Is a Corporate Credit Card Right for Your Small Business?

Cody Cromwell
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What a Corporate Credit Card Is & How It Works

A corporate credit card is one that is offered by a bank or financial institution that can be used by any business and comes with special benefits, fees, and rates. It can help your small business reduce its expenses and increase its profits.

While corporate credit cards are often reserved for businesses that process enough volume for this benefit, there are still many examples of small businesses with corporate cards. Many corporate cards are ideal for small businesses that don’t have a lot of revenue, don’t sell things enough to warrant opening a storefront, and can’t take advantage of other more sophisticated deductions.

A corporate card isn’t designed to pay for routine expenses; it is reserved for expenses that have a special overall benefit to your business. For example, a corporate card could be ideal for supporting a new marketing campaign, creating a new product or service, or paying a specific bill.

Perhaps one of the most important advantages of using a corporate card is that it helps reduce your business’s tax liability. While you are able to take advantage of lower rates for the normal expenses related to running your business, you cannot take advantage of the benefits that a corporate card has to offer. These benefits can include travel insurance, replacement travel documents, extended warranties, companion tickets, and traveler protections.

Who a Corporate Credit Card Is Right For

If you are a small business owner, chances are that your business has expansion plans, short term objectives, and long term goals. And if so, you’re on the lookout for new ways to expand your business. When you’re looking to a corporate credit card as a potential tool for your business success, you’re in luck. The International Corporate Credit Card offers the flexibility and potential that can give your business the boost it needs to grow. But before you think about jumping right in, you’ll want to make sure you’re on the right track.

The International Corporate Credit Card’s ease of use and application process can help your small business grow. In fact, many small business owners’ corporations sign up right away.

However, there are a lot of things to consider if you’re considering the use of one of these corporate credit cards. If you’re looking to determine whether or not this corporate credit card is right for your small business, here are a few things to consider.

Corporate Credit Card Rates, Costs, & Terms

Especially for small businesses, the terms and credit terms on a corporate credit card are the closest they will ever get to a –business” card. The good news is that the bad news is that the terms will be highly beneficial to the company and have no real incentive for the consumer.

One of the biggest advantages of a corporate credit card over a personal card is that the company card is never subject to the individual owner’s credit history. To get approved, the company must provide enough information that the bank can make the decision to give the company the credit lines it’s requesting.

Due to the fact that most corporate credit cards are issued to a large company with a strong and established credit history, the amount of available credit is often significant. This means that many companies are able to get excellent terms on their corporate cards.

If the company purchases the corporate card outright, there’s also the added benefit of cash back, for expenses that directly relate to the business. A large amount of advertising money can be spent at no additional cash back cost, and purchases can be applied directly to company expenses.

There are several things to be aware of, however, when dealing with a corporate credit card.

Typical Rates, Costs, & Terms of Corporate Credit Cards

A corporate credit card is a payment card issued by a bank to your company. The primary purpose of a corporate credit card is to allow your company to make purchases on a credit basis.

Corporate credit cards are offered through banks or credit unions, and are often available with a co-branded card. Not all corporate credit cards are issued by banks and non-bank issuers don’t all issue corporate credit cards.

Most accounts are issued with flat fees, although there are some corporate credit cards offered by issuers that go with variable rate pricing. If your company uses a corporate credit card for employees’ expenses, you may be able to save on payroll taxes and you’ll be able to track purchases through electronic statements.

After you have a corporate credit card, you may want to consider applying for a personal credit card.

The primary benefit of a corporate credit card vs. a personal credit card is the increased level of oversight you’ll receive if you have the corporate card, as opposed to a personal credit card. One benefit of a corporate credit card is that the issuer usually requires a pre-approval of accounts and purchases before issuing the cards.

How to Qualify for Corporate Credit Cards

Whether you’re brand new to business or you’ve been running your small business for some time, there’s a chance you’re still not accepted by all the major merchant credit card providers like MasterCard and Visa. This can be frustrating since credit cards can provide you with an efficient and convenient payment method.

However, it’s not as difficult or lengthy as it may seem, and in most cases, it’s very likely that you’ll qualify for your own merchant credit card.

The first step in qualifying for your own credit card is to research the different available card types. Below are a few of the most common credit card types and their advantages:

Commercial Credit Cards: One of the most common credit cards for small businesses, a commercial card will help you build a credit history and demonstrate your ability to make timely payments. It will also prove your business’s financial stability and growth potential, which are essential when applying for a merchant credit card.

Visa Signature Cards: In some cases, you may be eligible for a Visa signature card (also known as Platinum) since it’s often reserved for small businesses such as banks and airlines. It’s important to note that the qualifying criteria for these type of cards can be tougher compared to commercial cards.

Corporate Credit Card Providers

A credit card for your business is a great way to manage your cash flow, boost your profits, and increase sales. And thanks to corporate credit cards, you can take your business wherever your business takes you, without incurring a lot of extra charges.

Corporate credit cards offer more value than standard cards. So choosing the right one will help you keep your business well-endowed with capital, better manage your credit, and earn more profits.

To take advantage of corporate credit cards and vice versa, you may want to learn the ropes, tips, and tricks of credit card usage. To help you take the plunge, we’ve come up with a list of some of your options.

  • Corporate Credit Cards: Most Corporate Credit Cards are approved for business use and are ideal for small businesses with needs. However, some cards will restrict you to a certain type of business or limit the number of customers you can attract. Be sure to check that, and its other requirements.
  • Credit Cards from Big Banks: Big banks offer corporate credit cards to help businesses grow. Banks like JP Morgan Chase and Citi offer different options to choose from, depending on your company’s needs. These include corporate prepaid cards and corporate credit cards.

Types of Corporate Credit Card Liability

Full Corporate Liability

Joint Corporate & Cardholder Liability

While most businesses are probably familiar with the liability protection offered by standard business credit cards, North Carolina doesn’t limit credit cards to only those that are co-branded with a bank. To determine whether the credit card you’re considering is an acceptable form of liability coverage for your business, look into the liability protection it offers.

A business credit card that is co-branded with a bank provides the joint liability coverage you need when it comes to corporate expenses. If you have a personal credit card in addition to the corporate credit card, it’s important to note that if you use it for business expenses, the bank will be liable for those expenses and able to charge your business for them, in addition to the fees charged for your personal credit card. You can read more about this at the North Carolina Attorney General’s website.

Why You Need a Corporate Credit Card Policy

It makes sense when you think about it, but you’ll be surprised at how many small businesses employers and employees don’t think about that a corporate credit card policy should be part of their business.

A corporate credit card policy provides employees with guidelines on how to use business-related credit cards. As a small business owner, you may be surprised to learn just how much credit card debt your employees are racking up.

It’s easy enough for employees to abuse cards the corporate credit card policy won’t allow. If your employee is buying cigarettes, candy and dinner at restaurants with their business credit card, you may be in trouble.

It’s important to keep your employees in check when it comes to credit card use, but it’s equally as important to have a credit card for your small business. Here are some of the reasons why having a corporate credit card policy should be a small business staple:

Tells Employees the Rules

Having a credit card policy can help employers provide employees with a guideline on how to use all aspects of credit cards in a small business. It’s also an important way to help employees know what’s expected of them.

Pros & Cons of Corporate Credit Cards

We've all heard the tales of larger corporations who spend so much money on credit cards that they're able to close down their company the next week and owe their corporation more than their company makes in a year.

A large corporation's credit card program can seem like a no brainer…and it can also be a grand disaster. What makes one credit card program bad for a corporation and another a good idea? Let's take a look at some of the pros and cons.

Pros of Corporate Credit Cards

One of the main issues small businesses encounter whenever they apply for a line of credit is finding a bank or credit union willing to offer them a good rate. In contrast, corporate credit cards offer easy access to credit lines with low or no interest rates and also often provide assistance with things like start up money and business loans. Additionally, corporate credit cards can offer significant discounts and services that can save you lots of time and money.

Cons of Corporate Credit Cards

Corporate cards are definitely a great tool for any small business owner that you have your credit issues under control. These credit cards are offered by many financial institutions and business credit unions, and are not really for personal credit. These cards offer a huge sign-up bonus to go along with your credit limit. However, the downside of these cards is that they have a higher APR than a personal credit card. Your credit score and your personal personal credit limit really play a factor in how much you are approved for.

The problem with these corporate credit cards is that you are directly connected to your employer and some of the fraud that happens using these cards are a direct correlation to these creditors. These cards are not a good fit for a business owner because you need to be 100% committed to the business that you are working in. bouncing business cards may affect your business and customers in a negative way.

Alternatives to Corporate Credit Cards

There are several good alternatives to corporate credit cards for small businesses that don’t have a history of trade debts, outstanding bank loans, or the ability to get a co-signer.

There are three basic approaches to using credit cards: personal, corporate, and merchant. In each case, some advantages and disadvantages apply.

The most common type of business credit card is a personal card. With them, a business can charge expenses or sell items, and the owner of the company can then pay the bill from personal funds. The disadvantages of using a personal card are that it’s harder to manage than the other two options, it’s expensive to maintain your balance, and most personal credit cards have an annual fee.

The second option is a corporate credit card. Businesses use corporate credit cards when they want to make purchases anonymously, or if they are a sole proprietor or small business with a weak credit history. The disadvantages of corporate card usage are that the owner can’t get a personal line of credit, and the owner can’t apply for a business loan without a corporate credit card.

Small Business Credit Cards

The last few decades saw a lot of growth for small businesses. This was largely thanks to technology. If you were more than ten years old, chances are you’ve already experienced the difference of going to a doctor’s office instead of a pharmacy or that of buying clothes at a clothing store instead of a department store. Though this may be a good thing if you are a retiree or if you’re already financially stable, it can be overwhelming to many small business owners who can’t afford to spend thousands of dollars in upfront costs that are meant to extend your business further.

One way to counter this is by borrowing from the banks. A corporate credit card can offer you things you haven’t even dreamed of. Whether you’re looking for a credit card for your small business or for everyday use, you can find credit cards that you wouldn’t have thought of otherwise.

Having a corporate credit card can be worthwhile as it offers you:

  • Low interest rates with no annual fees
  • Loyalty incentive programs
  • Other perks in return for your business

From corporate credit cards to business credit cards, you’ll also find business loan terms of interest to any small business owner. However, there are some prerequisites for choosing a small business credit card.

Fleet Cards

A corporate card is an official credit card issued by a business. This corporate card has multiple uses such as enabling employees to have a single corporate card to pay for both personal and business expenses as well as enable business owners to use the card as a business expense account.

A credit card issued by a business can help your business grow in several ways. Perhaps they are able to use the card to get new business leads, access new business partnerships, offer discounts to loyal customers, and provide a great new customer acquisition incentive.

The key to using these benefits is to ensure that you only issue specific cards to specific personnel, that the appropriate people have access to the card, and that they’re only buying and using the card in accordance with business policy. If you do this, you’ll open yourself up for great rewards.

You also don’t want to be considered a credit card company. If you’re not careful, you could harm your business and even get sued by other businesses. When in doubt, consult your business attorney.

Business Prepaid Cards

With their annual fees dropping significantly, 10,000’s of merchants like Mercantile Bank, Visa, and MasterCard are now offering Corporate Prepaid Cards. Generating the income you need to expand your business, Corporate Prepaid Cards help you establish the credit history necessary to secure today’s loans and credit options.

The Corporate Prepaid Card can be a great option for businesses with low monthly sales, because there is no limit to the size of the balance that can be reported. For merchants that spend more than they generate, the card’s benefits will help you control your company’s spending, through credit purchases and purchases paid for in advance.

The cards also offer low cost payment processing, and can even help your merchant service provider, relieve business card processing costs.

Here are the benefits you get with a Corporate Prepaid Card:

  • Eliminate monthly fee
  • Reduced merchant fees
  • Easy and secure online purchasing
  • Ease of use and security of transactions when compared to business checks

Frequently Asked Questions (FAQs) About Corporate Credit Cards

Do Corporate Credit Cards Check Your Credit?

A credit card allows your small business to obtain credit for itself. This program is designed to help you establish credit that can be used for subsequent purchases that are already approved.

The steps necessary to qualify for this assistance vary by credit card program. Some businesses qualify while others may be required to go through a credit check.

A credit check is performed on your business to determine if you’re eligible for this assistance. This evaluation takes place on a national level, and it will not show if you’ve been turned down in the past. To be considered for approval, you will have to prove your business exists with numerous reputable clients during the last 2 years.

Once this evaluation is performed, you will be presented with an enormous credit limit that your business may use for purchases. The credit limit for each card tends to be in the thousands of dollars. This is an excellent tool for small businesses that keep accounts open throughout the year.

Try It

Before you apply, make sure you have enough money in the account to cover the first order. If you’re approved, you can charge your credit card immediately, enjoying the full credit limit. Keep in mind that you may be charged additional fees with each purchase. You must notify your credit card company if you fail to make a payment on time. You’ll be sent a notice and charged an additional fee.

Can Corporate Credit Cards Affect Your Credit?

Corporate credit cards are designed to help small businesses take advantage of credit products that they may not be able to use on their own personal credit cards. While the best corporate credit cards can be beneficial for your business, there are a few things you should keep in mind before joining up.

The first thing to be aware of is the associated interest rates. Corporate credit cards are offered by banks not small businesses, so they cannot offer lower points and annual percentage rates. The cards are also not insured by the FDIC or CU.

However, they do have beneficial features that can provide a significant boost to the revenues that your company earns. These features can include everyday discounts, credit limits that go up over time, access to special financing programs and so on. Companies that make corporate cards must pass very strict liability requirements to be categorized as such. These regulations have been established to make sure that both you and the lender can be protected.

In a nutshell, corporate credit cards are beneficial for the company, but they can make it more difficult for you to build and maintain a good personal credit rating. Also, if you’re thinking about applying for a corporate credit card, it can be a good idea to talk to a financial advisor, since credit card terms can affect anything from your personal debt-to-income ratio to your cash flow.

How Do I Get a Corporate Credit Card?

Bottom Line

Should Your Small Business Have a Corporate Credit Card?

When you are just starting up, it seems like a good idea to apply for a corporate credit card. After all, you’re trying to raise capital, you’re seeking investment and you want to stand out from the crowd.

However, there are some downsides to a corporate card, including:

  • The annual fees
  • Your credit line is in danger if your small business isn’t growing as fast as you had hoped
  • You’re also at risk if your business fails (or you are personally overextended)

The last thing you want to do is jeopardize your personal credit rating, so you’re essentially taking a risk that the card will fail to get you the capital you need or the funding you’re seeking. Or, worse, your business fails before you can pay it off.

Another thing to consider is the level of service you’ll get. As a small business owner, you are used to dealing with small minimums, mailing lists, copywriting, and word processing, for example. This is what makes the business owner’s life as an entrepreneur worth it.