What is a business credit card?
As the name suggests, a business credit card is one that is used by a business, rather than an individual. Eligible for businesses of all sizes, they provide a range of benefits and rewards. For this reason, they’re incredibly popular with all enterprises, but especially SME’s.
How do they work?
Business credit cards are very similar to traditional, personal credit cards. Also known as corporate credit cards, they grant businesses a credit limit based on their worthiness for credit. To determine this, they’ll need some key pieces of information about your business before determining what card and what rates they can offer.As there’s a variety of banks and financial institutions, it’s often difficult to guarantee you’ve found the best corporate credit card. What’s more, most applications result in a hard credit check, which can affect your credit rating negatively if you are declined. That’s why we recommend using a broker service like Aurora Capital. We’ll ensure you are applying for a company credit card for which you are likely to be accepted, as well as finding you the best rates and reward schemes.
Are business credit cards worth it?
When used correctly, a company credit card can have a real positive impact on your business finance. As with any credit, responsible use is mandatory as failure to keep up with payments can result in charges and a poor credit rating. But as long as you keep up to date with payments, corporate cards can help your business in a number of ways.
- They make keeping track of purchases incredibly easy, which can help simplify your tax returns come the end of the year.
- They’re also the quickest and simplest way to facilitate staff spending. Instead of asking employees to keep receipts for work-related expenses, a business credit card will keep track of all purchases without the stress.
- When used sensibly and efficiently, they can help improve your credit rating, by showing credit providers that you can keep up with your credit bills, paying on time and not maxing out your allowance. This will enable you to receive greater credit in future, allowing your business to keep growing.
- Most corporate credit card providers offer reward schemes too, allowing you to use your business credit to your own advantage. These can include sign-up bonuses, air miles, gift cards, cash back or extra credit. It’s worth looking for a card whose reward schemes include the places you shop – whether that’s for fuel, air and rail travel, or anything else you regularly purchase. Getting a business credit card with rewards can save you a lot of money in the long run.
- Providing your company credit card use is only for business-related expenses, your spends are fully deductible from your tax bill at the end of the year. Any annual fees and late payment charges are also eligible for deduction from your tax bill.
What to consider when applying for a corporate credit card
Your credit score will need to match the type of card you apply for. If your business is a start-up or has a poor credit history, you may not be able to get the rewards or rates you’d like with your first card.
This doesn’t mean you should forego company credit cards altogether. Instead, you’ll be best suited to a card that will help improve your business credit rating, allowing you to apply for preferable rates and rewards in future. These generally feature low credit limits until you have shown your business can afford substantial monthly repayments.
If your business is just starting out, you can access introductory business credit cards which feature interest-free credit for up to one whole year (and in some cases, beyond). This can help your business expand and grow without the worry of having to pay back interest.
Are business credit cards tied to personal credit?
Most corporate credit cards are linked to the financial history of the business rather than the owner. This means that all interest rates, rewards and bonuses will be linked to the accounts of the business, not those who run the business. For this reason, you may be able to access better rates and credit limits than you would with a personal credit card.
However, most corporate credit cards do require a personal guarantee. So, while the limits and rates may be better, you’re not absolved of all responsibility. That’s why you need to ensure you only use a business credit card for business-related expenses.
In some cases, credit providers may look into the personal credit history of business owners. This is usually because the business in question has newly started up and has no history of financial transactions or proof of growth and profit. However, there are still options for getting a business card if you have bad credit.
Regardless of your credit rating or how long your business has been trading for, we can help you apply for the best business credit card with rates most suitable for your current situation and requirements. Use the form above and be on your way to better business credit in no time at all.