Small Business Credit Cards

A Business Owner's Guide To Small Business Credit Cards

What Are Small Business Credit Cards?

You might assume that a small business credit card is similar to a personal credit card, and it is to some degree. The application process is nearly identical: When you apply for business credit cards, the issuer checks your personal credit (and your small business’s credit ranking, if it has one). You assume responsibility for covering the charges on the card once it’s issued.

The differences between small business credit cards and personal credit cards lie in the specific features offered and the varying ways they affect your credit.

Why Consider Small Business Credit Cards?

Business credit cards have features tailored for small businesses like higher credit limits, no annual fees and flexible cash back rewards. In addition to these benefits, putting business expenses on a separate small business credit card can give you access to business credit card rewards programs.

Having a designated small business credit card can make it easier to build up your business’s credit history — something that’s difficult when using a personal credit card for business spending. A handful of credit card companies even offer small business credit cards designed specifically to build business credit.

Is a Small Business Credit Card the Right Choice for Me?

If you’re still unsure about applying for a business credit card, ask yourself some of the following questions:

  • Am I looking to establish business credit for my business?
  • Do I need a higher credit limit to cover business expenditures that a personal credit card could not cover?
  • Do I often need to make inventory purchases on the spot?

If the answer is yes to any or all of these questions, there’s a good chance a business credit card could be a good fit for you and your business. Just keep in mind that there are many different small business credit cards with varying features. Research the ones that look most promising and compare APRs and payment options before applying.

Are There Alternative Options to a Business Credit Card?

Small business credit cards may not be the right option for most small business owners. Unlike a typical business loan, business credit cards don’t provide literal “cash in the bank” for you to draw on. They may have a cash advance option, but you can only request a limited amount and are often charged a hefty fee for doing so.

If your business needs a steady cash flow or working capital, you might be better served with a line of credit from an alternative lender like Headway Capital. A true line of credit gives you 24/7 access to funds, allowing you to draw whenever you need to cover business expenditures. At Headway Capital, we believe you can accomplish great things with the right support — and we’re proud to take a holistic view of your business when making an approval decision — not just your credit score.