Business credit cards can help your business get through the COVID-19

The right card can help your business with cash flow.

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Stressed small business owner, cashier

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. In this guide, we’ll discuss certain types of business credit cards that can help your business weather this uncertain economic climate.

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 low 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.

A business credit card can help your business by:

  • Helping you pay less interest. Look for cards offering low 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 and 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.

Low purchase APR credit cards

A low business APR card lets you make purchases with your card and pay very low (or sometimes 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 low business 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.

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 low 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.

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.

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.

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.

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.

Compare business credit cards

Name Product Purchase Interest Rate Cash Advance Rate Annual Fee Minimum Income Welcome Offer
American Express Business Edge Card
19.99%
21.99%
$99
N/A
Earn up to 42,000 Membership Rewards points in your first year. Earn a Welcome Bonus of 30,000 Membership Rewards points when you spend at least $5,000 on eligible purchases within the first three months, and earn 1,000 Membership Rewards points each month (a total of 12,000 annually) when you spend a minimum of $3,000 on eligible purchases
BMO Rewards Business Mastercard
14.99%
22.99%
$0 annual fee for the first year ($120 thereafter)
N/A
Get up to $470 in value in your first year. Get 50,000 BMO Rewards points when you spend $5,000 in the first three months. Plus, the primary cardholder will get the first year $120 annual fee waived.
BMO Air Miles Business Mastercard
19.99%
22.99%
$120
N/A
Get up to 3,000 AIR MILES Bonus Miles ($310 towards your purchases with AIR MILES Cash).
BMO Cashback Business Mastercard
19.99%
22.99%
$0
N/A
Get 10% cash back on gas, office supplies, cell phone bills and internet bills for 3 months.
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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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