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How to Pick the Best Small Business Credit Card for You

Mariah Bliss
Business woman is using her small business credit card to pay for her lunch at a restaurant

Access to capital is often one of the biggest financial concerns for any small business, and small business credit cards are a popular financing option because they offer fast and easy access to credit.

In fact, a recent survey of more than 500 small-business owners with annual revenues or sales under $1 million found that 46 percent regularly use a business credit card. Among those who don’t, 7 percent planned on applying for one within a year.

What were these company owners using credit cards for small businesses for? According to the survey, common expenses charged to the cards included office supplies, equipment and product costs, gas for business vehicles, phone and internet bills, and business-related travel. And thanks to low interest rates, generous spending limits, and significant rewards and perks packages, it’s easy to see why anyone—from solopreneurs and freelancers to small companies with employees—might choose to do the same.

Whether you’re primarily interested in finding the best small business credit card in order to smooth out your company’s cash flow irregularities, make a large purchase, earn rewards on day-to-day office spending, or serve as a convenient way to track your business expenses, the process is the same. Simply follow the steps below, keeping mind that card issuer requirements vary and—ultimately—the best credit product for your company depends on your personal business needs.

  1. Take a look at your personal credit history and score.

    In many cases—whether you’re a freelance photographer or graphic designer, solopreneur marketing consultant, or a brand-new LLC—the issuers of small business credit cards are going to look at your personal credit history and score in order to determine your business creditworthiness. It’s important that you do the same before you even begin evaluating your options. Not only will this allow you to find and correct any reporting errors, but knowing your score—and whether issuers will consider it bad, fair, good, or excellent—will help you narrow down the many business credit cards available to those for which you are most likely to qualify.

  2. Think about your business needs and how you plan on using the credit card.

    What are the most common expenses you encounter in your business? Are you going to be charging day-to-day operating costs to your card or making larger purchases? Are you going to pay your charges off in full each month or need to carry a balance? The answers to these questions will help you evaluate the value of the various benefits offered by credit cards for small businesses.

    For example, if your purchases will be covered by your normal cash flow and can be paid off each month in full, a small business credit card that offers cash back or rewards points towards travel expenses might be your best option. On the other hand, if you’re going to need to carry a balance, you may be better off with a credit card that offers a zero percent interest rate on new purchases. Additionally, while cards with higher annual fees may offer a wider range of benefits—from concierge services to travel insurance—those fees aren’t worth it if you’re not likely to actually use the perks.

    In some cases, a personal consumer credit card may actually be your best credit option for business, especially if scoring the lowest APR for the longest time is your goal. The Citi® Diamond Preferred® Card regularly appears on best small business credit card lists because it offers a zero percent purchase APR for 21 months, no annual fee, a 23 day grace period, and free access to your FICO score. It also includes Citi® Price Rewind, which will give you back up to $500 per item and $2,500 per year if a lower price for a registered purchase is found online within 60 days. A Good (690) credit score is required.

    There are actual small business credit cards with zero percent APRs available—including Chase’s Ink Business CashSM Credit Card—however, the interest-free period tends to be shorter. In this case, it’s only 12 months. That said, the card has no annual fee, offers $300 in bonus cash back when you spend $3,000 on purchases within the first three months, and offers employee cards at no additional cost. A Good (690) to Excellent (850) credit score is required.

    Capital One® Spark® Cash for Business requires a Good (690) to Excellent (850) credit score and offers unlimited earning of 2 percent cash back on all purchases. You’ll receive a one-time $500 cash bonus if you spend $4,500 on purchases within the first three months and can add employee cards at no additional cost. While the annual fee is waived the first year, you’ll pay $95 after that.

    If you have excellent credit, plan to pay off your balance in full each month, and do a lot of traveling for business, Chase’s Ink Business Preferred℠ Credit Card may be the best small business credit card for you. You’ll earn 80,000 bonus points if you spend $5,000 on purchases in the first three months. After that, earn one point per $1 on all other purchases with no cap on your earnings. You can redeem points for travel, cash back, gift cards and more—and they never expire. However, if you redeem your points for travel through Chase Ultimate Rewards, they’re worth 25 percent more.

    If you’re interested in earning free hotel nights with your small business credit card, the Club Carlson Business Rewards Visa Card is one of the most generous. You’ll earn 10 points per $1 spent in eligible purchases at participating hotels—including Quorvus Collection, Radisson Blu®, Radisson®, Radisson RED, Park Plaza®, Park Inn® by Radisson, and Country Inns & Suites By CarlsonSM—along with five points per $1 spent on eligible purchases everywhere else. Make your first purchase and you’ll receive 50,000 Gold Points. You’ll also get 40,000 renewal bonus points each year. You will need at least a Good (690) credit score and will pay an annual fee of $60.

    If your credit history is average or limited, you may want to check out Capital One® Spark® Classic for Business. You’ll enjoy no annual fee and earn 1 percent cash back on every purchase with a 25-day grace period and fraud coverage. The card also comes with business benefits including year-end spending summaries and employee cards at no extra cost.

    Keep in mind, the cards mentioned above are only a sampling of the options available in the business credit card market. Websites like WalletHub and NerdWallet regularly review credit card offers and update their best small business credit card lists—making them excellent research resources. You may also want to check with any banks with which you’ve already established a personal or business relationship.

  3. Apply for the small business credit card that best suits your needs.

    Most credit card issuers will allow you to apply for a small business credit card online. While their approval requirements vary, the information they collect through the application is usually quite similar and likely to include:

    • Your name and the legal name of your business
    • Your EIN (employer identification number) or Social Security number
    • Your business contact information
    • The industry your business is in
    • The length of time you’ve been in business
    • The number of employees you have
    • Your personal and business annual revenue
    • Your personal and business outstanding debt
    • Your estimated monthly business spend

    In some cases, the information you provide will depend on your situation. For example, if you’re a solopreneur or freelancer, your personal income and business income may be the same number. If you’re a freelancer, you likely don’t have an EIN so will use your Social Security number. And unless you have opened a bank account and file your business taxes under a specific business name, the name of your business may just be your own.

    If you’re not approved for any of the credit cards for small business for which you apply, you may want to turn to a secured business credit card instead. Secured business credit cards are excellent options for business owners who lack a personal credit history or have a low personal credit score. They can be financial lifesavers, enabling you to build or improve credit.

    With a secured small business card, you will put down a refundable cash deposit. The issuer will then give you a credit limit that is typically between 90 to 100 percent of the deposit amount. You can then use the secured card as you would any other credit card: making purchases and timely monthly payments.

    The BBVA Compass Business Secured Credit Card is one of the best. Designed for business borrowers with Bad (550 or below) credit scores, it has no annual fee the first year and a $40 annual fee after that as well as no monthly fee or one-time fee and a 17.24 percent interest rate. You must make a minimum deposit of $500 and your available credit will be 90 percent of your Secured Credit Card Savings Account balance. Unlike many secured business credit cards, this one offers CompassPoints for every dollar you spend. They can be redeemed for cash back, account credits, gift cards, travel, and more.

    Another excellent small business secured credit card is the Wells Fargo® Business Secured Credit Card. No one-time or monthly fees are required, though you’ll pay a $25 annual fee for a 16.15 percent interest rate. Your credit limit will be between $500 to $25,000 based on the amount you deposit. Make timely payments and you may be offered the opportunity to upgrade to an unsecured business credit card.

    Whatever your best small business credit card turns out to be, there are a few factors you should keep in mind.

    Unlike personal consumer credit cards, the CARD Act does not protect business credit cards. This means small business credit card issuers can change your interest rate at any time without notice. In fact, a recent WalletHub study of business credit card issuers found that only 19 percent wait until a card holder is at least 60 days delinquent on payment before raising the interest rate on their existing business credit card balance. This means the total cost of your debt can change at any time, making budgeting difficult.

    Additionally, most small business credit card issuers require borrowers to sign a personal guarantee. This means you’ll be personally liable for the business debt in the event that your company is unable to pay it off. Whether you make late payments or default on what you owe, the issuer may report that information to your personal credit report as well: the WalletHub study found that more than 56 percent of issuers report their customers’ business credit card activity to their personal reports.

Ultimately, opening and responsibly using small business credit cards is an important part of building an actual business credit history.

If you ever want to apply for a small business loan or other business financing without having to personally guarantee those debts, you need to establish a business credit history. A small business credit card is a great place to start, especially when combined with additional steps such as incorporating your business, applying for an EIN with the IRS, and working with vendors who will report your timely payments to the credit bureaus.

As with your personal credit, remember to monitor your business credit report and score annually at minimum and take the necessary steps to correct any errors. It’s more than worth the effort: excellent business credit will help you secure favorable payment terms with new vendors as well as obtain better interest rates and credit terms on loans and other small business credit cards you wish to open.

About the author

Mariah Bliss
Mariah Bliss
I love writing about the small business experience because I happen to be a small business owner - I've had a freelance copywriting business for over 10 years. In addition to that, I also head up the content strategy here at Simply Business. Reach out if you have a great idea for an article or just want to say hi!

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