Quick Look at the Best Business Credit Cards for Startups:
Finding the right business credit cards for startups is a crucial step when opening a business. You will need access to credit as your business grows, and one of the best things you can do as a fledgling business is to establish business credit so that when you need a loan, your credit score will enable it. Additionally, as a new business owner, you will need to do all you can to save on expenses, and the right card will help you do that.
Benzinga has researched the best business credit cards for startups and presents the list below.
1. Best for No Personal Guarantee: Brex 30 Card
When you’re just starting a business, or running an existing one, it’s difficult to find a business credit card that doesn’t require you to sign a personal guarantee. If you sign one and your business gets into financial trouble, you will be held personally responsible to pay any outstanding bills. But when you open a Brex 30 Card, the credit card issuer does not require you to personally guarantee the debt that your business takes out. The card issuer also issues the credit cards without performing a credit check. The only drawback to this card is that to qualify, you must have a linked bank account to the card and that bank account must have a balance of at least $50,000.
2. Best for Businesses with Employees: Ink Business Cash® Credit Card
If your business is growing and you need your employees to have a credit card tied to your business, the Ink Business Cash® Credit Card is a great choice. Issued by Chase, this credit card allows business owners to give a card tied to the business to each employee that needs it – but without the typical additional card fees. Because this credit card is a rewards card, each employee that uses a card will contribute to the rewards pool, helping your business use the cash back or miles rewards to save on business expenses.
3. Best for No Preset Spending Limit: Capital One Spark 2% Cash Plus
For business owners with the need to pivot financially or have access to credit at all times, the Capital One Spark 2% Cash Plus credit card is a winner. The card issuer does not have a preset spending limit, which means the card limits will adapt to your spending habits, credit profile and payment history. Having a card like this in your business wallet can equip for those unexpected things that pop up when running a business. To qualify for this card, you must have an excellent credit score. Cardholders must pay off their balance in full each month.
4. Best for Business Travel: The Business Platinum Card® by American Express
If you plan to do a lot of traveling with your business, the right credit card can help you save on expenses with travel rewards and other perks related to travel. The Business Platinum Card® by American Express offers business owners a ton of rewards to help cut travel expenses. In addition to miles, the card offers perks that make traveling less expensive and more comfortable. The only drawback to this card is the relatively high annual fee, so be sure you plan to travel enough in your business to ensure that the annual fee is worth it.
5. Best for Miles Rewards: Capital One Spark 2X Miles
If you plan to travel for your business but don’t want to pay a high annual fee, the Capital One Spark 2X Miles credit card could be right for you. As you spend money for your business on the card, you will earn miles that can be used for flights, hotels and car rentals booked through Capital One Travel. The great thing about this card is that your ability to earn miles is unlimited, so if you travel a lot, the miles can really add up quickly – and be there when you want to use them.
6. Best for Short-Term Loans: The Blue Business® Plus Credit Card from American Express
When you’re running a business, your need for cash will be greater than ever. But instead of taking out a bank or credit union loan, you can use a business card like the Blue Business® Plus Credit Card by American Express. Because the card charges no interest for the first year you own it, you can treat the card like a short-term bank loan and save your new business the expense of all that interest. Just be sure to pay off the balance before the interest kicks in to reap the rewards.
7. Best for Cash Back: Ink Business Unlimited® Credit Card by Chase
If you want a simple business credit card that allows you to earn cash back on all your business expenses, the Ink Business Unlimited® Credit Card by Chase is a great option. This credit card does not have complicated cash-back requirements or extra rules to keep up with. Instead, you can use the card for all your purchases and earn cash back. Then, you can apply the rewards to your credit card statement and save on business expenses, or you can choose to apply them toward business travel. The rewards never expire, so every time you use the card for business purchases, you can be sure that you will reap the financial rewards later.
Why You Should Use a Business Credit Card
For new business owners, business credit cards have a lot of benefits. Used correctly, they can greatly improve a few areas of your business.
Build Your Credit Rating
When you use business credit cards, it will help build your business’ credit rating. That’s important because as your business grows, you will need access to credit to fund its growth. But remember, just as it’s true with personal credit scores, you have to make your credit card payments on time each month. The credit card issuer will report your on-time – or late – payments to the credit reporting agencies.
Protect Your Personal Credit
When you apply for a business credit card, your personal credit score will take a hit from the application, but after that, your business credit card won’t affect your personal score. That’s because the balance you carry on your business card is parked on your business credit score. So, if you carry a large balance, it will not affect the credit utilization on your personal score.
Keep Expenses Separate
It’s considered best practice to keep your business expenses separate from your personal ones, and a business credit card will make it easy. For instance, if you charge all of your business expenses on your business credit card, it will make it easy to reconcile them at tax time. And many business credit cards offer solutions that allow you to transfer your business expenses to your accounting software.
Cut Back on Expenses
When you use business credit cards that offer cash back or travel miles, you can use the cards to help pay down your business expenses. For instance, if you travel in your business, the miles you earn while purchasing things on your business credit card can be used for business trips to help pay for flights, hotels and rental cars. And if you choose a cash-back business credit card, the cash back can be applied to your statement balance to reduce your overhead.
Business Credit Card Comparison
How to Open a Business Credit Card as Startup
Applying for and opening a business credit card is almost the same as applying for a personal credit card – with a few differences. If your startup needs a business credit card, here are the steps you should take to open a new account.
Understand Your Credit Score
Even though you plan to apply for a business credit card, the credit card issuer will use your personal credit history when considering your application. As a startup, you haven’t yet built a business credit history, so it’s important to understand your score before you apply for a card. You’ll understand this logic in the next step.
Decide Where to Apply
You have many options when it comes to applying for a business credit card, but to protect your credit score, you don’t want to apply to them all at once. That’s because each time you apply, your score takes a hit. And if you apply to a lot of cards at once, it can be a red flag for credit card issuers. Instead, you need to be methodical about selecting the right cards.
The first thing you should look at is the minimum required credit score for the card. Each business credit card has a minimal credit score that it will accept on an application, and if your personal credit score is lower, you won’t be approved for the card. It’s a great way to reduce the number of potential cards.
Next, look at the rewards, perks and fees for each card. Every business has different needs, and you should consider what you want from your business card. Do you want miles to use for business travel, cash back to help pay your expenses or a business credit card with a low APR and no annual fee?
Submit Your Application
When applying for a business credit card, you will have to answer the same personal questions as you do on a personal credit application, plus some specific questions about your business. For instance, in addition to your name, social security number, address and telephone number, you may be asked how long you’ve been in business, how many employees you have, your business name, the state in which your business was formed and your business address.
Once you’ve submitted all of the information, you’ll be notified of your approval, usually by email. Some credit card issuers provide an approval in as little as a few minutes.
Frequently Asked Questions
Who can apply for a small business credit card?
You don’t have to run a large business to apply for a business credit card. Anyone who earns income as a business can apply for a business credit card, including freelancers, people who have a side hustle, small business owners, independent contractors and gig workers. If you sell goods or services, you are eligible to apply for a small business credit card.
Can I use my business card for personal use?
While it’s not against the law to use your business card for personal use, it can complicate your taxes. To avoid improperly filing your business taxes, be sure to deduct any personal charges from the total so you don’t accidentally claim personal expenses as business expenses.
Additionally, when you sign up for a business credit card, the card issuer may ask you to sign an agreement that states you will only use the card for business expenses. In the worst case scenario, the credit card issuer may cancel your card if you use it for personal expenses.
Can you use an EIN to get a credit card?
If your business has an Employer Identification Number (EIN), the credit card issuer may ask you for the number on your application. But if you are a sole proprietor, you can also use your social security number. While not all small business credit card applications ask for an EIN, they do ask for a social security number.