What To Know About Getting A Small Business Credit Card

Whether you are a sole proprietor or the new owner of a small business, the use of a small business credit card can be a great option for …

Credit Cards

Whether you are a sole proprietor or the new owner of a small business, the use of a small business credit card can be a great option for getting the capital you need very quickly. It can also help to ease and streamline the process of accurately managing the transactions of your business. Each type of small business credit card comes with its own set of pros and cons. Determining if you should apply for one and which kind to apply for can be a big decision. Below are some tips for figuring out the ins and outs of a small business credit card so that you can determine if its right for your business needs. This can be especially beneficial for those that cannot find a bad credit loan option for their business when they are in need of capital.

Approval Based On Two Things

When you apply for a small business credit card, your eligibility will be based on both your personal and your business credit history. If you have a new business and a less-than-perfect personal credit history, you might find it more difficult to get approved for a card. Credit card issuers for small business credit cards may also be more swayed in favor of approving your application if you have up-to-date insurance policies and business licenses. These show that you are a small business owner running a legal enterprise.

Liability For Debts

The liability that comes with a small business credit card can depend on whether the card and issuer offers “joint several liability” or “commercial liability.” For commercial liability, your small business will be liable for all of the debts incurred on the card. The other means that both the owner and business are responsible where the debts are concerned. Before you sign on the dotted line for a small business credit card, be sure you know fully what your rights and your responsibilities are. There could be more at stake than you realize if you fail to pay your small business credit card debts.

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High Credit Card Limits

In general, business credit cards will command higher credit limits than personal cards. In some cases, business credit cards may not carry a spending limit at all. However, these types of credit cards will usually come with annual fees. It has been found that around thirteen-percent of small business owners carry balances on their credit cards of more than $25,000.

Flexible Payment Options

Most credit card issuers for small businesses realize that cash flow can be a little unpredictable at some points. This is why many of the popular credit card companies will offer business-friendly payment plans. Some great options that might be offered are ones such as getting a discount for paying your balance off early or accepting the option to defer your payment while your cashflow is slow. The payment terms that are available will also vary great from card to card. Other cards may come with separate finance options for large business purchases. You could make a big purchase and get a separate payment plan and interest for that single purchase compared to your routine small business purchases.

There are many great reasons to consider a small business credit card. They can really help business owners separate their personal and business expenses. This is essential for avoiding any problems with your accounting department or with the IRS.


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