Business Credit Cards How to Tap Their Credit & Accounting Benefits

Business credit cards can help owners to secure funding and manage cash flow. A recent survey by the National Small Business Association (NSBA) found that 37 percent of small businesses have relied on credit cards to meet their capital needs. Some surveys report that half of all small businesses receive business card offers in the mail every month. Is a business credit card right for your company?

7 Reasons to Use a Business Credit Card

Consider these seven reasons for using business credit cards:

Startup Capital

Businesses new to the market can find the capital needed to get the business off the ground through business credit cards, especially considering that startup businesses face a losing battle in securing traditional bank loans, which are really only available to established businesses.

Working Capital

Businesses that experience a longer waiting period between accounts receivable and accounts payable have a need for greater working capital to cover expenses while they are awaiting payment. Having a business credit card bridges the gap.

Growth Capital

Businesses looking to expand their footprint may need cash to purchase more inventory or supplies to meet consumer or client demand. A business credit card may provide a short-term lending solution.

Cash Advance

Businesses need cash when the unexpected happens. For example, vital equipment suddenly breaks and needs immediate replacement. A business credit card allows a company to address emergency situations.

Business Credit

A positive business credit card record can establish business credit history and contribute to a good business credit score, a necessary component to a successful bank loan application or other funding source later on down the line.

Clear-Cut Accounting

Having a business credit card allows easier tracking of business expenses and separation between business expenses and personal spending. This proves helpful for accounting, liability and tax reporting reasons.

Rewards, Discounts and Bonuses

Many business credit cards offer rewards programs for travel, office supplies and other business-related needs. A company can take advantage of offers to minimize expenses or receive cash back.

Business Credit Cards In Action

Consider these four real-life examples of business credit card uses:

1 Working Capital/Bridge Financing

A private-label manufacturer of candles receives several dozen shipping orders per month. It averages 32 invoices per month, and often ends up with an average 45 days on hold with receivables outstanding from customers. The manufacturer does not have any vendor-supplied trade credit with suppliers that provide materials for its candle-making process. To cover the period between invoicing and payment, the manufacturer bridges the gap in cash flow by using a business credit card to pay for its candle-making supplies.

2 Funding for Growth

A catering company bids successfully for a large-venue event hosting 300 guests. It's the most prominent event the company will have catered and provides the opportunity to promote its brand. To adequately staff it and provide the customer service it touts itself on, the company hires additional contract workers to prepare, deliver and serve the food. However, the company will not receive full payment for the event until after the payroll date. Using a business credit card, the company covers food-related expenses so that it can pay workers on time. As soon as the company receives full payment from the event client, it can turn around and pay the balance on the credit card account.

3 Quick Loan to Replace Equipment

The equipment used by a clothing company unexpectedly breaks down, requiring it to purchase replacement equipment that costs $25,000. Using a business credit card, the company can provide upfront payment for the equipment. The company pays off the purchase over several months, including interest charged on the balance. The interest rate is higher than what the company would have paid through a bank business loan but it is a short-term situation and the company can write off the interest as a business expense.

4 Separate Accounting and Business Credit

A self-employed IT specialist sets up consulting services as an LLC. The nature of the work requires travel to client locations throughout the country. The specialist incurs many travel expenses — including airfare, car travel, lodging and restaurant meals — and uses a business credit card to pay for them. When it comes time to request reimbursement from clients, the specialist can easily figure out the expenses relating to each client because the charges are never commingled with personal expenses. Also, by keeping charges separate from personal credit card accounts, the consultant limits personal liability and maintains the LLC as a separate entity. Moreover, by separating business charges, the consultant continues to build up a positive business credit record, which is important for a good business credit score.

Business Credit Cards by the Numbers

4 out of 5

small businesses use credit cards for working capital

3 out of 5

small businesses use business credit cards


of all small businesses pay off the balances of their business credit cards every month


of small businesses in a 2012 survey said in previous 4 years, they needed funds and were unable to find willing sources, whether through loans, credit cards or investors

3 out of 5

small businesses opened a credit card by their fourth year of operation, an 4 out of 5 do so by their ninth year

How a Business Credit Card Compares With Business Loans

To determine whether a business credit card can work for your company, you need to understand your other potential sources of funding. Much of your determination should depend on the growth stage of your business, the urgency of your cash-flow needs, the intended purpose and amount of the funds, the strength of your credit history and the availability or your willingness to provide collateral.

Compare the features of the various funding sources in the table below:

Business Credit Card Traditional Bank Alternative Lender Crowd Funding or Peer2Peer Lender (P2P) Friends or Family
Best for Businesses in This Growth Stage






Startup: Crowdfunding

Established: P2P lender


Case-by-case circumstances

Approval Time

Quick: Often less than 24 hours

Extended wait: Several weeks to several months

Quick: Sometimes in a few minutes but usually 24-48 hours

Depends on parameters set up by applicant, often several days or a week


Can be quick but case-by-case circumstances.

Loan/LOC Amount


Loans guaranteed through the Small Business Administration do not have a minimum amount. Maximum amount is in the millions

Median small business loan amount is $130,000-$140,000


Depends on business owner's stated goal


Case-by-case determination

Loan Purpose

Business owner determines purpose, as long as business related

Banks examine and assess whether sound business purpose justifies loan

Varies, most do not review business purpose


Some lenders prescreen applications


Case-by-case determination

Qualification and Underwriting Standards

Card issuer examines business owner's personal credit score, sometimes considers business credit score. Often requires personal guarantee

Most stringent underwriting standards: Requires high credit score, business and owner's strong personal credit history, solid business plan, sufficient collateral, personal guarantee, financial statements, cash flow projections

Flexible, generally easier than business credit card

Looks at credit score, but also considers real-life data. Some lenders set minimum credit score of 400 and minimum of one year in business

Varies, but generally more difficult than business credit card

Minimum qualifying standards vary, depends on business owner's pitch and donors' responses. One crowdfunding site only accepts 2% of startup applicants. P2P lenders generally require minimum 2 years business operation and minimum credit score of 600


Case-by-case determination

Repayment Term

Minimum payment amount for each billable cycle

Permits business to carry a balance

Strict repayment terms and amounts are set from the get-go. Intermediate-term loans are less than 3 years with monthly installments. Long-term loans can last 20 years

Usually short-term repayment period

Varies, usually short-term repayment period

Repayment is unnecessary if funds are considered donations/gifts

Flexible, terms determined by parties

Repayment may be unnecessary if friend or family provides gift, not loan

Interest Rate


APR can reach 20%+

Usually lowest interest rate available, especially for largest loan amounts

Typically ranges 6-13%

SBA offers loan less than 6%

Usually very high, higher than business credit cards

Some may charge more than 100% for the highest risk loans

Additional fees may apply (e.g., origination, early prepayment penalty fee)


Some P2P lenders may charge APR comparable to business credit cards (e.g., 14-19%).

No interest rate if funds are considered donations or gifts


Case-by-case determination; the IRS requires that a government-set interest rate be paid for loans over $10,000.

Collateral Requirement

No collateral required

Many issuers require personal guarantee

Collateral often required but not always.

No collateral required

No collateral required

Amounts received are considered donations.

Sometimes donor receives equity stake in company


Case-by-case determination, but often no collateral required

Business Credit Cards vs. Personal Credit Cards

The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 formalized a slew of protections for consumer credit card holders. The CARD Act, however, does not apply to business credit cards, so business owners must take extra caution in applying for and using their business credit cards. The good news is that some institutions issuing business credit cards voluntarily comply with provisions of the CARD Act, especially those relating to notifications and interest rate increases. In some cases, the protections they offer are even better. So although the legal requirements for personal credit cards are certainly more favorable than business credit cards, you need to do your homework to find out the real terms of your business credit card. Keep in mind that business credit card issuers, even those who have extended CARD Act protections, can easily reverse policy and remove those protections, and you would have no recourse except to take your business elsewhere.

Consumer Business
Typical Annual fees

$0 or other low fee

$0 to $450

Fee break-even point

Minimal purchases typically required to earn usable rewards

Often need to make $1,000+ in monthly purchases to earn usable rewards


Wide variety of purchase categories, depending on the card

Typically available for travel, office supplies, phone service, cable TV, internet service

Other points programs are available

Redeeming points

Generally more restrictive and earlier expiration date

Tend to be easier to convert with later expiration date

Credit limits

Tend to be lower than business cards, but varies by card issuer and consumer's credit history

Typical range is between $5,000 and $50,000. Tend to be 10 -100 times higher, especially for businesses with established credit history. Sometimes, issuer does not impose a credit limit

Billing information


More detailed and appropriate for business accounting

Billing Date

Must be due on the same date every month

No requirement, issuer can set different date every month. Some issuers set same date every month.

Interest rate/annual percentage rate

Typically ranges from 9.99%-13.99% for users with excellent credit.

Can go up to 23% for fair credit.

Rates on existing balances can't be raised if you pay on time and according to original terms

Typically ranges from 12.99%-29.99%, depending on business owner's credit score

Interest rate change notice

45 days. Cannot raise rate in first year, except for: expiration of teaser rates; card has a variable rate and the increase results solely from the index rate increase; or if you are 60 days late in making a required minimum payment

Teaser rates must be offered minimum 6 months

Average variable APR hovered in 15% range in late 2015

No minimum notice period required. Most business credit cards have variable APRs, so interest you pay depends on movement of the prime rate

Billing grace period

21-day payment window

No required minimum grace period

Late fee limits

Generally limited to $26 or the amount of the minimum payment, whichever is lower (second late payment within six billing cycles increases fee to $35)

No limit on late fees

Over-limit fees

Limited to the amount of the over-limit charge (e.g., $10 over limit charge means penalty charge can't exceed $10)

Consumer must have opted in to over-limit fees

No limit to over-limit penalty charges

Some issuers extend legally required consumer protections to business credit card

Application of payments

Amounts received above minimum payment applied to balance with the highest APR, except for last 2 months before expiration of a deferred interest plan

No requirement

Many cardholder agreements state will apply payment to balance with lowest APR first

Credit history reported to...

Consumer credit bureaus

Business credit bureaus when positive, provided the card issuer reports at all (business owner must confirm issuer will report)

Business and consumer credit bureaus when negative

Should You Get a Business Card or Use Your Personal Card?

As a business owner, you're familiar with taking risks. If you accept the idea of taking on a business credit card, which lacks the legal requirements of consumer protections found in personal credit cards, then a business credit card may be right for you. You'll find that the sign-up bonuses and reward rates of business credit cards are much more generous than those available for personal credit cards. Although the offers are tempting, you first need to consider the big picture to determine whether you should obtain a business or personal credit card. Although interest rates are much higher for business cards, building up your business credit is a worthy goal, especially is you foresee applying for a traditional bank loan. Qualifying for a bank loan requires a minimum business credit score as a strong indicator of your company's ability to repay a loan.

Here are some reasons for using a business credit card instead of a personal card:

  • Separate accounting

  • Cash flow needs

  • Business credit history

  • Credit card discounts and programs

Separate Accounting

If you want to maintain a black-and-white line between your personal and professional life, securing a business credit card is good way to accomplish that. You can more easily differentiate between the two. If your business is set up as an LLC or business entity other than a sole proprietorship, having a business credit card helps maintain your limited liability. In the unfortunate case you can't make payments on your business credit card, the issuer will encounter more difficulty going after your personal savings and assets to satisfy the debt. It also removes the negative effects on your personal credit history in the event your business suffers and you are unable to keep it afloat and cannot keep up with your business credit card payments. In addition to liability reasons, having a business credit card just makes accounting easier, especially during tax season.

However, keep in mind that many business credit card issuers require business owners to sign a personal guarantee. If this is the case, separate accounting won't shield your personal assets from the issuer's reach if you end up defaulting on the business credit card. It will also affect your personal credit score, which may have a damaging effect on your future success in financing the purchase of a home or car.

Cash Flow Flexibility

Spending limits are typically much higher than those available for consumer credit cards. An NSBA survey shows that 16 percent of small business credit card accounts had limits more than $50,000. If you operate a business that has relatively high cash flow needs, you might choose to get a business credit card. Doing so gives you more flexibility in periods when business activity spikes and your expenses are higher. A higher credit limit enables revenue growth. It gives you the opportunity to expand your business without the worry of going over your credit limit.

Don't forget that in using your business credit card, you should view your balance as a short-term obligation. Interest rates are high and the costs can run up over time if you fail to pay off lingering balances.

Business Credit History

Having a business credit card also helps you build your business credit score. A strong, positive business credit score is essential if you eventually plan to apply for a traditional bank loan or line of credit, which offer much lower interest rates. It also helps you obtain approval for additional business credit cards as your company grows and needs a higher overall total spending limit. Amassing strong financial statements in your business financial history and becoming a more established operation include strengthening your business credit score.

Several business credit scoring organizations measure your company's credit history: Dun & Bradstreet (D&B), Experian and Equifax. D&B's Paydex score looks at your bill payment history — including trade experiences by various vendors —promptness in paying your bills and compliance with payment terms. How your business pays back banks or other lenders is not a critical factor in D&B's scoring methodology. A Paydex score of 80-100 is considered a good score. Equifax also primarily looks to your company's payment history to calculate its score, although it does consider trade and lending history. Experian may offer the most balanced score because it takes into account factors such as your company's industry code, lifespan and financial performance.

Keep in mind that to build up a strong business credit record, you need to obtain and use a business credit card from an issuer that actually reports activity to the right credit agencies. Not all business credit card issuers report activity to business credit agencies. More than 500 business credit card types are available, but fewer than 20 percent report to business credit reporting agencies. Thus, when it comes time to decide which business credit card issuer to use, it's critical to seek out an issuer that reports payment activity to a business credit agency.

Credit Card Discounts and Programs

An extra and significant incentive to obtaining a business credit card are the available rewards programs and bonus offers. You'll find many issuers that provide a short-term, zero interest rate introductory offer, perhaps for six months or up to one year. Using the available credit during this period may contribute significantly to a successful startup venture or allow you to replace equipment during a critical period.

Compared with personal credit cards, business credit card issuers are also much more generous with their rewards. For example, an issuer might offer cash-back at a much higher percentage, or more points for travel rewards or office supplies for each dollar spent on the account. Expiration dates of points earned are also extended further out, so you have the opportunity and flexibility to use them without the pressure of losing out. Many issuers willingly issue multiple cards to users on the same account without additional charges. You'll find that these benefits reflect card issuers' understanding of what companies not only need but want. Business credit cards are tailored to business needs. The bottom line is that business credit card issuers are just as competitive about seeking out your business and they will offer perks that speak to your needs.

Factors Banks Use When Considering a Business Credit Card Application

If you've decided that a business credit card is right for your business, your next step is understanding what factors contribute to a card issuer's approval of your credit card application and making sure those factors reflect well on you. The good news is that compared with other funding sources, you have an excellent chance. Business credit card issuers tend to be quite lenient with doling out approvals. Because the terms, rewards and restrictions of business credit cards vary greatly, you can usually find one that suits your business situation and credit history. Some credit cards are available for businesses lacking stable revenue, financials or credit history. However, those credit accounts come with higher interest rates.

Most card issuers consider several factors when reviewing your business credit card application, including your:

  • Business credit report

  • Personal credit report

  • Income history

  • Existing debt

Your business credit, which appears on your business credit report, is measured by D&B's Paydex Score. Just like the calculation of your personal FICO score, D&B uses an algorithmic formula to produce a number that factors in your payment behavior. The score looks at whether you paid bills on time and according to the applicable terms. The three business credit bureaus — D&B, Experian and Equifax — all use your Paydex score, along with other factors, to calculate your business credit score. Experian Intelliscore ranges from 1-100; the higher the score the better your business credit rating. Equifax Business Credit Risk Score predicts the likelihood of a charge-off or a 90-day severe delinquency by your business in the next 12 months.

Your personal credit score and history matter in the approval of a business credit card application. Your business credit card issuer also looks at your income history and existing debt and determines your debt-to-income (DTI) ratio. The higher the DTI, the higher the interest rate it will charge to extend you credit. It also considers your repayment and payment history, and largely determines the corresponding interest rate of your business credit card based on your credit score and history.

What to Look For in a Business Credit Card

Just as with a personal card, the best business credit card for your company depends on your credit needs and your purchase and payment behavior. Your card issuer will not only ask you about your personal credit history but it should also ask about your business and request information about it. In addition to providing personal salary and credit scores, business owners should be prepared to share financial statements documenting the company's financial background, which can justify a larger credit line. In determining which business credit card is suitable for you and your business, you'll need to conduct a close-up comparison of issuers' policies and options.

Some business credit cards are more suited for smaller businesses, so if your company has experienced considerable growth over its history, you may find it useful to reevaluate your credit card use. It may be time to upgrade to a new card with the same issuer or to switch allegiances to another issuer. If you have a considerable number of employees using a business credit card, you may find that charges to the card are nearing or overtaking spending limits. In this case, it seems quite obvious that your company has outgrown the card and needs to graduate to a different business credit card. If tracking the expenses of employees and determining who charged what are increasingly becoming the cause of headaches, you may want to look into a credit card that automates account management and tracks transaction and expense data to each employee. Some card companies make it easy to automatically download activity to your company's accounting software.

The size of your business also matters in the type of business credit card you choose. If your business's annual revenue falls under $25 million, you can probably stick with a small-business credit card. Once you reach that threshold amount, however, you may be better off going with a corporate credit card.

Be careful how far you tread: Don't take on too many business credit cards and too much available spending limits. You want to remain cognizant of the debt your business can support, and that may be difficult for startup companies attempting to build too quickly.

American Express, Visa and MasterCard are the most well-known payment networks, and most consumers don't see much difference between them. These companies work with credit card issuers to offer a wide variety of benefits to card holders. You'll find that not too many differences exist between these network companies. You're better off focusing on the card issuing company. Because variations are specific to financial institutions' branded cards, business customers must still take a close look at the cardholder agreements as well as the terms of the rewards, discounts and bonuses offered for each card product. The bottom line is that your choice in a business credit card should mostly depend on your preferences for certain reward programs or bonuses, not on the payment network company.

  • Interest Rate

    Interest rates also vary greatly, so it's worth the effort to look around for the right offer. If you find a business credit card offer with a great low- or zero-interest rate as part of an introductory offer, make sure you keep an eye on the fine print. That zero-interest rate can suddenly jump to more than 10 percent without warning or notice.

  • Fees

    The fees charged for business credit cards typically run higher than personal credit cards, so you'll need to weigh the benefits of a business credit card over the additional cost. You can still find cards with zero annual fees, but typically annual fees are at least $100.

  • Available Balance

    Spending limits are usually higher than those available with consumer credit cards, which makes sense because small business owners need to charge a lot more than consumers. According to the NSBA, 36 percent of business owners carry a balance of more than $10,000 on their business credit cards. In fact, many business credit cards do not even have credit limits. To determine your ideal spending limit, you'll need to examine your monthly cash-flow needs. Choose a card with a credit limit that provides enough flexibility to tap into additional funds beyond your current needs, so that the credit card can grow with your company's growth.

  • Other Terms (Grace Period and Other Fees)

    Issuers of business credit cards understand that businesses often go through unpredictable cash flow periods. To allow businesses the flexibility in payments, some issuers give businesses the option to extend payments, so businesses can finance large purchases over a certain period with different terms. They are not required to provide a minimum grace period between the billing date and payment date, as is the case with personal cards, but many issuers provide a 21-day grace period. Most others also specify a minimum payment per billing cycle and do not require full payment as long as businesses submit the minimum amount. Some offer a discount for businesses that pay off a balance early. By examining your business' operational cycle, you can determine the optimal grace period for your business and identify suitable credit cards accordingly.

  • Rewards and Signup Bonuses

    Business credit cards are geared to meet the needs and wants of business owners. You'll find many business-related rewards, through which you can redeem points for office equipment or business services. Cash-back bonuses and other special discounts that allow you to "make money" while you spend are common. Some card issuers provide a discount in the form of an interest-free float period if you pay in full or a minimum percentage of the balance by a certain date. Issuers often provide greater flexibility so that business owners can transfer rewards and use them for airline miles and hotel points, which are often coveted for business travel.

    If your business requires extensive travel, you may want to consider a business credit card that offers insurance for travel and vehicle rentals. If the amounts you charge on your business credit card are high enough, it may make sense for you to choose a card that allows you to transfer points to several airlines and hotel partners rather than to just one. Doing so gives you options if your usual go-to airline doesn't have the flight routes or hotel locations you prefer.

  • Other Services

    Business credit card issuers are continually tweaking programs and services for their clientele. You'll find all varieties of services available. In addition to rewards programs and bonuses already mentioned, some cards offer no foreign transaction fee perks, which can come in handy if company employees undertake frequent international travel.

    Card issuers are creative with their offers. Here are some other available special perks:

    • Earn points from advertising

    • Earn points for shipping expenses

    • Earn points for Amtrak travel

    • Airport club and lounge access

    • Expense-tracking tools

    Card issuers also make businesses' jobs easier by giving them tools to manage their expenses. With some card programs, you can set employee-spending limits or restrict card charges to specific types of purchases.

  • Card Liability

    Your overriding reason for seeking out a business credit card, rather than a personal credit card, may include limiting your personal liability in case your business goes south. The less it affects your personal life, the better. Although many business credit card issuers require a personal guarantee, you should try to obtain one that doesn't require it. You should also find out whether your business credit card offers commercial liability or joint and several liability. Commercial liability puts your business, not you, on the hook for its debts. Joint and several liability puts the responsibility of the business credit card debt on both your business and you personally.

Business Credit Cards

Whether earning rewards through a credit card is something that you rely on in your business or simply a nice-to-have bonus, comparison shopping will maximize the benefit of your purchases. Still, it's important to take APR into account, especially if you know you may carry a balance on your business card. Compare interest rates and other features using MoneyGeek's card comparison tool.

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Business Credit Card Questions & Answers

Priyanka Prakash is a business and finance writer and loan specialist at FitBiz Loans and Fit Small Business. helps small business owners find loans with low rates, and is a leading educational site for small business owners. A licensed attorney, Prakash has legal experience at a startup, law firm practice, and multiple government agencies. Prakash’s work has been referenced in Business Journals, Credit Karma, DailyWorth, and other leading publications.

Priyanka Prakash

What are some common mistakes business owners make when choosing a business credit card?

First off, contrary to popular belief, you don't need to have a corporation or LLC to get a business credit card. Even sole proprietors or people who are thinking of starting a business can get a business credit card. Business owners that get a business credit card often make these mistakes:

  • Not knowing where their credit score stands - Even though these are business credit cards, card issuers will check the business owner's personal credit score in deciding whether to approve him or her for the card. A lot of business owners don't know their score, or there may be errors on their credit report. This leads to credit rejections and excessive inquiries on their credit reports. You should have a personal credit score above 650 for the best chance of approval on business credit cards.

  • Applying for the wrong type of card - That business card that offers 20,000 miles as a sign-up bonus may be perfect for your friend who travels a lot for business, but it may not be ideal for you. Business credit cards come in all shapes and sizes, and you should get one that's best suited for your business. For example, if you spend a lot on office supplies, Chase Ink Plus might be a good choice because it offers 5 percent cash back at office supply stores. Similarly, if you spend a lot on advertising, consider the Amex Business Gold.

  • Getting swayed by the sign-up bonus - A card may offer a great sign-up bonus in cash back or rewards, but don't choose that card if the APR or annual fee is sky high. You need to decide on a monthly budget for your business credit card, and if the interest rate or annual fee puts you above budget, don't choose that card.

What are the ways business owners get into trouble using business credit cards?

Business owners often fall behind on credit card payments and end up in debt. It's easy to fall behind on credit card payments because, unlike a traditional business loan, there are no fixed monthly payments on a credit card. The key to avoiding this scenario is to treat business credit cards like any other business loan. Earmark a fixed amount of your business revenues for paying down your balance. Whenever possible, make more than the minimum required payment so you are not needlessly wasting money with interest payments. If you can't make even the minimum monthly payment, you probably need to take a step back and re-evaluate your spending habits. Remember, even though these are business credit cards, you typically have to provide a personal guarantee of repayment. That means that if you cannot pay back the balance, the issuer can repossess your personal assets, such as your home and car.

What are the top advantages of using business credit cards?

There are several. Here are the main ones:

  • With rates around 16 percent, business credit cards are surprisingly more affordable than many other business financing options. Many cards also offer zero-percent interest promotional periods. If you can buy and pay back during that period, it's like borrowing interest free.

  • Business credit cards generally have higher credit limits than personal credit cards.

  • If you pay on time, business credit card activity generally isn't reported to the consumer credit agencies, although this differs from issuer to issuer. This allows you to build business credit apart from your personal credit.

  • Business credit cards often offer business-specific cash back and rewards.

  • Business credit cards often offer assistance with accounting, through tools that make bookkeeping faster and more efficient, such as annual account summaries.

Do you have any data or anecdotes that relate to small business credit card use that would illustrate its usefulness?

At FitBizLoans, our salespeople often get calls from small business owners who are panicking because they can't afford payments on a short-term loan or merchant cash advance. They want to refinance. Our salespeople never really get such calls from business owners who've used credit cards to finance their businesses. So, at least from our experience, credit cards are a good option.

I have had small business owners tell me that they have sworn off short-term loans because those loans were so hard on them financially. I have not spoken with a small business owner who tells me they have sworn off business credit cards for any reason.

In what situations would you ever advise a business owner not to use a business credit card?

Some situations where you wouldn't want to use a business credit card:

  • You want to make a large, long-term investment in your business — like renovating a storefront or buying equipment — and you can qualify for less costly financing, such as a bank loan or SBA loan. Such long-term loans allow you to spread out the cost of a long-term project over many years.

  • You cannot afford the minimum monthly payments on the card.

  • The purchases you want to make exceed the card's credit line.

  • Your business partner(s) don't agree with using the card for business expenses.

Are there any trends in business credit cards that small businesses and entrepreneurs should look out for?

There's a unique new product that some lenders are offering called credit card stacking. With credit card stacking, the lender applies for a bunch of personal and business credit cards on your behalf. Their combined credit limit acts as an unsecured business credit line. It's a financing option that startups are beginning to use because they can't get financing elsewhere. The lender will apply for cards strategically so that your credit report doesn't get too many inquiries. I think we'll see a growth of credit card stacking in the future because startups are so limited in where they can find financing.