Managing Money In A Crisis
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How business credit cards can help your business get through the coronavirus downturn
The right card can help your business with cash flow.
Business Credit Card Guides
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From closing doors to experiencing reduced cash flow, many businesses are being impacted by coronavirus. In light of these difficult times, the right business credit card can sometimes help. A business credit card can help your business by:
- Helping you pay less interest. Look for cards offering 0% intro APRs on purchases or balance transfers.
- Giving you more working capital. You can benefit from credit card grace periods — the time during which you can pay off your balance in full to avoid paying interest.
- Reducing risk. In some cases, you can get a credit card without having to personally guarantee the debt.
- Paying rewards. If you’re diligent about avoiding interest, rewards can give you more room to pay certain expenses.
In this guide, we’ll discuss certain types of business credit cards that can help your business weather this uncertain economic climate.
0% purchase intro APR credit cards
A business 0% intro APR card lets you make purchases with your card and pay no interest for a period of time. In some cases, this type of card will offer an intro APR on balance transfers as well.
How can these cards help?
If your business is in a cash crunch, a 0% purchase intro APR card can help you spend on necessary expenses without accruing interest.
What to watch out for
- An intro APR doesn’t last forever. If you haven’t paid off your balance in full by the time your intro APR expires, your debt will start accruing interest at the normal rate. This ongoing APR will vary based on your creditworthiness.
- Penalties for late payments. If you’re delinquent, your card issuer might cancel your intro APR. Then, your balance will start collecting interest at the normal rate. In some cases, your issuer might even apply a very high penalty APR instead.
Recommended card
The U.S. Bank Business Platinum offers the best purchase intro APR on the market. You’ll get a 0% intro APR on purchases and balance transfers for 20 billing cycles. After this promotional rate expires, your rate will revert to 9.99% to 17.99% variable.
Balance transfer credit cards
With a business balance transfer card, you can move debt to the card and pay no interest for a period of time. In some cases, the card will also offer an intro APR on purchases as well.
How can these cards help?
If you’re currently paying high interest on credit card debt, you can move that debt to a card with a 0% balance transfer intro APR. Then, you can pay off that debt over time without worrying about interest.
If your issuer allows it, you can move debt from other sources such as loans.
What to watch out for
- Your intro APR will expire. If you don’t pay off your transferred debt by the time your intro APR expires, your balance will start accruing interest at the normal rate.
- Penalties for late payments. If you make a late payment, your issuer might cancel your intro APR. At that point, your balance will start collecting interest at the normal rate or even a penalty rate.
- Fees. You may have to pay an annual fee for your card. And if you’re making a balance transfer, you’ll likely have to pay a transfer fee — typically 3% of the transaction.
Recommended card
As with purchase intro APRs, the U.S. Bank Business Platinum is an excellent pick for a balance transfer intro APR. You’ll find the best promotional interest rate on the market.
High limit credit cards
Issuers of these cards often give generous starting credit limits and may be willing to raise your limits substantially. For more information, check out our guide to high-limit business credit cards.
How can these cards help?
High limit credit cards can help you make essential purchases — and potentially pay vendors — when cash is tight. With a higher credit limit, you have more room to put expenses on your card.
What to watch out for
- You might not get the credit limit you were hoping for. Issuers use many factors to determine your credit limit, such as your credit score and business income. They’ll give you only the amount of credit they feel you can repay.
Recommended card
Brex for Startups usually offers limits that are 10 to 20 times higher than you’ll find with other business cards. Keep in mind this is a charge card, so you must clear your balance every billing cycle.
- The first corporate card for startups
- No personal liability or security deposit needed - your personal credit score won't be affected
- Minimum of $100,000 of funds in corporate bank account and US EIN required
- Earn 7x points on rideshares, 4x points on travel booked through Brex Travel, 3x points at restaurants, 2x points on software subscriptions and 1x points on all other purchases
- Get a credit limit 10 to 20 times higher than traditional business cards
- No foreign transaction fees
- Build business credit - Brex partners with Experian to report your on-time payments
No-annual-fee credit cards
A no-annual-fee business card requires no initial fee to open an account. Oftentimes, you’ll also be able to open employee cards at no cost.
How can these cards help?
These cards can help if you don’t need anything fancy — such as rewards or travel benefits — but you want a simple card that lets you start using credit. Some no-annual-fee business cards even offer rewards.
What to watch out for
- You won’t find the highest signup bonuses. The largest offers typically come with business cards that have annual fees.
- Rewards aren’t the highest. If your card offers rewards, they’ll usually be less impressive than what you’d find with annual-fee products.
Recommended card
The Chase Ink Business Unlimitedâ„ Credit Card is a simple and flexible card that offers unlimited 1.5% cash back on all purchases. It also offers a generous signup bonus and good intro APR on purchases.
Another great option with no annual fee is the Ink Business Cashâ„ Credit Card, which offers bonus cash back in select business categories.
No personal guarantee credit cards
With a no-personal-guarantee card, you won’t be personally liable for your credit card debt in case of business failure.
How can these cards help?
In an uncertain economic time, you might be wary about committing your personal assets to back your credit card debt. A card with no personal guarantee can help you decrease the pressure — at least slightly — while you steer your business.
What to watch out for
- You’ll have fewer options, and approval might be difficult. Issuers typically require personal guarantees to ensure they’ll be repaid. Cards with no personal guarantees are usually for more established businesses with high annual revenue.
Recommended card
Among cards with no personal guarantees, the Brex for Startups is unique. Its main requirement is that your business has $100,000 in the bank, which is far lower than other issuers will ask to see.
Rewards credit cards
Rewards credit cards for businesses pay cash back, points or miles as you make purchases. They usually also offer signup bonuses that give you a large haul of rewards after you meet spending requirements.
How can these cards help?
While cash back might not produce significant revenue, they can give you extra capital to pay off certain expenses. For example, if your business often spends on certain office supplies that fall within a rewards category, you can collect points that may be helpful after this downturn ends.
If your card offers a signup bonus, you could collect a large amount of cash back, points or miles.
Altogether, the additional rewards can help you make necessary expenditures for your business.
What to watch out for
- Interest. If you don’t pay off your balance in full each billing cycle, your debt will accrue interest. This will essentially erase your rewards.
Recommended card
The Capital One® Spark® Cash for Business offers unlimited 2% cash back on all purchases, regardless of category. You’ll also find a good signup bonus.
Helpfully, the card offers a $0 intro fee for the first year, after which the annual fee will be $95.
Compare business credit cards
What businesses would benefit most from using a business credit card during a financial crisis?
- Businesses that need just a little more room to manage cash flow. If your business can still manage to meet expenses and pay vendors but cash flow is a bit tight, a business credit card can help. In many cases, you can take advantage of your card’s grace period to pay off your balance without interest.
- Businesses that need low interest rates. A 0% intro APR card can help keep your business afloat without loading you with expensive interest payments. But remember, you still need to pay off your debt. You’ll also start collecting interest if you haven’t paid off your balance by the time your intro APR expires.
- Businesses that can make use of rewards. Cash back, points or miles can help alleviate expenses. While they won’t create significant revenue, every bit can be beneficial during tough times. Keep in mind that it only makes sense to collect rewards if you’re paying off your balance in full each month.
Bottom line
Certain types of business cards can be especially helpful during a downturn. Mainly, these include products that help you better manage your cash flow. If you need help deciding, check out our guide to the best business credit cards.
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