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Small business credit card vs. corporate credit card: Which is right for your business?

Keep reading to learn what small business and corporate credit cards are, how they differ, and how to decide which is right for you.
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Written by Erin Gobler on

As you're growing a business, having a credit card can help you manage your cash flow, build your business credit, access special credit card rewards, and more.

When you choose a credit card for your business, you might be wondering which type of card is best for you: a small business credit card or a corporate credit card? While the two have some similarities, they offer different perks and features and are designed for different types of businesses.

Keep reading to learn what small business and corporate credit cards are, how they differ, and how to decide which is right for you.

What is a small business credit card?

A business credit card is one that allows businesses of all sizes to manage their spending. Business credit cards can be used by entrepreneurs with no employees or large companies with many employees and high revenue. 

Business credit cards have a simple qualification process that usually requires the business owners to provide a personal guarantee, meaning accepting liability for the company's debt on the credit card. Many business credit cards allow companies to add employees as authorized users, as well as set spending limits and track their employee purchases.

Pros:

  • Better credit card rewards

  • Available to businesses of all sizes

  • No or low annual fees

Cons:

  • Personal liability for business expenses

  • Fewer reporting features

What is a corporate credit card?

A corporate credit card is one that is held by a corporation or eligible limited liability company (LLC). These cards are designed for large companies that have millions of dollars in annual revenue, high annual spending, and at least several employees. Corporate credit cards allow companies to grant many employee cards and allow the company to track expenses and easily set spending limits for their employees.

Corporate credit cards are tied to the finances of the company. To qualify for these cards, you'll need to prove that your business is creditworthy. You'll likely to be required to share financial statements to prove revenue, spending, and ability to pay.

Pros:

  • Reduced personal risk

  • Better reporting features

  • No effect on personal credit

Cons:

  • Lower rewards than small business cards

  • Higher annual fees

  • Limited to businesses with millions of dollars in revenue

Small business vs. corporate credit card: What's the difference?

There are several critical differences between small business credit cards and corporate credit cards:

Liability

With a small business credit card, the company's owner is often directly liable for credit card debt. That means that if the company goes out of business or can't pay its debts, the business owner is responsible.

But in the case of a corporate credit card, the business is responsible for its debts. The business owner isn't personally liable.

Eligibility

Small business credit cards are widely available. Anyone with a business of any size can apply, and as long as your personal credit is sufficient to qualify, then you can open a credit card.

Corporate credit cards, on the other hand, have stricter eligibility requirements. In most cases, card issuers require that companies have at least $4 million in revenue to qualify. Some issuers may also require a certain amount of annual spending or a certain number of employees.

Cost

Some small business credit cards charge an annual fee, but many are entirely free to use. Even those that do charge fees are usually limited to less than $100. On the other hand, corporate credit cards tend to charge higher fees because of the additional features they offer.

Credit impact

When you apply for a small business credit card, as the business owner, the credit card issuer is likely to run your credit to determine if you qualify for the card. Additionally, in many cases, the card issuer will report your business credit card activity to the credit bureaus, which means your company's spending can impact your personal credit.

When you apply for a corporate credit card, the card issuer will rely on your company's creditworthiness to determine if you qualify for the card. And rather than reporting your spending to your personal credit, they'll report it to your business credit.

Reporting

Many small business credit cards come with reporting features that allow business owners to track their spending and their employees' spending easily. But these features are even more robust with corporate credit cards.

Rewards 

Many small business credit cards come with similar cashback and travel rewards to what you would find on personal credit cards. These rewards allow business owners to gain extra money and perks on spending they're already doing. Corporate credit cards tend to have fewer rewards. 

Should you get a small business credit card or a corporate credit card?

A corporate card can be extremely beneficial if you own a large business with millions of dollars in revenue and many employees. It reduces your personal risk, makes it easy to manage employee spending, and more.

That being said, corporate credit cards aren't right for all businesses. Credit card issuers generally require that companies have millions of dollars in revenue before they're even eligible for a corporate card. Additionally, the perks of corporate credit cards are offset by some disadvantages, such as higher fees and lower rewards-earning potential. 

If your business has lower revenue than is generally required, only a few employees, or takes advantage of the rewards on your current small business credit card, then a corporate card may not be right for you.

Does a corporate credit card affect your personal credit score?

No, a corporate credit card won't affect your credit score in the same way that a small business credit card might. This is because the business, not the individual, is liable for the debt.

How do you qualify for a corporate credit card?

To qualify for a corporate credit card, your business must be both legally and financially established. They are often only open to businesses with millions of dollars in revenue and satisfactory business credit history.

What is the best small business credit card?

Small businesses have plenty of credit cards to choose from to help manage cash flow in their businesses. Visit our round-up of the best business credit cards available now to help choose the right one for you.


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