As a startup, you may have raised a large sum of money and have a large amount of cash in your bank account. It can take time to figure out how to secure a business credit card for a startup. So if you're looking for the best business credit cards for startups, read this article to learn about which cards we rank as the best
When starting a business, it’s essential to have the correct financial instruments at your disposal. A decent company credit card can help you pay for some of your venture’s startup fees and continuing expenses without relying too heavily on your resources. These credit cards offer incentives and privileges in addition to rapid borrowing capacity.
You may separate your business and personal money if you employ the correct mix of business credit cards. A business credit card can also help small business owners save thousands of dollars annually by offering competitive cash back and incentives designed to ease and reward daily business operations. Many knowledgeable freelancers, entrepreneurs, and sole proprietors are ideal candidates for a small business credit card.
But which card is best for you and your new business? We’ve compiled a list of the finest startup company credit cards. Your requirements determine the best business credit cards for startups for you. A travel card can make business trips more affordable and fun, while cash-back cards can increase your net worth even as you spend. Each offers a unique set of advantages.
In this article, we go through all the benefits so that when looking for new business credit cards, you can keep these elements in mind and any other features your company may require. Here is how to choose the best business credit card for startups, what it takes to get accepted, and how to get the most from your account.
What is a business credit card for startups?
Startups are companies in their early stages of development; usually, they are companies that have obtained investor backing. However, the banking requirements of startups and other new enterprises are often relatively comparable. A startup would utilize the same type of company credit card as any other small firm or other business.
When deciding which credit card is best for your startup, keep your company’s needs in mind. A business credit card is a card that is specifically developed for business owners and provides perks that are tailored to businesses. Business credit cards often have more considerable credit limits, better rewards potential, and capabilities to help you manage spending and staff cards.
Even if your new startup has cyclical tendencies, as a business owner, you must continue to pay your fixed business expenses like rent and electricity (such as snow supplies that experience high demand only in winter). Use your business credit card to make purchases to help you deal with these cash flow swings.
Businesses of all sizes can use business credit cards to create credit profiles that will improve their borrowing terms in the future. If your company has an emergency, your business credit card could potentially offer accessible funding. Business credit cards usually have unique benefits, but they sometimes have other consumer safeguards expected of personal credit cards.
How do business credit cards work for startups?
A business credit card for a new firm differs from a personal credit card in that it provides greater access to cash and allows you to track your expenditure for business-related expenses. It can also assist develop a company credit score and receive particular rewards for typical transactions. You make purchases using your card, and after each billing cycle, you get a statement that includes the total amount you owe and the minimum payment required.
No interest will be applied to such purchases if you pay your account in full each month. Interest will begin to build up on your balance if you decide to carry interest charges. Business credit cards are available with various interest rates, just like personal credit cards: You have a better chance of obtaining one if your company has a good credit rating.
However, a lot of business cards are essentially charge cards, which call for full payment each month. The fact that charge cards typically have no defined credit limit is their main benefit. The lack of a spending cap can make charge cards ideal for established businesses with significant monthly expenses built into the budget, even though they are not the best option for newer businesses with high startup costs that owners are looking to spread out over time or for those with unpredictable income.
You may issue credit cards to your staff and conveniently watch their daily spending. This eliminates the requirement for employees to be reimbursed for corporate expenses incurred on their credit or debit cards. It is also helpful to track fraudulent charges and determine where they originated.
Benefits of having a business credit card for startups
A business credit card, like a personal credit card, allows you to draw on a line of credit. Business cash flow might be irregular, but money is required to fund activities regularly. That’s when the line of credit on a company credit card comes in helpful.
Managing your expenses
Business credit cards can help you monitor and itemize your business costs. In addition to providing the standard advantages associated with credit cards, business credit cards assist small business owners in keeping work-related expenditure distinct from personal spending.
This division might be beneficial for accounting and tax considerations. The cards also make it simple for employees to make purchases and for employers to track their employees’ corporate transactions.
Company credit cards typically offer certain unique features intended to entice business clients. These perks may differ from those provided to individual clients. Some business credit cards, for example, provide cash back on purchases made at retailers that businesses are likely to frequent, such as office supply stores.
In anticipation of substantial business expenditure, corporate credit cards typically provide more significant sign-up incentives than individual credit cards. Many will also offer 0% interest as an introductory rate for a limited time.
Travel bonuses are another popular perk, as many organizations incur significant travel expenses. A business credit card may permit the holder to use an airline’s VIP club at airports or obtain hotel discounts while on business.
Furthermore, business credit cards may provide more flexible payback periods, intended to appeal primarily to enterprises with erratic cash flow. Issuers can provide longer durations of interest-free financing to company owners than the standard 21-day period for a personal credit card. If your business card offers this benefit, you will have a more extended grace period to pay down your balance and more freedom to make business investments.
Your company credit card may also qualify for a higher sign-up bonus. Monthly cash-back bonuses could also be increased. All this will be extra money to put back into your business. Business credit cards are designed for corporate requirements and often provide a more extensive credit line than a standard consumer credit card.
Drawbacks of business credit cards for startups
There are some significant drawbacks to business credit cards also that should be taken into account. You must choose whether the advantages of having a business card outweigh the disadvantages of opting for a business credit card.
When a firm does not meet the minimum requirements for credit score or other creditworthiness analysis, the lender may request a personal guarantee from the business owner or another individual. Personal security is a contractual term that holds the person applying for the card responsible for the card’s regular payments and fees.
Borrowers must study and comprehend the agreement’s provisions because many business credit card agreements have a personal guarantee provision regardless of the business’s creditworthiness. Any late payments on the card could be recorded on the person’s credit report and lower their credit score if the lender enacts the personal guarantee rules for recovery.
Fewer consumer protections
One significant drawback to remember if you apply for a corporate credit card is that these cards are exempt from the protections provided by the Credit Card Accountability Responsibility and Disclosure Act of 2009. (CARD Act).
Because of this, it’s possible that the consumer safeguards many people take for granted with their credit cards—like the prohibition on interest rate increases on outstanding balances—do not apply to their business cards. Some card issuers have voluntarily included some of these protections to their business credit cards, but potential customers shouldn’t assume this unless it is stated explicitly in the card agreement.
How can a startup obtain a business credit card?
When applying for a business credit card, you must provide more information about your company than when applying for a personal credit card, maybe including your company’s EIN and income figures. Your name, address, and other personal and professional information may be needed.
Most small firms will require a personal guarantee for business credit cards. As a business owner, you must apply for credit using your credit and ensure that you will be held personally liable for any debts the company accrues. Few cards allow applicants to apply without providing a personal guarantee.
Spend the time necessary to investigate your credit card alternatives for your business thoroughly. If you need help locating what you need there, check with other financial institutions after checking with your bank to see what they might have available. Take into account the features of each card, such as rewards, sign-up bonuses, and credit limits.
How can someone with no credit obtain a startup business credit card?
Your options for business credit cards will be significantly constrained if you have no credit or low credit, but you still have possibilities. Secured business cards and cards for people with fair credit, like Capital One, may be helpful.
How can a new business obtain a business credit card?
Even though new companies frequently have low revenue, you may still be eligible for a new credit card. Depending on the issuer and how you apply, you can support your application with a business plan or other proof of anticipated or future revenue.
You can also get a company credit card if you have a personal guarantee and a significant personal salary. You might gain a deeper understanding of the procedure and considerations used by your particular issuer by speaking with a representative over the phone or in person at a bank location.
How to make the most of your new business credit card?
As a startup, you may do a few things to maximize the value of your company credit card.
- Use sign-up perks to your advantage: Remember your sign-up bonuses. When you first sign up for a business credit card, you can get some great incentives. You might get a sizable incentive boost simply by using your business credit card. So, if your spending is sufficient, swipe your card to obtain this incentive.
- Use your reward miles to book a trip: If you frequently travel for work, you can use your reward miles to pay for future flights and hotel stays. In the long term, this will save you money.
- Be on time with your payments: The most straightforward strategy to utilize your business credit card is to settle your credit card balance. Nobody enjoys having to pay interest or late fees. Debt can readily accumulate due to missed payments. To avoid being charged a penalty for carrying over a balance, make sure to spend the money wisely and set aside the money necessary to make payments on time each month.
Best business credit cards for startups
Having the appropriate financial resources available to you when starting your firm is a wise move. Without having to rely too largely on your personal finances, a decent business credit card can assist you in covering some of the startup and ongoing costs of your enterprise. These credit cards offer rapid borrowing ability along with bonuses and privileges.
Which card, though, is best for you and your new business? The best business credit cards for startups are listed below. Depending on your needs, you should choose the best business card. A travel card can help you save money and have fun on work travels, and cash-back cards can help you grow your wealth even as you spend. Each provides a different set of benefits.
Capital one spark classic
For startups and business owners attempting to achieve their objectives while coping with ordinary credit, Capital One Spark Classic is the best business credit card. With a $0 annual fee, limitless 1% cash back on all purchases with no caps or restrictions, and the opportunity to improve and increase your business credit rating, the Spark Classic For Business Card offers a lot to like despite its lack of bells and whistles.
The rewards rate is reasonable and better than you may anticipate, with only a fair credit rating, even though it is not the highest we’ve seen. You can cash out your card rewards as a statement credit or a check. As long as your account is active, there is no minimum redemption requirement, and your points never expire. Remember that this card has a high APR of 27.24%, so you should use it to avoid carrying debt.
- Accessible to customers with subpar credit
- Endless 1% cash back
- No yearly charge
- Complimentary staff cards with programmable spending caps
- Limited benefits
- High APR
American Express blue business cash card
The American Express Blue Business Cash Card offers new cardholders an introductory period of 12 months with 0% interest on purchases (followed by a 16.24 percent to 24.24 percent variable APR) and a welcome offer of $250 after spending $3,000 in purchases within three months.
This enables your firm to pay for costly expenses while meeting the welcome offer’s minimum spend requirements and giving you some freedom to pay them off over the next year without incurring interest.
You’ll get 2% cash back on qualified purchases up to $50,000 yearly, then 1%. The Amex Blue Business Cash also has the American Express Expanded Buying Power program, which allows you to exceed your credit limit without incurring a fee in certain instances.
- Cashback of 2% (up to $50,000 each year, then 1%).
- There is no annual charge.
- For the first 12 months, there is a 0% APR on purchases (then 16.24 percent to 24.24 percent variable after that)
- There are no significant travel benefits.
- Bonus cashback is limited to $50,000 per year.
Ink business preferred credit card
Chase’s Ink Business Preferred Credit Card comes with a whopping 100,000-point sign-up bonus. You must spend at least $15,000 within the first three months to qualify. This card is designed for travelers seeking various airline and hotel options.
When you book through Chase’s Ultimate Rewards loyalty program, you can get a 25% discount. There are no foreign transaction fees. Therefore you will be charged only a little while conducting international transactions.
Because the Chase Ink Business Preferred is not linked with any particular airline or hotel operator, it offers excellent flexibility. Because you may not know where you’re heading at any given time as a startup, this freedom might be very appealing. It also provides free employee cards, and you will be notified immediately if they make any charges.
- Low annual fee of $95 in comparison to the potential rewards
- 3X points on travel, shipping, internet, cable, phone services, and advertising (on cumulative annual purchases of up to $150,000)
- Options for flexible point redemption include travel, statement credits, Amazon.com purchases, and gift cards.
- The bonus has a high minimum spending requirement.
- Does not provide a 0% introductory APR.
Bank of America business advantage customized cash rewards mastercard credit card
The Bank of America Business Advantage Customized Cash Rewards Mastercard credit card allows you to receive 3% cash back on purchases made at gas stations, office supply stores, travel, computer services, business consulting services, and television, telecom, and cellular bills.
You will receive 2% cash back on dining purchases and 1% on all other transactions. You can receive additional cashback rates on combined choice category and dining expenses up to $50,000 per year.
With the Preferred Rewards for Business program, you may earn up to 75% extra cash back on every transaction if you also have a Bank of America business checking account. The incentives will be credited to your statement, mailed to you, or put into your bank or savings account. In addition, after you charge $3,000 in the first 90 days, you will receive a $300 statement credit bonus.
- There is no annual charge.
- Possibility of extremely high cash-back returns
- Purchases have a 0% APR for the first nine billing cycles (followed by 15.24 percent to 25.24 percent variable APR)
- The increased rewards rate necessitates the use of a Bank of America checking account.
- Rewards cannot be transferred to airlines or other loyalty schemes.
- The maximum annual bonus payout is $50,000.
Wells Fargo business secured credit card
As difficult as it is to obtain startup funding when you have ordinary credit, it is far more difficult when you have low credit or no credit history at all. This is where secured business cards come into play.
The Wells Fargo Business Secured Credit Card is one of the finest credit cards for entrepreneurs with bad or no credit. With its versatile rewards structure that allows you to pick between miles and cash back, you can maximize your spending while simultaneously developing a solid credit history for your firm.
With the Wells Fargo Business Secured Card, you can earn 1.5% on every dollar you spend, or one point for every dollar spent, with a 1,000-point bonus every billing period you spend $1,000 or more. After making a $500 to $25,000 security deposit, you can begin using the card.
This deposit is applied to your credit limit. It could be better, but if you’re starting a business and need a reliable credit history, this gives you a chance to get your firm up and running while you develop the credit you’ll need later.
- There is no annual charge.
- A bonus of $300 in cash or 30,000 points.
- 5% cash back on eligible purchases.
- APR of 0% for nine months.
- Required security deposit
- A credit line with a maximum limit of $25K is available.
What to look for when choosing a credit card for your business?
It’s easy to become overwhelmed by the number of credit cards that allow you to earn points for business expenditures, but some cards are far superior to others. These pointers will assist you in selecting the best card for your needs and ambitions.
What kind of incentives suit you? Choose the incentives you want to receive. While some credit cards give you the option of earning cash back, others allow you to accrue transferable points, which may be worth much more than what a typical cash-back reward card offers. Remember the worth of your issues and how you can redeem them.
What are your main spending areas? Examine the bonus categories for credit cards. How will you use your credit card to make purchases? If your new credit card offers bonus categories like advertising, office supplies, restaurants, or travel, you’ll want to be sure you can use them fully.
Fees? Make sure you will receive enough points from the card to offset the cost of owning it by comparing expenses, including annual fees. This would be extremely helpful in the long term and make it easier for you to limit your expenses.
Will you enjoy the advantages? Examine carefully additional cardholder benefits from which you or your company can profit. Examples include free staff cards for your company account, purchase protection against theft or damage, extended warranties, and travel insurance protections like luggage delay and trip accident insurance.
Check your credit reports before applying and challenge any mistakes. If they reveal correct but unfavorable data, such as late payments and a high credit use percentage, take action to address these concerns.
Delinquencies cannot be fixed before they disappear from your credit report after seven years, but you may ensure that all subsequent payments are made on time. Reduce revolving balances until they are much below the credit limit. These two actions will both improve your results.
You must include your company’s name, contact information, and mailing address to apply. Although it can be used for a solo owner, you must include details about the company’s incorporation or partnership.
Be prepared to provide information on your company’s industry, annual revenue (from all sources of income), number of employees, years in operation, and projected monthly spending. Your Social Security number can be used if you don’t have an employer identification number.
Credit might be challenging to come by for start-ups and fledgling enterprises and ventures, but revolving credit in the form of a credit card can be done. Business credit cards frequently provide startups with choices that can assist in financing significant purchases with introductory APRs or simply making simple operations with convenience and rewards.
For sole proprietors and other small business owners, using a credit card to separate personal and business expenses is a terrific approach to simplify tax season. Before applying, carefully weigh your options and decide which advantages, incentives, and prices are ideal for you and your company. You’ll reap the benefits of having a business credit card as you go.