Business credit cards can be a great tool for growing companies thanks to perks, rewards, and streamlined business expense management. But there are two distinct categories of cards—small business and corporate.
Choosing the right one for your business is all about understanding the key differences and eligibility requirements. To help you choose in the small-business credit card vs. corporate credit card debate, learn more about how to qualify and the pros and cons of each type.
- Small-business credit cards provide a variety of credit-card perks and rewards and have lower qualifying requirements than corporate cards.
- There are far more small-business cards to choose from than corporate cards.
- Corporate cards usually don't require a personal guarantee.
- The applicant requirements for corporate cards tend to be more stringent than business cards.
How Small-Business Credit Cards Work
Small-business credit cards offer business-specific perks and benefits and help business owners keep their business and personal expenses separate. Some cards offer tools to help simplify expense tracking and perks like free employee cards. Even though business cards are intended for business-related purchases, the issuer will access your personal credit history when reviewing your application.
In general, to get approved for a business credit card, you must own a business or be authorized by a business to make purchases. You can be a sole proprietor, a partnership, an LLC, or a corporation. On the application, you will usually have to share both personal and business details. Depending on the issuer and the card, you might have to share business details like:
- Your annual revenue
- Monthly expenses
- Years in business
- Number of employees
- Personal income information
Just like with consumer cards, there are small-business credit cards that cater to different levels of spending and types of rewards. Some are focused on business travelers, like the Bank of America Business Advantage Travel Rewards credit card, while others offer cash-back, like the Spark Cash from Capital One for Business. There are secured business cards, like the Wells Fargo Business Secured Card for owners who don’t have the best personal credit, as well as more upscale cards with luxury perks, like the Amex Business Platinum Card. Even if you’re just starting or have a solo freelance business, there are entry-level business cards that might be a good fit for you.
Some banks may require you to have been in business for six months before applying for a business card.
Pros and Cons of Small-Business Credit Cards
Easier to separate and track business expenses
Help with business cash flow
Rewards and benefits
Help build business credit
Don’t offer the same level of consumer protections
Involves personal credit (in most cases)
Easier to separate and track business expenses: It’s important not to mix personal and business expenses if you’re an entrepreneur. And for companies with several employees, managing expenses can be made simpler if they all come from authorized users on one account so that data can then be integrated directly into your accounting software.
Helps with business cash flow: Small businesses might not always have cash on hand to pay a vendor or place an order. Business credit cards allow for some leeway.
Rewards and benefits: Some business credit cards let you earn rewards for common business expenses, including travel, office supplies, shipping, telecommunications, and online advertising.
Helps build business credit: Expanding businesses should think about activities that can help grow their business credit profile—opening a small- business credit card can do just that.
Doesn’t offer the same level of consumer protections: Consumers have multiple protections thanks to the CARD Act of 2009, but business-card issuers are not held to those same standards. As such, business cards may handle grace periods and payments differently than consumer cards, so be sure to read your card’s fine print.
Involves personal credit (in most cases): To get approved for the average business credit card, your issuer will review your personal credit report. And, if you don’t make your payments on time, your consumer credit score can take a hit.
There are a few business cards that don’t require a personal guarantee, meaning your personal credit status will not be impacted if you miss payments. However, the eligibility for those cards is strict.
How Corporate Credit Cards Work
Corporate credit cards (sometimes called “commercial” cards) are geared toward larger organizations that have millions in the bank and have many employees. They are intended to let employees charge their business expenses from one account, but, in most cases, the business is liable for the payment.
There are some exceptions where the business and the employee might share liability (such as if the employee used the card for personal spending), but that is rarer.
In general, issuers require applicants to speak with a sales representative to begin the corporate-card application process. The vetting process is more extensive than with a regular business credit card—being asked to share business financials and other documents is common. The applicant’s personal credit history is not a factor, however.
Some examples of corporate credit cards include American Express’ Corporate Green, Gold, and Platinum cards, and Business Extra Corporate Card. J.P. Morgan offers four different commercial cards: Single-Use Accounts, Purchasing, One Card, and Corporate Card. Capital One has a single corporate card: the One Card.
Pros and Cons of Corporate Credit Cards
No personal liability
Streamlined expense tracking and spending controls
Benefits, perks, and customer service
Much harder to qualify for
No personal liability: Except in rare cases of shared liability, employees can charge business expenses without worrying that it will impact their personal credit score.
Streamlined expense tracking and spending controls: Corporate cards have enhanced account management features to help large companies manage and track their card spending.
Benefits, perks, and customer service: Large corporate credit card accounts usually have a dedicated team of corporate account representatives as well as business-level rewards and benefits.
Much harder to qualify for: Corporate credit cards require millions in revenue or ample bank account assets and a business track record. The application process is also more involved than with business or consumer cards.
Higher fees: With some corporate cards charging annual fees for each employee card, there tends to be a higher cost associated with corporate credit cards.
Which Card Makes Sense for Your Business?
Deciding between a small- business and a corporate card comes down to size and scope. Unless your company is earning lots of revenue, you may not qualify for a corporate account, therefore taking the decision out of your hands. That said, if you have a choice between a corporate or business card, then you’ll have to weigh the pros and cons of both.
If you want to use credit cards as a way to streamline numerous employees’ business expenses, then a corporate card is a great option. Employees’ personal credit isn’t impacted, and the cards can help with your accounting. Also, spending is aggregated, thereby boosting rewards that the company can then reinvest in the business or use to save on expenses.
Regular business cards are more accessible to businesses of all sizes, from start-ups and solo entrepreneurs to midsize businesses. Though there is a personal guarantee requirement for the majority of these cards (meaning personal credit history is affected), there is a good range of card options to match different spending styles and reward preferences.