Why do you need a small business credit card?

Jennifer Doss
Written by
Jennifer Doss
Why you should trust CardRatings
Why do you need a small business credit card?
Terms apply; see the online credit card application for full terms and conditions of offers and rewards.

The most relevant answer to this question will vary based on your situation. Maybe your primary need is to build a business credit history so you can qualify for a traditional small business loan in the future. Perhaps you’re looking for a way to give employees spending power without handing over your personal credit card or going through a reimbursement process when they use their own accounts. Maybe you just need a better way to monitor your business expenses.

Only you can judge what is most important to you about having a small business credit card. In general, however, there are a few key reasons a small business credit card could be a good idea for you and your business:

1. Increase your business cash flow with the equivalent of an interest-free small business loan

A business credit card allows you to use your card for business expenses throughout the month, and then later pay for those purchases. If you’re paying your balance in full before your card’s due date, you won’t have to worry about interest charges. This can be particularly handy if the bulk of your business’ revenue tends to come in once or twice a month rather than spread out evenly throughout the month. Freelancers or contract workers who are paid irregularly can certainly understand this situation.

Furthermore, a number of small business credit cards offer introductory 0% interest on new purchases made with the card. That means if you have some big expenses on the horizon– whether startup costs or some kind of significant capital expense– you could snag yourself months of interest-free time to pay off those purchases.

Please note that this interest-free cash flow situation only works if you pay off your balance completely every billing cycle (or by the end of the introductory period). If you don’t, the interest you pay could cut into your business’ bottom line.

2. Separate your personal and business expenses

You have enough details to keep up with already as a business owner. Trying to separate your business and personal expenses on a single credit card statement doesn’t have to be one of them.

A small business credit card allows you to easily segregate your business expenses from your personal expenses. Now, this may not seem like a big deal when you think about, say, separating your grocery bill from your office heating bill. But what about buying your kids’ school supplies at an office supply store and buying your business’ office supplies at an office supply store? Suddenly, those charges get a bit more difficult to tell apart on a credit card statement.

“We think it is important to keep these two types of finances separate,” says Brent Reinhard, chief marketing officer for business banking at Chase. “When we talk to small-business owners we hear that they spend a lot of time managing their business’ finances. Why would you make that job more difficult by co-mingling your business and personal finances? If you really want to spend time analyzing your business’ finances, it’s much easier if they are confined to one place.”

Besides making your life easier throughout the year, you’ll especially appreciate having all your business expenses separate from your personal expenses come tax time (and your accountant will appreciate it, too). Think of it this way, every time you swipe your business credit card, you’re potentially looking at a tax deduction; a business-expenses-only credit card statement will help you organize and maximize those deductions when tax time rolls around each year. Some small business cards even offer special tools to further help you stay organized such as integration with QuickBooks or other accounting software.

3. Earn rewards or cash back on your business purchases

You know the saying, “You have to spend money to make money”? Well, it’s true. Every business has expenses. A small business credit card, however, can soften the blow of those expenses with rewards or cash back earned on your spending.

Business credit cards can allow owners of businesses both large and small to quickly generate rewards points, which can then be turned into free airline miles or healthy cash-back bonuses. Even freelancers and work-from-home-contractors have expenses, so you might as well rake in rewards for what you have to spend anyway. Small business credit card rewards come in a number of forms including a flat rate for all your purchases or tiered rewards in certain categories, many of which are designed specifically with common business expenses in mind– think travel, shipping, office supplies, advertising, etc.

As an added, well, bonus, many small business credit cards offer healthy signup bonuses for new cardholders. Many of these bonuses equal a few hundred dollars in cash back or enough miles or points for a round-trip flight or two.

4. Enjoy features and perks specialized for small business cards

Small business credit cards are specifically structured to meet the needs of small business owners. That means the reward tiers tend to focus on common business expenses, and features like free additional cards for your employees and business management tools are pretty standard.

In addition, small business cards also tend to come with higher credit limits than personal credit cards do; something cash-strapped business owners might really appreciate when needing to purchase equipment or supplies to help their business. Ultimately, your credit limit will depend on several factors, including your personal credit report. If your credit is in good standing though, you can generally expect your business credit limit to be larger than your average personal credit card.

Additional advantages of many small business cards include access to specialized expense tracking software and, in some cases the option to spend above your credit limit penalty-free or extend your billing cycle. That said, business owners must still keep a tight rein on their spending. Don’t make the mistake of thinking that misusing your business credit cards can have no impact on your own personal credit score.

One thing small business credit cards DON’T come with are the same protections offered to consumers under the Credit Card ACT of 2009. A lot of the consumer-friendly aspects of the Credit CARD Act of 2009 don’t apply to business lines of credit, so don’t expect the same protection in terms of rate increases, which fees a card can charge, how you’re billed and when you’re expected to pay.

5. Build a credit history for your business

This is pretty basic, but definitely something to note. If you plan on being in business for years to come, you’re going to want a solid credit history for your business. Sure, you can work toward that by paying your utility, rent and other bills on time, but having a small business credit card and using it responsibly can also help you along that path.

expert icon

Ask the experts:

Why do you use business credit cards for your business?

Jennifer Doss
CardRatings Executive Editor

Jennifer Doss is a credit card analyst and the executive editor of CardRatings.com. She has worked as both a print and online journalist and has over a decade of experience in the media industry. Her published work has covered a broad range of topics, from...Read more

Featured Partner Cards:


The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.

This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company. CardRatings.com does not review every company or every offer available on the market.