What Is A Business Credit Card And How Do They Work?

Often, business credit cards offer business oriented rewards, such as office supply discounts or travel benefits. Business credit cards are one of the easiest types of business financing to qualify for. Eligibility largely depends on your personal credit history, which can make business credit cards for new businesses and very small companies more accessible than traditional business business credit card definition loans. These cards often come with higher credit limits than personal credit cards and make it easier to spot potential tax deductions, among other features. Although business credit cards and corporate credit cards are both potentially useful ways to access capital and manage business expenses, they have different eligibility criteria, features, purposes, and benefits.

• In such instances, a business owner may end up with personal liability for business credit card debt.
• The content on this page is accurate as of the posting date; however, some of our partner offers may have expired.
• Some credit card issuers may require additional documents, such as financial statements, to verify your business’s creditworthiness.
• At Business.org, our research is meant to offer general product and service recommendations.
• The condition of your business credit can even affect your insurance premium.

To determine the number of employees, SBA counts every employee as one worker, whether they are full-time, part-time, temporary, or working through a professional employee organization or leasing arrangement. Many businesses are measured by their average annual receipts, which SBA defines as the average of your gross annual receipts over the past three years. Small business size based on annual receipts can run as low as $1 million for farms to $41.5 million for hospitals. Business credit refers to the summary of a business’s financial history, which indicates its ability to repay its debts and other financial obligations. Lenders issuing Small Business Administration (SBA) loans will be required to check a FICO SBSS Score for certain loans.

Application Process for a Business Credit Card

This can help avoid confusion and mitigate bad feelings from employees who would like a card but are not eligible. Special programs are also available to support research and development by small businesses. These include the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program. These are competitive, awards-based programs that provide small businesses with a mix of grants and contract opportunities.

The main difference between business credit cards and corporate credit cards is the size of the business that they’re intended for. The former tend to be used by small business owners, whereas the latter tend to be granted to large companies in which over 15 employees will be using a card. Credit cards are a part of our daily lives — a convenient way to pay for essentials (and splurges) with a tap or a swipe. Likewise, if you run your own business, a business credit card can help you pay for expenses required to purchase supplies and run your day-to-day operations. Like personal credit cards, business cards offer the ability to earn points, miles or cash back on your spending and finance large purchases — sometimes with a 0 percent intro APR that saves you on interest. Small business credit cards and corporate credit cards vary in a few categories, such as liability, eligibility requirements, and usage.

Travel perks:

Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. If you’re a small business owner, you’ve probably received numerous offers and applications for a small business credit card. These cards can be a convenient way to increase your company’s purchasing power but should be used with caution. Some card issuers have voluntarily extended some of those protections to their business credit cards, but applicants shouldn’t assume that unless it’s spelled out in the card agreement. A business credit card is a credit card intended for use by a business rather than for an individual’s personal use.

However, some companies extend these protections as a courtesy or to entice customers. As the name implies, the definition of a business credit card is a card that will be used for business purposes. Any size business, from a sole proprietorship to a corporation, can qualify.

Number of employees

A business credit card’s advantages also are apparent when it comes time to pay taxes. Many cards also provide detailed annual expense reports that are useful when preparing your taxes. For instance, business travel cards offer perks like airline miles, airport lounge access and hotel points. And using a cash back business credit card means you’ll get a percentage of what you spent — either across the board or in certain categories — typically as a cash deposit or credit at the end of each statement period. To qualify you for a business card, your issuer will look into your credit history and personal credit score to determine your creditworthiness and likelihood of paying back what you charge on time. The FICO LiquidCredit Small Business Scoring Service, also known as FICO SBSS, is a popular credit score used by lenders and financial institutions to help predict risk when businesses apply for financing.