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For new startups, it can be almost impossible to score a small business loan because the risk is too high for lenders. Small business credit cards can provide the capital you need to get off the ground.
It’s important that you choose the card that best fits your business’ needs. Those needs may be to keep an open line of credit or to earn credit card rewards and other perks that business credit cards offer.
How business credit cards differ from personal credit cards
Business and personal credit cards function the same in almost every way, except for a couple of key differences. “Business credit cards aren’t subject to most of the protections offered by the CARD Act of 2009,” says credit card expert Jason Steele.
He adds, “However, most card issuers have chosen to voluntarily offer the same terms as consumer cards.” Be sure to check the fine print before you apply to ensure you’re protected.
Steele also notes that business credit cards are more likely to offer rewards and benefits that would appeal to a business user. For example, you may get bonus rewards for office supplies and advertising expenses or easy connection with Quickbooks.
Can you get a business credit card with bad credit?
Your personal credit score can either help or hurt you when applying for a business credit card. “Small business credit card applicants rely on their personal credit score to be approved, just like a personal card,” says Steele.
“Only corporate cards require a business credit report,” adds Steele. As a result, you’ll typically have a hard time getting approved for a small business credit card if you have bad credit. So, work on improving your credit before you apply.
For those who have fair credit or better, your chances of getting approved are better.
The 5 best business credit cards for your small business
If you’re looking for a business credit card to help you build your business, here are the top five options to consider:
1) Capital One Spark Cash for Business
If it’s a huge sign-up bonus you’re looking for, the Capital One Spark Cash has it. What’s more, you’ll earn 2% cash back on every purchase you make, making it easier to rack up the rewards. Unlike a travel rewards credit card, this card’s cash back rewards offer flexibility to use them however you wish.
The card charges no foreign transaction fees but does charge an annual fee, which Capital One waives the first year. Also, you’ll pay a pretty high-interest rate if you choose to carry a balance, so avoid doing that if you can.
2) Blue Business Plus Card from American Express
If you want a 2% rewards rate but don’t want to deal with an annual fee, the Blue Business Plus Card should be right up your alley. The only caveat is that this only applies to the first $50,000 you spend each year. If your business spends a lot more than that, you’ll only get one Membership Rewards point per dollar spent after the $50,000 cap.
Another reason to get this card is its 0% APR promotion. If you need to make a large inventory purchase or get some much-needed equipment, you’ll have more than a year to pay it back interest-free. Also, if you have another credit card with a balance, you can transfer it to the Blue Business Plus Card and pay it off interest-free in the same period.
Lastly, American Express understands that business owners sometimes need more than their credit limit offers. With this card, you can spend above your credit limit if you need to. How much you can spend above your limit, however, depends on your payment history, credit history, financial resources, and other factors.
3) The Business Platinum Card from American Express
If its premium perks you’re after, look no further than the Business Platinum Card from American Express. While it comes with a steep annual fee that isn’t waived the first year, the card offers a slew of travel benefits that will have you traveling in ultimate comfort.
Here are some examples:
- Get a big sign-up bonus worth almost double the card’s annual fee.
- Earn 5X rewards on airline and hotel arrangements booked through Amex Travel (just 1X rewards on everything else).
- Receive a $200 airline fee credit every year to cover things like checked bags and in-flight meals and drinks.
- Get free access to more than 1,000 airport lounges worldwide, including Amex’s Centurion lounge collection.
- Receive a statement credit once every four years when you apply for Global Entry or TSA PreCheck.
- Get elite status at hotels and car-rental companies.
Because of the cards elite perks, you can get much more value than you pay in the annual fee if you do it right.
4) Chase Ink Business Cash Card
If you have a conventional business and want to find ways to maximize your rewards, check out the Chase Ink Business Cash Card.
You’ll get a decent sign-up bonus and:
- 5% cash back on up to $25,000 spent each year at office supply stores and on internet, cable, and phone services.
- 2% cash back on up to $25,000 spent each year at gas stations and restaurants.
- 1% cash back on everything else.
The card also offers a 0% APR promotion, which gives you a year to pay back a big purchase or a balance transfer with no interest. Depending on your needs, this could save you more in interest than you’d get in rewards.
Last but not least, the Chase Ink Business Cash Card has no annual fee, making it easy to get maximum value.
5) Capital One Spark Classic for Business
So far, all of the cards we’ve listed require good or excellent credit get approved. If you have fair credit, however, your best option is the Capital One Spark Classic for Business. This is one of the few cards available for people with less-than-stellar credit.
The card’s rewards are fairly simple, offering 1% cash back on every purchase. However, this card doesn’t charge an annual fee. Most noteworthy, this is a key feature you won’t always get with a fair-credit credit card. There are also no foreign transaction fees with this card, so you can take it overseas if you need to.
Which of the best business credit cards should you choose?
“The credit card industry is extremely competitive, and card issuers are constantly offering new products with even better reward and benefits,” says Steele.
“Any must-haves will relate to how you are using the card. For example, those who will carry a balance will want the lowest possible interest rate, while travelers will want benefits like free checked bags, or even airport business lounge access.”
So, to find out which business credit card is best for you, take a look at your business expenses and your feature preferences. Also, consider annual fees. If you’re not spending enough to make up for an annual fee, it might not be worth it.