The Benefits of a Business Credit Card

Money may not be the solution to every problem in life, but it certainly helps businesses immensely. Having access to sufficient liquid capital lets your company stay flexible in changing market conditions, covering immediate needs and allowing you to make smart investments for the future.

If you’re like many sole proprietors, you may wonder if it’s best to apply for a company credit card or if your personal credit card is enough. The following are six advantages to business credit cards that will have a positive impact on your company’s growth.

1. Boosting Your Business Credit Rating

New businesses have a completely blank slate when it comes to credit. Isn’t that a good thing? Not really. Without a credit history to look at, lending institutions aren’t sure what to think. They don’t know if you will be able to repay a loan or not. This can make it more difficult to secure financing.

A business credit card can make a huge difference. By using it regularly, and being punctual with payments, your company starts to build a solid credit rating that grows over time. If you want to qualify for long-term loans in the future, there’s no better way to get started.

2. Keeping Business and Personal Finances Separate

As soon as your company has a business bank account, it’s a smart idea to apply for a dedicated credit card as quickly as possible.

  • To reduce personal liability for business expenses: To run your LLC or corporation as a distinct entity, first, you have to show that its finances are separate. The first step is to get a business credit card.
  • To simplify accounting: Keeping track of expenses is much easier with a business credit card statement to look at. This can also help you deduct business-related expenditures at tax time.
  • To minimize the effect of your personal credit: Building a solid business credit history reduces the pull of your personal credit rating for loans. If something damages your personal credit, your company can still have the solid footing needed to request financing.

3. Gaining Access to Increased Financing and Better Terms

Personal credit cards are geared towards the spending habits of consumers, which usually means lower spending amounts revolving around electronic items and home furnishings. For many businesses, this limited credit cap just doesn’t cut it. Weekly or monthly inventory purchases can quickly eat up available funds.

Credit cards, designed specifically for business use, feature much higher spending limits to account for common corporate expenditures. With access to $30,000–$50,000 or more, taking care of periodic purchases isn’t a problem. In addition, this type of business financing may offer extended interest-free repayment terms of 30, 60, or 90 days. This additional grace period leaves you with increased freedom to invest in your business.

4. Improving Business Cash Flow

Money flowing into and out of your business is a natural part of healthy commerce. Investors and banks like to see ongoing growth and profitability. How can corporate credit assist you in driving company expansion?

  • Inventory purchases: Whether it’s raw materials for manufacturing, physical inventory to drive sales, or other products to run your business smoothly, a credit card ensures you have exactly what you need when you need it. Also, thanks to increased spending limits, you can purchase larger quantities to reach more favorable supplier pricing brackets.
  • Cyclical expenses: Business expenditures are rarely the same every month. This is especially true with companies that deal with seasonal fluctuations. But, most businesses have to deal with some kind of annual payments, such as taxes or insurance premiums. Credit cards are an excellent way to cover expenses that fall outside the norm.
  • Unexpected emergencies: It’s always a good idea to be prepared for business emergencies. Knowing you have a buffer to keep the lights on, no matter what, gives you peace of mind. It also lets your company weather the unexpected without issues.

5. Enjoying Company-Specific Rewards

Personal credit cards may offer perks such as miles redeemable for free airfare. How do business options stack up? In many cases, they go above and beyond other types of credit cards. Business credit may offer bigger travel rewards, more miles, bigger cash-back percentages, or more attractive signup bonuses. This is because business owners are likely to spend far more on a monthly basis than the average consumer.

What makes these special perks even more desirable is that they’re tailored to your company’s needs. If your normal business activities involve traveling overseas to meet with clients, investors, or suppliers, it’s not hard to find a credit card that provides excellent airfare rewards to match. For owners that don’t need to accumulate travel miles or hotel points, monthly cashback bonuses based on total purchases may be a better fit, providing extra capital to invest back into the company.

6. Setting Up Custom Spending Controls

You can also use your company’s credit cards to keep tabs on employee spending habits. By giving each manager or department access to a specific card, you can clearly see which area is spending the most and what the money is used for. You may even be able to set tailored spending limits for authorized users. It is also helpful to develop a Business Credit Card Policy within your organization, to keep employees accountable for their credit card spending.

The Difference Between Debit and Credit

Are there any pros and cons to applying for a company debit card versus a credit card? While both types of cards may be a viable option for businesses, they each work very differently. Debit cards withdraw funds directly from your business bank account, limiting the amount you can spend to the liquid capital you have available. On the other hand, credit cards function as a type of small loan where the bank “lends” you money for purchases and charges you a certain amount of interest. 

Debit options can be helpful if company personnel tend to overspend or incur penalties. That said, credit cards provide benefits that many business owners simply can’t ignore:

  • Wider acceptance: Credit cards are accepted for payment virtually everywhere in the world, including online. While a growing number of brick-and-mortar stores accept debit cards, many e-commerce retailers do not support debit payments.
  • Improved fraud protection: With credit cards, your business finances are less vulnerable to theft. Even if a credit card is stolen, you can immediately put a freeze on the account and avoid having to pay for fraudulent expenses. In the meantime, your company’s bank account is completely untouchable. Debit cards may not offer the same protections since they can drain money directly from your account before you notice.
  • Better customer service: Credit cards often allow you to suspend or cancel payment if products or services are defective or incorrect. This provides some level of protection for your company against poor-quality goods or false advertising.

How to Get the Best Business Credit Card for Your Company

There are numerous corporate credit card options that you can choose from. At Blackhawk Bank, our helpful Business Bankers encourage you to ask questions to discover the best fit for your business. It’s good to compare things such as card perks, grace periods, interest rates, and fees when deciding on the right credit card. To fill out an application or request additional information, visit us online or contact a Blackhawk Bank expert.


Andy Williams, Senior Vice President and Senior Lender Business Banking on Perryville Road in Rockford Illlinois

Andy Williams
SVP & Senior Lender

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