Business Miscellaneous

Understanding Business Credit Cards

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Credit cards are often an essential tool for businesses. Whether you are a high-tech startup or operate a lawn care service, a business credit card can offer you the crucial purchasing power to keep your business moving. But what are the types of business credit cards out there, and how can they be used?

Small Business Credit Cards vs Corporate Credit Cards

There are two main types of business credit cards:

Small Business Credit Cards

Small business credit cards are issued by hundreds of major banks as well as regional banks and credit unions. These credit cards are typically used by anyone from a sole proprietor to business owners with up to 100 employees as authorized cardholders.

Small business cards work much like a personal credit card, and the primary account holder relies on his or her personal credit when applying for a card. The primary account holder is responsible for the repayment of all charges, but he or she can also receive rewards for all of the purchases made by employees.

Corporate Credit Cards

A corporate credit card is a financial product offered to larger organizations such as a company, a non-profit organization or a government entity. Only a handful of major banks offer corporate credit card programs.

These credit cards use the organization’s business credit history to establish an account, with designated employees as managers and administrators. Most of these cards don’t offer rewards for spending, but there are some corporate cards that allow individual employees to opt into a rewards program for an additional fee.

How Business Credit Cards Can Be Used

A corporate credit card is primarily a means of extending purchasing power to employees and tracking their purchases. Some corporate cards have an individual liability that requires employees to submit expense reports, receive reimbursement and pay their own bills. More common are corporate cards where the organization is responsible for paying the bills (though expense reports are often still required for accounting and tracking purposes).

Corporate cards offer spending power to employees that they might not have on their own. For example, if an employee needs to purchase expensive equipment, or make costly travel reservations, he or she might not have or want to use their own personal credit on behalf of their employer.

A small business credit card can be even more versatile. First, a small business owner can use a credit card as a means of financing purchases.

Small business credit cards, like personal credit cards, allow you to extend payment on purchases. In addition, a small business credit card is more likely to offer a range of cardholder benefits. These can include rental car insurance, extended warranty coverage, and damage and theft protection. In addition, a small business credit card can offer travel benefits such as trip interruption coverage and baggage delay insurance. And if your small business credit card is affiliated with an airline or hotel, benefits could include free checked bags or room upgrades.

Finally, most small business credit cards come with robust expense tracking and reporting tools. For example, small business credit cards usually offer monthly and quarterly reports to help track expenses and simplify tax preparation. Many small business cards will also allow you to configure alerts when employees spend a certain amount, or to restrict employee spending. Some small business credit cards even offer mobile apps that allow you and your employees to snap pictures of receipts and tag them.

Read here for more information on various ways to fund a small business.

How Small Business Cards Differ from Consumer Cards

There are few if any inherent differences between small business credit cards and those marketed to consumers. Consumer credit cards are protected by the CARD Act of 2009, which exempts credit cards marketed to small business users. Nevertheless, most small business credit card issuers have chosen to voluntarily have their business cards comply with the regulations that affect consumer versions.

Small business credit cards are also more likely to offer rewards and benefits that appeal to small business owners. While a consumer card might offer additional rewards for grocery store or department store purchases, a small business credit card is more likely to offer bonus points, miles or cash back at office supply stores or for advertising purchases.

Once you understand the types of business credit cards available and how they work, you’ll be able to choose the best one for your needs.

For more information, visit the Experian Blog:  credit cards for small businesses.

About the author


Jason Steele

Jason Steele is a journalist who specializes in covering credit cards, award travel, and other areas of personal finance.