Understanding Business Credit Cards


Jeffrey Bumbales

Business credit cards offer business owners a convenient and reliable method of funding routine business expenses. They are an indispensable financial source that provides business owners the flexibility to pay for things as needed, enabling them to have immediate access to on-hand emergency funds.

What You Need to Know About Business Credit Cards

Because business credit cards are an unsecured line of credit, they can be difficult to qualify for, particularly for new businesses without established credit. Prior to applying, it’s important to understand the eligibility requirements and the interest rates involved to ensure it’s the right type of credit for your business.

1. Great business credit history is a requirement for eligibility.

The primary downside of business credit cards is the rigorous eligibility requirements they contain. Regardless of your personal credit history, your business has to have a proven record of great credit in order to be eligible for a card.

Typically, credit scores between 720 and 850 are needed. For new businesses, you may have to seek alternative small business funding initially, while you work to build your credit score.

2. They have higher credit limits than traditional credit cards.

The primary benefit of business credit cards is that they offer high credit limits and flexible spending options. Whereas other forms of business loans require detailed accounts of where the money is spent, business credit cards enable you to spend the money on all related business expenses, without having to provide documentation to the banks.

Also, with high credit limits, you can make much larger purchases than you could with a traditional credit card, which is ideal for emergency funding or necessary business repairs.

3. They can improve your business credit.

Provided you remain on track with your payments, a business credit card is a great way to improve your business credit, which will make large loans easier to qualify for later on.

4. They have higher interest rates than traditional credit cards.

Business credit cards are unsecured, which means the bank is taking a much bigger risk by supplying you a loan. Since no collateral is required, banks charge increased interest rates, which are often between 15 and 20 percent.

5. Many come with rewards programs as incentives.

By finding a business credit card with a rewards program, you can save money every time you use the card. If you use the card regularly for travel expenses, supplies, or repair costs, you can gradually build points, which can be applied toward future purchases.

6. They can be issued to both employers and employees.

This simplifies business spending and allows employees to spend money as needed, without constantly having to receive prior authorization from management. You can even cap their spending limits by category and expense type to ensure responsible spending.

Business credit cards are a popular way for small business owners to pay for routine expenses as they go. They provide spending flexibility, convenient on-hand cash, and critical emergency funds when needed. Provided your business has great credit and can reliably pay the money back, a business credit card will provide the spending versatility needed to thrive as a company.


Apply for small business financing now, so you can begin building credit and grow as a business.