How To Choose The Best Small Business Credit Card For Your Company

Choosing the best small business credit card can be a significant decision. A business credit card can help you build credit, manage cash flow and earn rewards, making it an essential tool for both managing and growing your business.

However, it can sometimes be a challenge to determine which business credit card is right for your business. Here we’ll explore the key factors to consider when choosing a small business credit card to help you make an informed decision.

What is a business credit card?

A business credit card works like a personal credit card but is designed for small to medium-sized businesses to make purchases and payments. Business credit cards typically offer higher credit limits than personal credit cards, and the debt incurred on the card is linked to the business.

Depending on the card, they also offer multiple perks and benefits, including rewards, cashback, free air miles, and discounts on business-related expenses. They also enable business owners to track and manage their expenses, build credit, and separate personal and business expenses. Business credit cards often have additional business-related eligibility requirements, such as a minimum trade history or monthly revenue.

“There are numerous benefits to taking out a business credit card for your small business, from cashback to reward programs. But these will only truly benefit your small business if you pay off the balance in full each month and stay within the credit limit. You could incur high interest fees and negatively impact your business’s credit score if you fail to clear your balance.”

Damian Brychcy, COO and US MD of Capital on Tap

What can you use a business credit card for?

Business credit cards can be used for expenses relating to running a business, such as these.

  • A business credit card can cover goods and services to run your business, such as equipment, supplies, marketing, and travel expenses.
  • You can use a business credit card to manage your company’s cash flow by making necessary purchases and paying for expenses while waiting for revenue.
  • It’s possible to use a business credit card to build a credit history for your business to enable you to qualify for credit lines, loans, and other business financing options
  • It’s common for business credit cards to offer rewards such as cashback or points which can offset expenses.
  • A business credit card can help manage employee spending by setting spending limits and tracking expenses.

How to choose the best business credit card for your company

With so many business credit cards available, it’s vital to choose the right one for your business needs. Here are some important things you’ll want to consider.

What you need from a business credit card

Consider your priorities for getting a business credit card. For example, it might be competitive interest charges, low rates and fees for using the card overseas, or rewards and perks.

Your business spending habits

Consider how much you likely spend per month on the business and where. This will help you to determine what perks and rewards will benefit your business and whether these balance the monthly or annual fee you’ll have to pay on the card.

Overseas spending

If you expect to use a business credit card abroad, look for deals that don’t charge fees for overseas transactions and offer a competitive exchange rate. You may also benefit from additional perks, such as travel insurance.

The interest rate

An important factor when choosing a business credit card is the interest rate.  Business credit cards may have higher rates than personal cards. Before taking out a credit card, read the terms and conditions carefully to understand how the interest rate is calculated.

Credit limit

When choosing a credit card, you must consider how much credit the business needs. The credit limit should cover expenses and be a manageable amount you can clear each month. Aim to keep your credit utilization ratio under 30% to maintain a healthy credit score. Before you select a credit card, check for an option to increase the credit limit as your business grows.

“It’s crucial that you choose a business credit card that offers a credit limit that aligns with the financial needs of your business. A high credit limit undoubtedly offers greater purchasing power and flexibility but also increases your risk of accruing debt that you may have difficulty paying off. Consider your business expenses and cash flow when determining the right credit limit. Once you have the card, be sure to focus on using it responsibly and staying within your credit limit.”

Damian Brychcy, COO and US MD of Capital on Tap

Small business credit cards: Summary

It’s an excellent idea to look at several credit cards and compare interest charges, perks, benefits, terms, and credit limits to select the best card for your business’s goals. An informed choice can help you manage your finances more effectively, earn rewards and help build your business’s credit score.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.