Business Credit Cards

A business credit card is a practical financial tool, offering short-term financing solutions to help businesses manage their expenses effectively.

They are available to businesses of all sizes and are highly versatile, enabling businesses to handle a wide range of expenses, from purchasing office supplies to funding travel needs. 

How does a business credit card work?

Similar to personal credit cards, business credit cards come with a predefined spending limit. However, there are some key differences when compared with personal credit cards.

One significant distinction is that business credit cards often have higher borrowing limits. This is because these limits are determined by both your personal income and your business revenue.

Additionally, making on-time payments on a business credit card can improve your business's credit history. A stronger credit profile can, in turn, make it easier to secure loans or additional lines of credit in the future. 

What are the benefits?

There are a number of potential benefits to business credit cards, including:

• cash flow management: effectively managing cash flow ensures you have enough funds to cover expenses, even while waiting for incoming payments. For example, if a customer’s payment is delayed, you can still proceed with essential purchases
• additional cards: issuing multiple employees cards linked to a single account simplifies payment management by combining all expenses into one consolidated bill. This approach not only streamlines accounting processes but also enhances the overall financial control you have over your business expenses
• simplified accounting: using business credit card statements instead of traditional receipts and paperwork simplifies accounting processes. These statements can be effortlessly imported into accounting software or Excel, enabling efficient analysis and reporting
• emergency funding: a business credit card offers a dependable source of funds during urgent or unforeseen financial situations. This feature can be especially beneficial in times of unexpected expenses or cash flow challenges.

What are the potential drawbacks?

Like all finance types, business credit cards can bring with it certain disadvantages, including:

• interest rates: business credit cards tend to have higher interest rates than some other forms of finance
• fees and charges: if you are late with a payment or miss one altogether you will likely be charged by the lender. This could also have an impact on your personal credit report which can make it harder to secure finance in the future
• short term: due to the higher interest rates and the need to repay the balance, business credit cards might not be a solution for longer term financing needs that might be more suited to business loans or another form of finance. 

How do I get a business credit card?

Applying for a business credit card can be done in various ways - online, via phone, or by visiting a physical branch of the card provider.

However, the application process may vary depending on the provider's policies.

Certain providers may require you to already have an account with them before you can apply for a business credit card.