business credit card definition

If the lender enacts the personal guarantee provisions for repayment, then any delinquencies on the card could be reported on the individual’s credit report and damage their credit score. As part of the application process, you’ll also most likely have to provide a personal guarantee. This is a promise that, if your business can’t pay the bill for your business credit card, you’ll be on the hook for it personally. These may include cash back, with higher percentages offered on frequent business expenses such as wireless phone services, office supplies, shipping, and advertising. Some lenders also may offer a 0% introductory APR business credit card.

  • We should note that while you may enjoy legal protections if you default on a personal credit card, you are often personally liable for any debts incurred on a business card.
  • For instance, business travel cards offer perks like airline miles, airport lounge access and hotel points.
  • If your employees travel extensively, then choose a card with travel perks and protections.
  • These cards often offer bigger credit lines than a consumer card and tools that can help you keep track of accounting and ease filing your business taxes.
  • Many business credit cards allow you to set up activity alerts that arrive as text or email messages.
  • This credit may allow you to invest in the systems, equipment and people you need to in order to reach your business goals.
  • The two main types of revolving credit you can open for your business are lines of credit and small business credit cards.

Businesses with less than 50% ownership may achieve affiliate status based on contractual arrangements or other measures. Mining, manufacturing, wholesale trades, business credit card definition and utilities are generally measured by the number of employees. Some industries, such as transportation and information services, are split down the middle.

Business Credit Cards: Definition, Strategies, and Success Stories

The two main types of revolving credit you can open for your business are lines of credit and small business credit cards. With revolving credit, you can borrow money up to a preset credit limit. Once you pay down your balance, you’re free to charge up to your credit limit again, as long as the account remains in good standing. Most business card issuers allow cardholders to order credit cards for employees, which is helpful for companies with a number of employees going to different places and spending on various orders for the company. In addition, business cards typically come with higher credit limits, greater rewards potential and tools to help manage spending.

business credit card definition

There are many more reasons that a business owner might choose to apply for a business credit card. It builds a credit profile and history for the business and can help track business spending. It also offers a revolving line of credit with which to pay for unexpected expenses or large purchases, and can help cover bills without the need for immediate cash on hand. Good personal credit can be an asset and may help you qualify for business credit, but you shouldn’t sign a personal guarantee without understanding the risks. You’ll be putting your personal finances and credit on the line if your business can’t keep up with its payments. Note that personal guarantees may be required, especially for bank loans or for financing to younger businesses and those without strong business credit.

What to consider before getting a business credit card

Basically, if you have business expenses, you can get a business credit card, provided you have sufficient income and credit history to qualify. CreditCards.com is an independent, advertising-supported comparison service. The offers that appear on this site are from companies from which CreditCards.com receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within listing categories. Other factors, such as our own proprietary website rules and the likelihood of applicants’ credit approval also impact how and where products appear on this site.

business credit card definition