How to find the best small business credit card for your business

Quick insights

• A credit card can provide cashflow and access to capital for small businesses.
• Small business credit cards typically offer rewards in the form of cash back, points or miles.
• Some business credit cards with benefits like travel or purchase protections may have an annual fee.

There are many tasks that can fall on a small business owner’s plate. You may need to market and sell your product, handle technical issues and track and manage your company’s finances, to name a few.

One part of managing your company’s finances may include getting a business credit card. If you’re looking to get a credit card for your small business, read on to learn about the key features of small business credit cards and what to consider when choosing the right card.

The differences between corporate and small business credit cards

There are different types of credit cards that cater to different size businesses. Financial institutions that provide business credit cards often have cards designed for larger corporations and others that are better suited for small businesses.

Some differences include:

• Spending thresholds: Corporate credit cards are typically for businesses with high spending thresholds and several employees, while small business credit cards are tailored to meet the needs of solopreneurs and businesses with a handful of employees or contractors.
• Minimums: Corporate credit cards often require a certain level of revenue or expenses to qualify, whereas small business credit cards may have more flexible eligibility requirements.
• Business type: S-corps, C-corps and established LLCs are more likely to be approved for a corporate card while sole-proprietors, LLCs and small businesses can be prime candidates for business credit cards
• Payment: Corporate credit cards can require the business to pay the balance in full each month, while business cards may have more flexible payment terms depending on the card.

Key features of the best small business credit cards

There are several potential benefits of opening a credit card dedicated for business expenses, including the following:

Access to capital

Credit cards can provide cashflow and financial flexibility for small businesses. Provided your purchases remain below your credit limit and your account is in good standing, you'll likely have access to capital. However, it is generally recommended to mind your credit utilization ratio when planning and making purchases with a credit card.

Rewards

Business credit cards often have rewards programs. These programs, much like that of consumer credit cards, can provide opportunities to earn cash back, points or travel rewards for everyday business purchases.

Expense tracking

Expense tracking may be easier with a business credit card. Some credit cards automatically categorize purchases in your credit card’s account according to common business spending categories. You may also find that your card easily integrates with your company’s accounting software making expense reconciliation and tax time easier.

Employee cards

Employee credit cards are issued by a financial institution and facilitated by the company for business expenses. Each employee card is linked to the company's credit account, which enables them to make purchases on behalf of the business.

Consolidating purchases by multiple employees under one credit card account can facilitate easier expense tracking and reporting. Not to mention, you may be able to cut down on the number of requests for reimbursements if employees use a company card for business purchases. Some small business credit cards provide employee credit cards for no additional charge.

Choosing the best credit card for your small business

The "best" credit card for you will vary depending on the specific needs and spending habits of your business. When considering a small business credit card, you may want to consider your business's spending patterns, including what kinds of purchases you typically make and how often you make them.

Additional considerations when determining which card is best for your business could include:

• Annual fees: Some business credit cards have an annual fee. If a card does have a fee, you may want to determine if the benefits of the card outweigh the cost.
• Interest rate: This is the rate you’ll pay for any balance you carry on a card. A lower rate is generally going to save you money in the long run, especially if you carry a balance.
• Rewards: If a card has rewards, it may be important to understand how you can earn and redeem them.

Applying for a small business credit card

You may want to assess your eligibility before you apply for a business credit card. Eligibility criteria can include:

• The legal structure of your business
• Its revenue
• Credit history

Your credit score may play a part in determining which cards you can qualify for. If you’re a small business owner who is just starting out, your personal credit score may be used to help determine your eligibility for a card.

Applying for a business credit card may also temporarily impact your credit score. Some financial institutions will do a hard pull of your credit as part of the application process.

In summary

Having a dedicated credit card can be a great way to help build and maintain a good credit score for your business—even if your business is brand new. Reading the terms and conditions of any card you’re considering can help you understand the features and benefits of the card. You have options when choosing a small business credit card so consider its annual percentage rate, fees and rewards structure when trying to determine the best small business credit card for you.