Finding a credit card that meets the needs of your small business can take some time. This is because you’ll want to search for the card that offers the lowest annual fee and the best balance of benefits and rewards. Find out more about why you might want to sign up for a business credit card and learn how to compare cards to find the best deal.
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Business credit cards come as fee-free or premium cards and are usually reserved for sole proprietors or small businesses. They are very similar to personal cards in the way that you spend money. The main difference is that they often come with benefits and features that are tailor-made for businesses.
For example, some cards offer low interest rates and high maximum spending limits to accommodate large purchases. Others come with a large welcome bonus and offer a high return on rewards for business expenses such as office supplies, travel or dining out. Most cards will also allow you to take out multiple cards at once to distribute to employees.
What other types of business cards are there?
Aside from your run-of-the-mill business credit cards, there are two other types of business cards that you may want to consider in certain situations:
Business charge cards. Business charge cards usually offer higher credit limits and more comprehensive benefits. They will only be a good fit for your company if you make enough money to pay your balance off in full every month. You’ll be better off sticking to a regular business credit card if this isn’t feasible.
Corporate credit cards. Corporate cards are designed for larger businesses that have multiple employees and generate significant revenue. These cards often come with a dedicated account manager and offer complex expense-tracking systems. They also usually remove any personal liability you have to cover your business credit card debt.
When are business credit cards worth it?
The biggest benefit of business cards is that they allow you to track all of the money you spend on your business account separately from what you spend in your personal life. Many business cards also come with budgeting tools to help you manage your finances throughout the year. This can be a huge advantage when it comes to tax time.
Having a business credit card can also be a good idea if you want business-specific rewards and benefits. These include low interest rates, high credit limits, longer repayment periods for purchases and a higher return on points or cash back for business expenses.
Who can qualify for a small business credit card?
Anyone who owns or operates a for-profit business may be able to qualify for a small business credit card. This includes businesses that have multiple employees and generate significant amounts of revenue. It also includes sole proprietorships and businesses that are just starting out and don’t make much money yet.
You’ll typically need to have a decent personal or business credit score to get approved for a business credit card. This shows the bank that you’re likely to pay back your debts rather than default on payments. This is especially important for business cards since they often come with much higher credit limits than typical credit cards.
It’s also important to note that with business credit cards, you can be held personally responsible for any debt that your company racks up. This is something to keep in mind before you sign up for a business card instead of an alternative form of credit such as a business loan or line of credit.
Understanding personal liability for your business credit card
Unlike other forms of business debt, you will typically be held personally responsible for any debt your company generates with a credit card. This is because business cards don’t often abide by “limited liability” clauses that restrict debt to the company itself rather than to its owners.
This means that you’ll usually need to sign a personal guarantee stating that you agree to take on any business credit card debt your company owes. If you would rather not go this route, you may want to look into other options for business credit.
How to compare business credit cards
When you’re deciding which business credit card to use, you might want to compare some of the following features to find the best fit:
Annual fee. Business cards can come with no annual fee or a high annual fee, depending on which benefits you want. Your best bet is to try to figure out if paying an annual fee is worth the higher return you’ll get on points and benefits. Also keep in mind that premium cards usually come with an additional fee for employee cards as well.
Return on points. Many business credit cards offer a higher return on points or cashback for business purchases. This can include travel, gas, dining, business supplies, shipping costs and other business expenses. You’ll want to choose the card that offers the highest return on rewards for categories you spend money on most often.
Welcome bonuses. You may be able to qualify for a welcome bonus with most business cards. The size of this welcome bonus will usually depend on how much you spend on your annual fee. Start by comparing the bonus offers advertised for various cards as these can sometimes give you a year’s worth of points or more.
Perks and benefits. Some cards come with travel benefits such as travel insurance or airport lounge access. Others offer extras such as mobile-device protection or employee card-misuse insurance. Try to pick the card that offers the best mix of perks for the lowest annual fee (or opt for a no-fee card if you don’t want many extras).
Introductory rates. Some business credit cards come with promotional interest rates in your first few months. This type of card could be useful if you intend to make several large purchases as soon as you get your card. Just make sure that your rates won’t skyrocket at the end of your introductory period.
Everyday interest rates. Certain business cards come with interest rates just a few points over prime (currently 2.45%) while others charge up to 23.99% for purchases. You should decide whether you want to carry an outstanding balance on your card and aim for the lowest interest rate possible if this is the case.
Foreign transaction fees. If you plan to use your business credit card for business travel or international purchases, you may want to consider how much it charges for foreign transaction fees. A business credit card with no foreign transaction fee is ideal because it allows you to avoid this expense.
How to apply for a business credit card
You’ll follow the same process to apply for a business credit card as you would to apply for a personal card. Follow these steps to get started:
Compare providers. Compare business credit cards from a number of providers to find the best fit for your unique set of needs and budget.
Contact banks or providers directly. You may want to contact the bank or provider you’re interested in directly to get advice on the best card for your business needs.
Apply for the credit card of your choice. You’ll usually be able to apply for the card you want online by visiting the provider’s main page.
Fill out application details. Fill out personal details such as your full name, address, email and phone number to start your application.
Provide business details. Input details about your business such as the length of time you’ve been in business, your annual revenue and your business number.
Submit relevant documents. You could be required to show bank statements, business licenses, references from suppliers and other documents to support your application.
Submit to a credit check. You’ll have to submit to a personal or business credit check, depending on how long your business has been in operation.
Review final details. Read the fine print of your card and make sure you understand what you’re getting yourself into before you hand in your application.
Click submit. Once you’re ready to apply, click submit on your application or call your credit card provider directly to apply over the phone.
Benefits of business credit cards
There are many benefits to choosing a business credit card to finance your business. These include the following:
Easy to separate business expenses. You can track your business expenses separately from your personal expenses so that you’re better prepared for tax time.
Get benefits tailored to your business. Enjoy special benefits that are designed with your business in mind.
Earn rewards for business purchases. Earn a higher return on rewards for business purchases such as gas, shipping, printing, Internet and dining out.
Higher number of additional cards. Order multiple cards for your employees to use and set spending limits on each one to help control your budget.
Higher credit limits for large purchases. Get a higher spending limit on business cards than you might with personal cards.
Lower interest rates for long-term financing. Pay less interest on large purchases and outstanding balances with rates as low as 4% APR.
Helps build business credit. Build up credit for your business so that it’s easier to apply for various forms of business financing in the future.
Potential tax deductions for annual fee. Qualify for tax deductions when you spend money on your annual fee with some cards.
Special protections for employee misuse. Take advantage of special card features that monitor and protect against fraudulent use of employee cards.
What to watch out for with business credit cards
There are also a couple of drawbacks to consider with business cards:
Higher fees for added benefits. You’ll usually pay more for a business credit card than you will with personal cards if you want a high return on benefits and rewards.
Personal guarantee is often required. You may have to sign a personal guarantee that makes you legally responsible for any credit card debt your business generates.
Difficult to qualify with bad credit. You may not be able to qualify with bad credit, or you may end up paying higher interest rates to protect your provider if you default.
Less comprehensive benefits. Benefits may be limited since it’s assumed that any coverage you get will need to cover a larger number of cardholders.
Potential for employee misuse. You open yourself up to risk by giving out employee cards and you could be held responsible for fraudulent purchases.
Can only be used for business spending. These cards can only be used for business spending, so you’ll need to have a separate card to pay for personal expenses.
Types of business credit cards
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 business 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.
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 business 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.
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.
Business credit cards can help you track business expenses separately from your personal finances, which can be very useful when you file your taxes. These types of credit cards can also be beneficial because they let you earn rewards and benefits that are tailor-made to businesses. Just keep in mind that unlike other forms of business credit, you could be held personally liable for any business credit card debt your company racks up.
Frequently asked questions about business credit cards
Your best bet is to choose the rewards that make the most sense for your industry or field of work. For example, if you own a long-haul trucking company, you may want to look for a card that gives you extra rewards and benefits for gas purchases. You would likely want to avoid a card that offers extra points or cashback for office supplies, Internet or utility purchases.
You should be able to take out multiple cards based on your needs. This means you could issue one credit card to your administrative employees for office purchases. You could issue a separate card to your field workers for gas and dining out purchases. Using the right mix of cards can give you the best benefits and a solid return on rewards.
You’ll need to make note of that when you file your taxes and make sure to exclude that amount from your deductions. As much as possible, you should also keep receipts for your business with notes indicating what the expense was for and how it relates to your business. This will save you a headache when you’re trying to validate your costs.
That depends on which card you want to apply for. Some business credit cards only allow you to have a handful of additional cards while others let you apply for up to 99 extra cards. You should check how many cards you’re eligible to order before you sign up with a provider.
Yes. Many business cards offer benefits and perks such as travel insurance, airport lounge access and priority services at the airport. Just be aware that you’ll usually have to pay more for these cards. You may also have difficulty finding a business credit card that offers travel medical insurance.
You might find it difficult to get a business card with bad credit. Your best bet in this case is to speak to your bank about your options. You could also explore other forms of credit such as a business loan or business line of credit.
Yes. You can apply online for the business credit card of your choice by visiting the website of the provider you’re interested in. You can also click “Go to Site” next to the card you’re interested in the table above.
Claire Horwood is a writer at Finder, specializing in credit cards, loans and other financial products. She has a Bachelor of Arts in Gender Studies from the University of Victoria, along with an Associate's Degree in Science from Camosun College. Much of Claire's coursework has focused on writing and statistics, with a healthy dose of social and cultural analysis mixed in for good measure. She has also worked extensively in the field of "Blended Finance" with the Canadian government. In her spare time, Claire loves rock climbing, travelling and drinking inordinate amounts of coffee.
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