The 4 Best Credit Cards for Your Small Business

Choosing the best business credit card isn’t that unlike selecting the best personal credit card for a person’s needs. Business owners, on the other hand, must properly examine their alternatives in order to comprehend precisely how this financial instrument may be utilized to benefit their company and to ensure that it does not have a negative impact on their personal finance.

A majority of business owners in the United States — regardless of their company’s size — used their personal credit to get cash for their company, according to the Federal Reserve Small Business Credit Survey conducted in 2019.

Whether you’re starting a new business or expanding an existing one, business credit cards are indeed an essential tool for raising capital for your enterprise.

Methodology

Forbes Advisor conducted an extensive analysis of about 200 business credit cards in order to compile this ranking. Our most important criteria are those that connect to value: Will the expenses you incur for these cards be exceeded by the perks you will gain as a result of having it on your person?

We also examined every category of cards within its lane, which means we compared hotel cards to other luxury cards, cashback credits to other cashback cards, and so on and so forth.

Additional characteristics taken into account when grading each area were accessibility, the financial equivalent of cashback or point incentives, the annual percentage rate (APR), fees, and any other perks or safeguards provided by the card. In the final analysis, we looked at auxiliary characteristics within each category, like elite status or access to lounges through travel cards.

Small Business Credit Cards vs. Personal Credit Cards

The operation of a company credit card and a personal credit card is very similar. Both credit cards and debit cards can give extra points, rewards points, promotional APR deals, and a sign-up incentive, but there are some significant distinctions in how they’re governed between the two. As a result, small business cards and personal cards may have different terms and conditions, and a knowledgeable credit card consumer should be aware of these distinctions before applying for a business card or personal card. First, let us examine the similarities and differences between corporate and personal credit cards.

1. The manner in which they are utilized.

Business and personal lines of credit, whether they include a PayPass or a swipe, can be used for transactions online and retail in the same manner as personal credit cards can. The principles remain the same, and they have almost the same security protocols as personal cards, such as CVV/security keys, expiration dates, signatures, and so on. They are also available in a variety of colors.

2. They depend on a personalized assurance from the other party.

In order to qualify for a major small business credit card, the applicant must provide a personal guarantee (PG). Having a personal guarantee implies that if you default on your line of credit or incur late payments, the provider can pursue collection efforts against you personally rather than against your business. It may even be necessary to sue the cardholder personally in order to obtain a judgment.

3. The importance of personal credit ratings in obtaining approval cannot be underestimated.

Despite the fact that a company credit card is intended for commercial reasons, a personal credit rating is nevertheless a primary qualification element for practically all major small business credit cards. This is fantastic news for small business owners with excellent credit because it eliminates the need to develop a credit rating, submit business tax records or financial documents, or convince someone of your business’s vision, as is required with other commercial financing options.
A good credit score makes it easier to get approved and opens the door to a myriad of possibilities for the candidate to select from. The opposite is true if you have a poor credit rating or insufficient data to generate a credit score — which is a huge issue for the small business industry.
Due to the fact that businesses are already considered as risky borrowers from the lender’s perspective, credit standards for business credit lines are sometimes even more stringent than those imposed on personal credit card accounts. When it comes to company credit cards for people with bad or no credit, there are only a few possibilities from the big business credit card providers.

How a Small Business Credit Card Will Build Your Business Credit

When someone qualifies for a line of credit, one of the first questions they ask is: how will this affect my credit score? When it comes to company credit cards, the answer is even more convoluted, because business credit cards can have an impact on both your individual and commercial credit scores at the same time. 

Despite the fact that it does not identify itself as a corporate credit bureau, the Small Business Financial Exchange (SBFE) distributes business financial banking details with a number of commercial credit agencies. As a result, your small business credit card account data is frequently exchanged with the SBFE, which then distributes it to its Certified Vendors, who can include it in the business credit reports that they sell.

Obtaining a credit card from a credit card issuer that reports can assist you in establishing a solid business credit rating with all three major credit bureaus. The downside is that if you default on your card account, pay late, or have any other negative record on the account, it might have a negative influence on your small business credit rating. The following are some simple pointers for establishing great business credit via your business account with your company credit card.

Choose a credit card that sends information to business credit bureaus.

It may seem apparent, but picking a credit card that will assist you in establishing company credit also entails selecting one that will report to business credit agencies. This is critical to achieving the ultimate goal of building business credit in the future to build good vendor/supplier partnerships, better net terms, and access larger-dollar, longer-term, and lower-rate financing options such as traditional bank loans and SBA loans — as well as establishing a strong foundation for future growth.
It is not necessary for a lender to reveal which credit agency they are utilizing when making a lending decision when evaluating business credit scores.

Make sure you pay your bills on time.

Payment history plays an important role in determining your company credit scores, just as it does in your personal credit scores. You will build a company credit score by frequently bounced checks or making late payments, but it will most likely not be a favorable one because of this practice. The ability to make consistent, on-time payments is essential for developing a solid company credit rating that you can use to your advantage when the timing is perfect.

Keep an eye out for any red flags or inaccuracies in your company’s credit scores.

Because an issuer submits your credit to the credit agencies, it does not rule out the possibility that they will make mistakes or typographical errors in the process. If you’re trying to establish business credit, it’s critical to check out the accounts which appear on your credit reports and ratings.
A policy of “set it and forget it” is not recommended because you never recognize when a prospective partner, creditor, or venture capitalist may request a copy of your business credit report.
Although there are frequent expenses associated with this service, any individual can obtain a copy of your company’s record at any time. Several commercial credit agencies, including the major ones, allow you to track and control your business credit scores.

How to Select the Most Appropriate Credit Card for Your Small Business

Choosing the right small business credit card can be a daunting task, but in the end, it all comes down to what is best for your company and its objectives. The most important aspects to consider are as follows:

Costs: How much does the card cost, and how does it affect the amount you’ll have to pay?

Rewards: If your goal is to maximize incentives, you’ll want to maximize the appropriate types of rewards.

Characteristics and advantages: Flexible spending limits, limitations on employee accounts, and expenditure management tools are all examples of what can be included.

Let’s take a closer look at each of these in greater detail:

As previously said, you must concentrate on the expenses, benefits, and features which are most significant to your company’s operations. Take some time to consider your options, and examine your credit cards on an annual basis.

1. Costs

For those who know they may occasionally carry debt on their credit card, selecting one with a low interest rate—perhaps even one that offers zero percent introductory interest rates on purchases and/or balance transfers—will be critical in keeping interest payments to a minimum. Most credit cards have a variable annual percentage rate (APR), which means that they will alter in response to changes in interest rates. The majority of credit card companies will depend on your interest rate at least in part on your credit score and other conditions; the stronger your credit score, the more probable it is that you will be granted a low-interest card.

You may be most concerned with maximizing the benefits you earn if, on the other side, you intend to repay the arrears in full monthly. In that situation, you’ll compare the expense of the annual subscription against the benefits you’ll receive as a result of your membership. It’s important to remember that some credit cards waive their annual charge the first year. Just be sure the recurring cost is positive.

Additionally, if you frequently travel abroad or purchase items from companies headquartered outside of the United States, you will want to seek a credit card that does not impose foreign transaction fees.

2. Rewarding

Take some time to consider which awards will be the most beneficial to you and your company’s success. This may include points toward travel and other travel-related privileges, like free checked bags, use of an airport lounge, or extra miles for some travelers. Co-branded credit cards can help you get the most out of your loyalty to a specific brand (such as United or Southwest Airlines, Marriott or Hilton hotels, for example). They can also help you save money. But if you are versatile and schedule cost or convenience-based travel, a multi-purpose card like Chase Ultimate Rewards can be a better choice.

If you’re still not certain, you can always go for a credit card that offers cashback benefits. You’ll get funds refunded that you can put towards whatever you like. Still, you’ll want to be sure you understand the types of purchases you’ll be making with the card since some cards will offer more cashback benefits for reward areas, such as expenditures at office supply retails or gas stations, than for other categories. Bonus categories for some cards may change from time to time. These greater cashback benefits may be beneficial to some entrepreneurs; however, for others, it may be too much effort and they will remain with their current business model.

3. Characteristics and advantages

As the number of business cards increases, cardholders will have a simpler time tracking and categorizing their expenditure. Some organizations go a step further and implement integrated expense reporting. If you want to provide cards to employees, you’ll almost certainly want to implement spending controls to prevent employees from making illegal or fraudulent transactions.

How to Apply for a Small Business Credit Card

If you believe you meet the requirements for a small business credit card wish to obtain one to help you with your operations, you can submit an application at any time. While completing an application is straightforward and should take no more than five to ten minutes, there are a few measures you should take to ensure that you receive the most appropriate card for your needs.

1. Analyze your alternatives

There are a plethora of different company credit cards to choose from. You should be aware of your possibilities before making a decision on a credit card. Examine your business costs to see which areas you are spending money in and whether or not you are eligible for incentives. Some are ideal for small businesses in need of low-cost finance since they provide extensive introductory periods with interest rates as low as 0%. Others are great for more established organizations with sales representatives who travel frequently since they allow them to accumulate reward miles. Still some cards include cash-back programs that provide excellent returns for spending in specific categories when using the card. Check the interest rates and fees on your credit cards as well.

2. Select a card

Once you’ve selected credit cards that provide the proper combination of fees, interest rates, and incentives, you’ll need to determine which one is the best fit for your financial situation. Make certain that you have thoroughly studied the literature and that you are aware of all of your cardholder duties and responsibilities. When is the promotional period for the card over? If the card carries a 0 percent APR, find out when it finishes. Prior to applying, you should find out whether there are any rewards caps in place or restrictions on how awards can be claimed in order to avoid disappointment.

Make sure to look into the card’s qualification requirements as well to ensure that you meet the requirements for the card you choose. [Are you looking for business credit cards? Take a look at our top choices.]

3. Conduct a credit check

If your company has been in operation for three years or more, you may be eligible for a small business credit card based on your company’s credit rating. More than likely, however, you’ll be applying using your own Ss Number, and creditors will verify your credit rating as part of the application process.

In either event, it’s a good idea to double-check these ratings on your own prior to actually submitting your application to ensure that they’re in good standing. The greater your ratings, the better your chances are. Consider delaying your application altogether if your individual credit score is less than 650 points. That will offer you more time to work on improving your credit score by taking steps such as paying off debt, bringing accounts up to date, and settling previous credit disputes.

4. Gather all your information

Once you’ve determined that your credits are on top form, you’re practically ready to submit an application. The final step is to compile all of the documentation you’ll need to submit with your application, which includes:

• The TIN of your company (found on IRS Form W-7 or SS-4)
• Identifying information such as your Ssn
• Business associates who own  upwards of 20% of your company’s stock should provide their Social Security numbers.
• Using your company’s charter and incorporation documents to verify the number of years in operation
• Check your most recent financial statements to ensure that your income and monthly spending forecasts are accurate.
• A list of personnel who will be required to have cards.

5. Fill out an application

Following your discovery of the credit card you desire, confirmation that your credit is in good standing, and gathering all of the necessary information to submit an application, now finish up the process of applying. Most of the time, this procedure is conducted online and takes only a few minutes.

Depending on the information you provide at the start of the process, the card provider may have queries or demand extra information. There is a possibility that this will be performed as part of your online process in the following steps, or that it will require additional follow-up by phone or email.

6. Wait for the card issuer to make a decision

You’ll only have to wait and determine if you’re accepted after you’ve submitted your card application in its entirety. Decisions on approvals can be made in a matter of minutes, or they can take a couple of days, if more follow-up is required, depending on the situation. If you are approved, you will receive your card(s) via mail, which you will need to activate before you can begin using them.

Best Credit Card for Your Small Business

Ink Business Preffered® Credit Card

BEST FOR UNLIMITED CASH BACK

When it comes to Chase credit cards, the Ink Business Preferred Credit Card offers one of the most generous sign-up bonuses we’ve seen. Aside from that, you’ll be able to earn points in four bonus categories that are particularly popular with businesses (travel, shipping, advertising, and communications providers).

For both you and your employees, the card will provide travel protections as well as shopping protections. It will also provide primary coverage while hiring a car for commercial purposes for both of you and your staff.

Key features

• If you expend $7,500 on transactions in the first three months of your account’s existence, you will receive a $750 extra cash back.
• You can earn an unlimited amount of 1.5 percent money back on every transaction you make for your company.
• There is no annual fee.
• Through Chase Ultimate Perks®, you can redeem your points for money back, gift cards, travel, and other rewards.
• Employee cards, which are provided at no additional cost, allow you to earn incentives more quickly. Individual spending limitations can be established for more control.
• Because of Fraud Protection, your card transactions will indeed be continuously checked for signals of potential fraud employing real-time fraud monitoring technology.
• With Zero Liability, you will not be held liable for any fraudulent charges that are made using your credit card or bank account details.
• Purchases are eligible for a 0% introduction APR for 12 months.

Pros

• One of the most generous sign-up incentives we’ve seen — 100,000 extra points after spending $15,000 in the first 3 months following card activation — makes this card one of the best values around.
• Membership to Chase Ultimate Rewards platform, which allows you to redeem your points.
• The annual price is a reasonable $95 each year.
• Bonus categories which are most important to business owners include primary car insurance.
• Benefits include cell phone and purchase protection, an extended warranty, travel cancellation/interruption insurance, and trip delay reimbursement, among other features.

Cons

• To earn the 100,000-point sign-up incentive, you must spend a lot of money.
• There are no travel advantages.
• Card applicants are subject to the 5/24 rule imposed by Chase.

American Express® Business Gold Card

BEST FOR FLEXIBLE REWARDS EARNING

The American Express Business Gold card is an excellent choice for small businesses with high spending habits because it allows you to generate 4x points in the 2 categories in which you spend the most. The card is best for small companies that place a high value on simplicity over all else.

Key features

• For the first 12 months, there is no interest charged.
• Every calendar year, you’ll get two points for every dollar you spend on the first $1 million you spend.
• Purchases for commercial purposes, such as office equipment and client dinners, earn two times the points.
• Spend Manager is a smartphone application developed by American Express. It assists in the addition of invoices and comments to transactions.
• You can get up to 99 staff cards free.
• Spend more than you have available on your credit card.
• Special accessibility to ticket pre-sales or events that are exclusively open to cardmembers in your city.
• ShopRunner membership is provided as a courtesy. It is possible to get a two-day shipment at participating stores.
• Personal loans from American Express: Fill out an application for pre-approved financing ranging from $3,500 to $25,000.
• Access to Quickbooks for the purpose of labeling and transferring your American Express transaction data.

Pros

• You’ll receive 4x Member Loyalty points in the top two spending categories monthly (on first $150,000 in total expenditures each calendar year) if you spend more than that amount in those areas.
• Pay with points for qualifying flights booked through Amex Travel and receive a 25 percent bonus on those points.

Cons

• The yearly charge is a hefty $295.
• There are no monthly or yearly credits, like there are on the Amex Business Platinum or the Amex Gold for consumers.
• Small firms with limited budgets may find that there are more cost-effective alternatives.

Capital One Spark Miles for Business

BEST FOR EVERYDAY BUSINESS SPENDING

When it comes to earning points on business purchases, your Capital One Spark Miles for Business program is the most straightforward option available. After that, the points may be readily exchanged for travel tickets or transferred to other airline partners.

Key features

• Make purchases totaling $4,500 or more during the first three months of your account opening to get a one-time reward of 50,000 miles, which is equivalent to $500 in travel points!
• Earn limitless 2X miles for dollar spent on any transaction, everywhere, at any time, with no restrictions or category limitations, and miles will not expire for the duration of the account’s existence.
• Transfer your points to more than 15 top travel reward programs, including JetBlueTM, Air CanadaTM, and EmiratesTM, and get cash back.
• You may use your miles to pay for anything connected to travel, including flights, hotels, and ride-sharing services, right now.
• One bill credit for either the $110 TSA Pre® registration fees or the $100 Global Registration application charges will be given to you as you pass through security.
• For the first year, there is no yearly charge; after that, it is $95 each year.
• Employees may get free employee cards that also allow them to earn limitless 2X miles on their purchases.

Pros

• You’ll earn twice as much money on every transaction, which eliminates the need to switch between different bonus categories.
• Employee cards are completely free, and they also earn two times the amount of money spent.
• It’s a reasonably priced card with an annual cost of only $95 (which is canceled the first year) and no foreign transaction fees.

Cons

• According to TPG estimates (which were not supplied by the issuer), the sign-up reward is only worth $850, which is much less than the bonuses offered by some of the best business travel cards.
• Unless you’re looking for additional incentives for when you travel, the card’s features are quite limited.

The Blue Business

BEST FOR EVERYDAY BUSINESS EXPENSES

When it comes to small business entrepreneurs who want to earn valuable Membership Rewards credits on their regular business spending, the Blue Business Plus card is a fantastic choice. In particular, it was designed for sole proprietors and start-up businesses with minimal income who would benefit from a credit card with an incredibly low-interest rate and increased purchasing power.

Key features

• In order to qualify for 15,000 Membership Rewards® points, you must spend $3,000 on qualifying purchases with your Card within the first three months of your Card membership.
• Spending money on typical business expenses like as office equipment or client dinners will earn you twice as many Membership Rewards® points. For the first $50,000 in expenditures each year, 2X points are awarded; after that, 1 point is awarded for every dollar spent.
• With Expanded Buying Power, you have the ability to spend more than the amount of credit available on your Card.
• The amount of money you can spend in excess of your available credit is not limitless. It varies depending on how you use the Credit, your financial history, credit history, financial backing known to Amex, and a variety of other considerations.
• Purchases are subject to a 0.0 percent intro APR for the first 12 months from the date of initial registration, after which they are subject to a variable rate ranging from 13.24 percent to 19.24 percent, which is determined by your credit score and other criteria at account opening.

Pros

• Promotional Offer: Earn 15,000 points after investing $3,000 in the first three months of your account’s existence.
• There is no yearly charge.
• Accumulate Membership Rewards points and transfer them to one of 22 participating travel partners.
• It is backed by a lifetime warranty.
• Buy-back protection, luggage insurance, and supplementary auto-rental insurance are all available.

Cons

• 2x points up to a maximum of $50,000 in a fiscal year (then 1x)
• There are no larger bonus categories for spending on business-related expenses.

Final Thoughts

While it is critical to obtain a small business credit card, it becomes even more critical to obtain one that is tailored to the specific needs of your company. Knowing what kind of incentives will enable you to operate your business more efficiently will enable you to take the necessary steps toward becoming a successful business owner.