee Card Access: Many issuers allow you to issue additional cards to employees and set spending limits.

Be aware that business credit cards are not subject to the same consumer protections under the Credit CARD Act of 2009, meaning they may have higher late fees, less interest rate protection, and fewer disclosures.

How to Apply for a Small Business Credit Card

Most business credit cards can be applied for online, often with an instant decision. The application may ask for:

• Business legal name and structure

• Business contact information

• Employer Identification Number (EIN), or your SSN if you’re a sole proprietor

• Annual business income and years in business

• Information on any owners holding 25% or more of the business

Some cards may require a personal guarantee, making you personally liable for unpaid balances—even if your business defaults.

To Sum Up

A business credit card can be a valuable financial tool for managing expenses, building credit, and improving your company’s financial infrastructure. When used responsibly, it provides flexibility and convenience that can help you grow your business, stay organized, and maintain healthy cash flow. But like any financial product, it requires thoughtful use and a clear understanding of its risks and costs. Always read the terms carefully and choose the option that aligns best with your company’s financial strategy.