Rolled up tie pictured next to a business credit card for Credit Karma's Guide to Business Credit Cards.Image: Rolled up tie pictured next to a business credit card for Credit Karma's Guide to Business Credit Cards.

Credit Karma Guide to Business Credit Cards

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Are you a small-business owner ready to take your business to the next level? This guide will help you discover how a business credit card can help you grow your business. Not only that, but also how to earn rewards and build business credit along the way.

As a small-business owner, you wear a lot of hats. You work long days — and even some nights — to get through your never-ending to-do list. Starting a business is no easy task, and to be successful you want to have the right tools to support your business.

One of the tools that can help streamline your finances and help your business grow is a business credit card. Getting a business credit card may seem like the last thing on your to-do list, so we’re making it easier for you by giving you the lowdown on everything you need to know about business credit cards.

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What is a business credit card?

Let’s start with the basics. What is a business credit card and how is it different from a regular credit card, anyway?

Business credit cards are similar to regular credit cards but have one key difference: They are designed for business use only. A regular credit card is typically considered for personal use, whereas a business credit card is specifically for activities related to business.

Want to book your next vacation? Use your personal credit card. Need to buy office supplies for your business? Use your business credit card.

Small-business owners of all types can use a business credit card to purchase items for their business and streamline their transactions so that they aren’t mixing their personal and business purchases.

Who can apply for a business credit card?

If you’re a business owner, you can apply for a business credit card. Even if you’re working as a sole proprietor or as a business owner with an LLC, you can likely apply for a card.

In order to apply, an “authorized officer” needs to submit the application. Any of the following may be considered an authorized officer to a business card issuer, but it’s best to check your card’s terms and conditions to be sure:

  • General manager
  • General partner
  • Owner
  • President/chairperson
  • Treasurer
  • Vice president

In other words, if you’re the owner or an authorized officer of your business, you can submit the application. The key, then, is to have a plan on how you will use the credit card for your business expenses. According to the U.S. Small Business Administration, some acceptable uses of a business credit card include paying for gas in a company car, taking clients out to lunch and buying office supplies, to name a few.


Personal credit scores vs. business credit scores

You probably know that you have personal credit scores. But did you know that you could have business credit scores, too?

It’s important to try and establish business credit scores so that your business activities can be separated from your personal credit.

A business credit score helps lenders understand how creditworthy your business is and where you stand with your payments.

One popular business credit score is the Dun & Bradstreet Paydex® score, which ranges from 1 to 100. The score is based on your payment history. As with your personal credit scores, you want to be mindful of making on-time payments to business lenders.

Why should you get a business credit card

You might think that getting a business credit card is just another thing to add to your already-substantial to-do list. If your current system is working, why change it, right?

But getting a business credit card can actually streamline your finances and make things easier.

Here are the top reasons you should get a business credit card:

1. Separate business from personal expenses.

The biggest reason to apply for a business credit card is to separate personal expenses from business expenses. As a business owner, you know how important it is to keep track of your expenses come tax time. When your business expenses are muddled with your personal expenses, everything gets a bit messy. Having full separation can set a boundary between your personal and business spending.

2. Access to a short-term loan.

As you probably already know, being a small-business owner means having inconsistent income. But while you may have variable income, you are still required to pay vendors and your other bills and expenses on time. A business credit card can offer a short-term loan until your next payment hits your account. If you pay off your balance in full by the due date (which we recommend), you can avoid paying interest and help your cash flow.

Looking for a business credit card?

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3. Get perks and rewards.

As a business owner, you have to spend money on bills, supplies and more to stay afloat. Depending on your business, you could be spending quite a lot. Why not get rewarded for your spending and access some perks as well? Getting the right business credit card can help you get miles or points to redeem for travel or cash back. Not only that, but you can have access to special perks — such as purchase and insurance protection — to help make running your business a little easier.

“We use business cards and pay early for a 1.5% discount savings through [American Express]. We also work diligently to use points for purchases,” says Deborah Sweeney, CEO of MyCorporation, a document-filing service for entrepreneurs. “It is important, however, to pay all credit card payments timely in order to earn these credits!”

Using a rewards business credit card can help you get a return on your investment when you spend money on your business. Your expenses may be tax deductible and you could get lucrative rewards for your spending too.

4. Build your business credit.

You may know that you can have business credit scores. According to a survey by Nav, 72% of small-business owners didn’t know their business credit scores, and 45% didn’t even know they had business credit scores in the first place. Your business credit scores can come in handy should you need additional financing in the future and may dictate what interest rates you are offered. Business credit scores are similar to your personal credit scores but are based on reports of your businesses’ credit activity. Getting a business credit card can help establish your business credit and therefore build your business credit scores.

How to get the most out of your business credit card

When used properly, your business credit card can be a useful tool to streamline your expenses and establish business credit. Not only that, but it can be a great way to reap rewards from your business spending.

In order to get the most out of a business credit card, look at your most common expenses as well as what you value.

“When selecting a business credit card, small-business owners should look for a card that offers cash back rewards for the purchases they make frequently,” says Julie Pukas, head of U.S. bank card and merchant services at TD Bank. “Small-business owners who spend often on things like office supplies, travel expenses or catering should choose a credit card that rewards them for those purchases.”

You also want to look at any hidden perks that could save you money or be useful for your business.

In short, here’s what you can do to get the most out of your business credit card:

  • Know what rewards you want
  • Understand how a business credit card will fit into your overall business strategy
  • Ensure that the card reports to business credit reporting agencies
  • Make all of your payments on time
  • Use your business credit card responsibly


How does a business credit card affect my personal credit?

Depending on the type of business you have, a business credit card could affect your personal credit. For example, if you’re a sole proprietor, your personal credit may be checked and intermingled with your business credit as you are considered the business.

Additionally, some business credit cards do not report to a business credit reporting agency. This means that you will not build your business credit and your personal credit could be affected.

To make sure your business credit card does not affect your personal credit, ask the credit card issuer if it reports to a business credit reporting agency. That way you can build credit separately and not affect your personal credit.

Lastly, keep in mind that the separation between personal and business credit can still be a delicate line — especially for small-business owners who are required to offer a personal guarantee to secure a business credit card.

What you need to apply for a business credit card

Applying for a business credit card is similar to applying for a regular credit card. But instead of asking questions about you and your personal credit history, the application will mainly ask questions about your business. Here are some things you may need for your application.

  • Full legal business name
  • Type of business
  • Employer identification number
  • Business revenue
  • Business category and type
  • Years in business
  • Number of employees
  • Business address

Additionally, you’ll be required to input some personal information, such as your full name and home address. Getting all of your information together ahead of time can make the process easier.

Once approved, you can start using the card as a tool for your business. If you are denied for a business credit card, you may have a limited credit history or no business credit scores, insufficient income or collateral, or you may have negative marks on your credit reports.


What to consider when applying for a business credit card

There are many business credit cards out there, but you want to find the right one that fits your needs. Here are some things to look out for:

  • Annual Percentage Rate (APR)
  • Annual fee
  • Rewards
  • Special perks
  • Terms and conditions
  • Credit reporting: Does it report to a business credit reporting agency? (Not all cards do.)
  • Credit limit

Evaluate what is important for you and your business. For example, if you travel a lot, getting a rewards card that offers miles could be a good fit. If you spend a lot of money in a certain category, look for a card that may offer more rewards for that particular category.

What’s next?

If you’re looking to grow your business and organize your expenses, getting a business credit card can help. Having a business credit card can also help you build your business credit scores and give you access to perks and rewards for your regular spending.

Before applying, carefully consider what you really want out of a business credit card and how it can help serve you and your goals. Read the terms and conditions and evaluate a few offers before deciding on one.

In the meantime, to learn more about business credit and business credit cards you can check out these additional articles from Credit Karma:

About the author: Melanie Lockert is a freelance writer and editor currently living in Portland, Oregon. She is passionate about education, financial literacy and empowering people to take control of their finances. Her work has been f… Read more.