Small Business Credit Cards

William Anderson

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Businesses use credit cards to pay for a range of different business expenses. There are many different small business credit cards on the market; each has different potential benefits they can offer to small business owners. Businesses use the cards to avoid tapping into their cash flow reserves.

How to Choose a Small Business Credit Card

In recent years, credit card issuers, as well as banks, have been making credit cards more accessible to small businesses. Start-ups are finding that it is simpler to open a new credit card account than it was in years past. One of the benefits of opening up a credit card account for the business is that this is a very good way of establishing credit in the business’s name. However, with all of the offers available, it can be challenging for a new business owner to know where to start.

There are several key points to keep in mind prior to taking out a small business credit card. Some of the factors to take into account when considering the application of a new business credit card include your spending habits, whether or not the business will carry a balance each month, and what the interest terms and fees are. By taking an honest look at these points ahead of time, you can be well on your way to making the selection of the small business credit card that is most aptly suited to your business’s spending style.

In the event that the credit card will be carrying a balance, and the business has good credit, you may be able to obtain very low-interest rates and even 0% interest rates for the primary year. Some credit cards for small businesses even come along with fixed interest rates which are very secure and provides peace of mind against fluctuations and interest rate hikes. If the business owner is consistent with paying the balance off in full each and every month, they may be able to access cards that have longer grace periods and even generous rewards associated with using them.

Small Business Credit Card Rewards

There are many small business credit cards that reward users via reward programs. If a business owner knows that they will be doing a lot of traveling, then it is essential that they consider applying for a small business credit card that features airline mile rewards. However, if travel is not a major component of your business, consider credit cards that provide the user with the benefit of cash back. Often, it is possible to find credit cards that provide between 1% and 5% cash back, however, sometimes there is fine print It’s important to review the terms and fine print since higher cash back payments might only be provided for specific types of purchases. In addition to cash back, some small business credit cards offer benefits solely for using the card like restaurants, retailers, access to hotel upgrades, or airport lounge perks.


It’s important to be aware that there are many small business credit cards out there that charge fees for their usage. Some credit cards charge an annual fee, however, this doesn’t mean it shouldn’t be considered. If the benefits being offered make the annual fee worth it, then you can consider that particular card for your specific business needs. Additionally, certain cards which offer grace periods also provide more time to pay such as up to 30 days to make a payment with no additional fees. However, if you plan on carrying a balance on your small business credit card, it makes sense to get a lower rate instead of a card that doesn’t have an annual fee but has a higher rate.

Small Business Credit Cards

How Can a Small Business Credit Card Help My Business?

There are many reasons you should use a small business credit card in your business. Many businesses that have credit cards use them for the following reasons:

Easy Access: If you don’t have a substantial credit history, a small business credit card can be one of the easiest ways to access capital from a lender. Many lenders who will not issue loans to new businesses may be more inclined to issue them a credit card.
Rewards: As you are probably aware, consumer credit cards offer their borrowers a range of awards to entice them into using their credit cards. The same goes for business credit cards a range of benefits such as air miles or cash back incentives are available to businesses who use credit cards.
Easy Use: Credit cards give small businesses an easy and centralized way to pay for various expenses in the day-to-day operation of their enterprise

Differences Between a Credit Card and a Line of Credit

Credit cards and lines of credit are often associated with one another because they are both forms of revolving credit. And while this is true, there are also many differences between the two forms of financing. Revolving credit is a form of credit that allows borrowers to tap into a predetermined amount of capital. Unlike a traditional loan, borrowers only pay interest on the money that they access — and they only have to pay back the money that they access. If borrowers don’t access any of the capital on the credit card or line of credit, then they don’t pay anything. But unlike credit cards, lines of credit allow you to access cash without any associated cash advance fees. For this reason, they are considered a more flexible type of financing.

Business Line of Credit Facts

A business line of credit provides a flexible vehicle for a business to obtain funding either from a private lender or from a bank. If your small business is in startup phase or needs reliable access to cash, then a business line of credit can provide the perfect solution. When using a business line of credit, interest is assessed only when the capital is used not on the entire line of credit. A business has a set period of time, usually within 6 to 12 months to repay the funds which were borrowed. A business line of credit is often considered as a mixture of both a credit card and a loan. When a small business receives a line of credit, it is typically in the amount of up to $250,000. However, some businesses have received up to $1 million if they have been established for a considerable length of time.

In some instances, lenders that extend business lines of credit have fees associated with the loan. The fees are usually in addition to the interest that is assessed on the funds that are borrowed. The fees can include origination fees of between 1% and 5%, and a draw fee when an amount is withdrawn from the line of credit. The draw fee is usually around 1% and if there are no withdrawals, then there is an annual fee of around 1%.

Uses For a Business Line of Credit

There are many different uses for the funds made available through a business line of credit. The funds can be used for the purposes of paying payroll expenses, utilities, operational costs such as rent, and other working capital requirements that a small business credit card can’t cover. Business lines of credit are also great for businesses which rely heavily on inventory for their source of cash flow. The line of credit helps bridge the gap in revenue and provides a cushion for managing consistent inventory levels in all seasons of the year.

A business line of credit is a great option for businesses that have unpredictable expenses and unsteady cash flow. It is also of great help for businesses that have long wait times for their accounts receivable. With no requirement to draw on the funds until absolutely necessary, it can be beneficial to have a line of credit as a backup funding source in times of need or in the case of an unforeseen emergency.

Small Business Credit Cards

Which Option Is Best For Your Business?

When it comes to learning about which option is the best one for your business, it can be a hard decision to make. However, choosing between a line of credit and a credit card for your business doesn’t have to be difficult. In fact, many small business owners elect to have both a credit card and a business line of credit. This allows the business owner to tap into each funding source as needed for different purposes. When taking into account the differences between a business line of credit and a credit card, it helps to consider the relevant factors. These include the annual costs, fees and rewards, accessibility to capital, and repayment schedules.

Comparing Fees & Rewards

The first thing to keep in mind when it comes to comparing fees on a line of credit vs. a business credit card is the fees associated with each. A business credit card has rewards programs while a line of credit doesn’t feature those benefits. However, a business credit card with sizeable rewards tends to have an annual fee associated with them. Before deciding on a line of credit or small business card, it is important to consider the relevant rewards and fees in order to have a fair assessment of which options work best for the financial goals of your business.

Access to Capital

The primary difference between a small business credit card and a business line of credit is their access to capital. A line of credit generally has a higher credit limit than a small business card offers. In addition, when drawing from a line of credit, the cash is withdrawn into the business checking account. However, a business credit card is typically only utilized for credit. If cash is taken out from the card in the form of a cash advance, this is usually accompanied by heavy fees and high interest rates.

Repayment Schedules

Learning about the repayment schedule of a small business credit card vs. a line of credit is also helpful when making a decision on funding. A credit card necessitates minimum monthly payments while a business line of credit is structured more like a loan. The general repayment terms usually fall between 6 to 12 months. Keeping in mind that each withdrawal from a line of credit is treated as a separate loan can assist you in spending wisely. The good news is that with a business line of credit, there is no obligation to make any minimum payments, only that the loan be repaid in a set amount of time.

Is There a Reason I Shouldn’t Get A Credit Card For My Business?

As mentioned previously, credit cards do not give you access to cash unless you are willing to pay substantial cash advance fees. Credit cards allow you to pay for things using a card, and therefore can only be used at vendors who have credit card facilities. This is why a business line of credit is considered the more flexible finance out of the two different revolving credit options.

At Business Line of Credit Hub, we are committed to transparency in lending. We only work with lenders who adhere to the highest industry standards. This allows us to best serve our customers while providing access to competitive loan terms that are favorable for their business needs. We understand that you have options when it comes to choosing a lender and we strive to make that choice a simple one. Using our simple online application portal, you can apply for the loan you need for your small business safely and securely.

If you want the benefits of cash on hand without having to pay extortionate cash advance fees, a line of credit is probably the more advantageous route to take. We offer our clients easy access to lines of credit so that they can meet funding requirements for day-to-day operations. You can apply through our easy-to-use online portal and get access to up to $150,000 in working capital!