Benefits of Small Business Credit Cards

When opening a small business, many entrepreneurs are unsure how to fund their operation. Instead of researching their best options they choose the immediate gratification of using their own credit cards “just for now” until everything starts falling into place. As a matter of fact, a study by the United States Small Business Administration shows 50% of small business owners who use credit cards use their own personal credit.

The risks of using your own credit to fund a small business are many and can often be severe. Personal expenses should never be threatened or overshadowed by your business aspirations, and combining the two is never a wise decision. Ask any professional financial advisor and they will tell you the same.

The most sensible and ultimately advantageous way to fund your small business is with a small business credit card. There are dozens of great options on the market and you are certain to find a card with the spending limit, rewards, and other perks you desire from a business credit account. Here is a list of the common benefits you will enjoy by using a small business credit card:

Build Business Credit
Unless you are happy with a small operation and ultimately a small profit, you have plans to grow your company exponentially. In order to acquire the higher credit lines or loans for a bigger office, more office supplies, etc., you are going to need a strong line of business credit. Once you have built up enough capital and made all of your payments on time, you can get the higher credit limit to take your company to the next step and beyond.

Reap the Rewards
The small business credit card market is highly competitive. In order for companies and banks to compete, they must offer a variety of rewards and you have the power to choose what will benefit you the most. If you travel a lot, a card offering frequent flyer miles is ideal. If you purchase supplies or software at a certain store you can get a significant discount in-store and online as well. The truth is, with just a little bit of research you can find the exact small business credit card reward program suited to your needs.

Itemize Your Purchases
You have enough paperwork to keep track of. Trying to keep receipts in order for all of your purchases can be a hassle for a monthly report, let alone your annual expenditure report. Bookkeeping can be a snap with a small business credit card, and you can easily itemize everything by category and know how much you spent on utilities, office supplies, and client lunches.

Monitor Employee Spending
The days of passing the company credit card back and forth are long gone. Not only can each employee have their own card, but as the account manager you can establish preset limits for each individual person. This will also help you know what departments are spending the most money and exactly what your company’s credit is being used for. All while your own primary card is in your wallet.

Defend Your Account
Like any line of credit, identity thieves attack and abuse small business credit cards. In fact, business accounts are a higher target, considering the size and randomness of a company’s credit card statement compared to one individual. Levels of protection depend on your provider, but you can choose what alerts you receive in addition to fraud protection and other similar services. With all of the actual purchases you need to make, no one can afford having their account hijacked.

Keep Business and Personal Separate
Yes, this was mentioned before but it is worth repeating. All of the benefits listed above would be jeopardized if you used your personal credit for business purposes and there is no way for you to grow. Also, having your own business credit account shows other companies you are a serious organization and it’s not just a hobby of yours. It will additionally help you avoid any unwanted IRS, tax, or money management issues altogether.

One extra benefit of a small business credit card is a possibly low APR, but be careful to read the fine print before opening an account. The APR, or Annual Percentage Rate, is applied to all of the unpaid balance once you’ve submitted payment. For example, if you spend $4, 500 in one month but can only pay $3,500, you will be charged interest on the additional $1,000. It is the exact same as a personal credit card but business accounts typically carry higher limits, so be careful not to spend beyond your means right away. Keep an eye out for “Teaser Rates,” which start off low but double or triple after a period of time.

Here are a few additional tips to keep your company’s credit in the 800’s:

• Keep All Balances Low and Pay Off Each Month
• Pay All Bills on Time – No Matter What
• Review Credit Score Quarterly and Report Any Errors
• Use Same Business Name and Address for Everything

Small business credit cards have come a long way and are the answer for any 21st century company that wants to succeed. Aside from cash and investments, your line of credit is directly related to how far you can really go with your dreams and ideas. Do the future of your business a favor – take a meticulous approach to finding the best small business credit card and follow this advice every month. You will thank yourself down the line when it’s time to ask yourself, “Can we afford to go bigger?”


With over 25 years of experience in the payments industry, Greg Constantine provides expert business leadership and marketing strategy development to SecureNet and its clientele as Executive Vice President and Chief Marketing Officer. From Fortune 500 companies to successful startups, Constantine has an extensive background in entrepreneurial guidance, marketing, sales, product planning, client services and operations management.

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