Business Credit Cards: Finance and Manage a Startup

If you’re deciding between a bank loan and a credit card to fund your startup, you may want to choose a credit card. Applying for a bank loan is not only a more extensive process with a long wait time, but you’ll also need a strong credit background too. There’s also another kicker. According to NAV, 72% of small business owners that apply for loans get rejected. Don’t take this rejection personally. Instead, consider opening a new credit card or business credit card account.

According to, 16% of startup founders used credit cards to get their business off the ground. If you have good credit, then obtaining credit cards and setting up low finance rates will be easier. Once you open a new line of credit you’ll want to avoid common pitfalls. Here are the do’s and don’ts for how to use credit cards to fund your startup.

Ask for a Credit Card Advance

It’s pretty common to finance a new business with credit cards. But be warned, you will have to pay back every cent, plus interest. Often times, personal credit cards don’t offer high credit limits. If your bank isn’t offering enough, ask for an advance. An advance lets your lenders know that you need more money. If you want to be granted more cash flow, be ready to present your case, sell yourself, and answer questions. Lastly, ensure that you can meet your monthly payments.

If one credit card isn’t enough to finance your business, consider opening a few more. Most people have several credit cards, so ask each of the lenders for a $500 increase. Before you call your financial provider, do an analysis of your current financial income and exactly how much you’ll need to start your business. You never want to bite off more than you can chew.

Don’t Mix Business and Personal Finances

Keep your business’ credit card accounts separate from your personal ones. Although it’s tempting to use business credit cards for personal expenses, it’s not worth the financial headache come tax season. Use your business credit card for only professional related needs. The less you owe, the quicker you can pay it all off. Establish a separate bank account for your business with separate credit cards ASAP. Take our advice and thank us later.

Organize Business Expenses for the IRS

As mentioned earlier, you’ll thank me later when you don’t mix business with personal expenses. To avoid an IRS headache, keep good records, go paperless, get organized and keep track of your business expenses.

Entrepreneurs paid interest on a business credit card for business-related purchases in that year are deductible.  If you want to calculate how much interest you paid refer to your bank statements.

You don’t want to miss out on deductions related to business expenses, so carefully record what you spent, the date, who you paid it to and the purpose for expenses.

Avoid Ruining Your Business Credit

Now that you’ve received enough cash flow to grow your business, don’t ruin its credit. Business credit allows you to get financing under your business entity’s name and is based on an assessment of your business by a business credit bureau. Getting business credit is important for starting a new company because it enables you to receive more financing than a personal loan. Using a business credit also protects your personal credit and assets from business debts, including credit card.

Business credit cards may seem tempting and an easy fix to financial problems, but be warned, if you’re not financially responsible, you can sink your business’ credit in the toilet. When used properly, you can get discounts, earn rewards, improve your credit, and solve cash flow needs.

Now that you’re informed on how to finance your startup with credit cards, here’s what you need to know about how to manage your business.

Should I sign up for credit cards with annual fees?

Business credit card companies don’t simply offer rewards without anything to gain. Many of them demand annual fees, causing many entrepreneurs to apply for free ones. While this may be the more financially responsible decision, many you may be losing out on some serious business benefits. Here’s why:

Business credit cards with annual fees have big sign-up bonuses

High fees usually come with high perks. This is made clear when you look at some fee-free lucrative sign-up offers. They go far beyond 0% intro APR periods and balance transfer deals.

For example, Chase Bank has several options for business credit cards. Here’s how sign-up offers compared in early 2018:

  • Ink Business Cash: As of this writing, there’s no annual fee, and the sign-up bonus is $300 cash after spending $3,000 in the first three months.*
  • Ink Business Preferred: As of this writing, there’s a $95 annual fee, and the sign-up bonus is 80,000 points after spending $5,000 in the first three months.*

In the example above, there’s clearly a major difference. 80,000 points can get you at least three round-trip flights in the USA ($300 will maybe get you one flight). That makes a $95 fee to own the card much more worthwhile.

Business credit cards with annual fees have cost-saving benefits

If the benefits of having the card greatly exceed the costs, it’s worth having one. Perks from some of the best card issues may include credits for car services, TSA PreCheck and/or Global Entry reimbursement, unlimited WiFi hotspot access, hotel, and flight upgrades, access to exclusive airport lounges, cash back on common office purchases—and much, much more.

If you’re thinking about getting a business credit card with an annual fee, look at the rewards the card company provides you. Most of the time, the fee becomes a non-issue when you consider the annual perks—especially when you’re a frequent traveler.

Best Credit Card Options for Business Owners with Poor Credit

Bad credit happens and you need good credit to get a business credit card. So what can you do if you’re applying for credit cards with poor credit? Check out a prepaid or secured credit card such as the Bento for Business card or the Capital One Secured Mastercard. These cards allow you to work towards a higher score while getting some of the same benefits of an unsecured card.

Bento for Business

The Bento for Business is a prepaid credit card. Though it cannot help you build your credit, it is still a great choice. However, say you want to start giving your employees a spending allowance—this card allows you to add users and control how much they can spend.

Capital One Secured Mastercard

Unlike the Bento for Business, the Capital One Secured Mastercard is an actual credit card that can be used to improve your credit score. It’s a secured personal card, so you’ll have to pay a security deposit, but your security deposit doesn’t have to be equivalent to your credit limit. Based on your credit score, Capital One will adjust the deposit amount.
There’s also no hidden charges or annual fee.

BBVA Compass Secured Visa® Business Credit Card

If you’re looking specifically for an option that allows you to have employee credit cards and want to build credit, the BBVA Compass Secured Visa Business Credit Card is a great choice. Expect to put down a security deposit of 10% your total credit line, with a minimum deposit of $500. You’ll also get free employee credit cards and one reward point per $1 spent on purchases that qualify.

Capital One Spark Classic for Business

The Capital One Spark Classic for Business is the only unsecure card on this list. If your credit score is about 580+, you should seriously consider this card.

The Capital One Spark Classic for Business offers

  • 1% cash back on all purchases with no cap
  • No annual fee
  • Year-end summaries
  • Free employee cards
  • Fraud protection
  • Access to Visa® SavingsEdge, an online portal that offers 15% at vendors like gas stations, restaurants, and hotel chains.

Even with bad credit, a business credit card can be a great tool for many small business owners. Though a secured or prepaid card may not be your ideal choice, they can be great temporary alternatives until you are able to build your credit score and qualify for higher end cards with larger limits.

Best Business Credit Cards to use for Travel

Business credit cards offer a variety of reward programs, but for the jet setting entrepreneur, travel can be one of the most attractive perks. However, with so many options, narrowing in on the right business credit can be difficult. Here, are a few of the top business credit cards for travel.

Capital One Spark Miles for Business Card:

  • A 50,000-mile signup bonus if you spend $4,500 in the first 3 months. This is worth $500 in travel 
  • Lifetime miles that don’t expire
  • You’ll earn 2 miles for every dollar you spend, period
  • Annual fee waived the first year; $95 annually after that
  • No blackout dates or airline or seat restrictions when booking flights

Bank of America Business Advantage Travel Rewards World Mastercard:

  • No annual fee
  • A 25,000-point signup bonus if you spend $1,000 within the first 60 days
  • 3 points per $1 spent on travel booked through Bank of America portal
  • 1.5 points for every $1 spent on all other purchases
  • 0% intro APR on purchases for the first nine billing cycles

After the first nine billing cycles, your APR will set in at a rate that will vary with the market Prime Rate, so be sure to see the issuer’s terms and conditions for the latest APR information.

Chase Ink Business Preferred Credit Card:

The points you earn with this card are worth 25% more when you redeem for travel through Chase Ultimate Rewards—for example, 80,000 points are worth $1,000 towards travel. Transferring those points to one of the bank’s airline and or hotel loyalty partners can make them even more valuable. The card offers:

  • An 80,000-point bonus if you spend $5,000 on this card in your first 3 months
  • 3x points on your first $150,000 per year spent on travel, shipping, advertising purchases with social media sites and search engines, and internet, cable, and phone services
  • 1 point per $1 spent on all other purchases
  • $95 annual fee

American Express Blue Business Plus Credit Card: 

  • A 15 month 0% introductory APR on purchases and balance transfers, which is currently the longest period currently available on the market
  • No annual fee
  • 2 points per $1 spent for your first $50,000 in purchases per year and 1 point per $1 for all purchases after that
  • Signup bonus of 10,000 points after you spend $3,000 on the card within your first three months

The Business Platinum Card from American Express:

  • A bonus of 75,000 points after you spend $20,000 within the first three months
  • 5 points per $1 spent on travel booked through
  • 1.5 points per $1 spent on qualifying purchases of $5,000 or more (up to 1 million points) and 1 point per $1 for all other purchases
  • A $200 airline fee credit for expenses such as checked bags
  • A credit for TSA PreCheck or Global Entry fees
  • Access to Amex’s network of airport lounges, including the Centurion Lounge and the International American Express lounges
  • Access to Delta Sky Club and Priority Pass Select lounges

Keep in mind that this card is a charge card. This means though there’s no preset spending limit, you’ll need to pay off your balance in full every month. This ensures you do not incur high fees.

It pays to make the most out of business credit cards to information. By choosing the right card for your business and using it wisely, you can take advantage of travel benefits and give your working capital a boost.

Choosing a Business Credit Card

At the end of the day, finding the best business credit card really comes down to what you need, what you buy for business and your credit eligibility. If you’re still deciding on which business credit card to use, you may want to try American Express.

Here are three of their best small business credit cards.

American Express Blue Business Plus

American Express Blue Business offers 2 points for every dollar spent, up to $50,000. After you’ve exceeded the $50,000 threshold, you earn one point for every dollar. With the American Express Blue Business card, there’s no hassle in making purchases in certain categories or paying an annual fee. This card is best for entrepreneurs who don’t plan to use it as their go-to source for cash flow because of the $50,000 limit to earn double points.

American Express Business Gold Rewards

If you plan to use your business credit card extensively and want to be rewarded for your expenses, consider applying for the American Express Business Gold Rewards. This card is touted for its point-earning flexibility as cardholders can choose the category in which they earn the most points. This, in turn, allows you to maximize your savings.

The biggest difference with this card is that it’s not a charge card. You cannot maintain a balance on this card which means the full amount must be paid after you receive your statement. Some purchases may be eligible for Pay Over Time which allows for extended payments.

American Express SimplyCash Plus

If you want to save as much as possible, the American Express SimplyCash Plus card makes that happen. The card offers 5% cash back on wireless telephone services and purchases made at office supply stores. You will earn 3% cash back from a category that you choose. Options include:

  • Direct hotel purchases
  • Direct airline purchases
  • Car rentals
  • Restaurants
  • Gas stations
  • Select advertising
  • Computer hardware, software, and cloud computing purchases

If your business makes significant purchases in one of these areas you can save a good chunk of money. Note that cash back perks stop once you spend $50,000 in each category. Once you top $50,000 in expenses, you only earn 1% cash back on all purchases. The perks reset each anniversary year.

Assign Your Employees Credit Cards

Are you tired of giving your employees cash or checks to do everyday business tasks? Go the convenient route and add authorized users or employees to your business credit card. When assigning employees company credit cards, make sure to do the following:

  • Have a written policy that clarifies your expectations and have your employees sign it prior to giving them a company credit card. This contract will ensure there is no confusion with respect to your policy.
  • Don’t allow your employees to spend beyond their means using your company business card, or you will be held liable.
  • Receipts are not enough anymore. Use an online invoice software to document the details of a receipt. The document should include the date of the purchase, the name of the place and location the purchase was made, invoice numbers if they’re available, and a brief description of the items or services paid for.
  • Put the credit card your employee’s name instead of yours. This is a safeguard for your company’s credit rating. This will also deter an employee’s temptation to misuse the card. If it’s in their name, the charges and credit score is a reflection of their spending, not your company’s. In a positive light, putting their name on the card also means they can improve their credit rating, especially if large expenditures are paid off every month.