Best Small Business Credit Cards of February 2019

HOW THEIR REWARD RATES STACK UP

Understanding business credit cards

At first glance, small business credit cards seem a lot like consumer cards. They come with similar sign-up bonuses, rewards and fees. But business and consumer cards differ in a few key ways. Here’s what you should know before applying.

You’ll have to sign a personal guarantee. Virtually all small business credit card applications include personal guarantees, or clauses stating that you are personally liable for the debt accrued. This means you’re responsible for the balances even if your business goes belly-up. Keep this in mind when applying and avoid borrowing more than you’re able to pay back.

Your personal credit may be affected. When you apply for a small business credit card, the application will probably show up as an inquiry on your personal credit report, which can cost you a few points on your credit scores for a short time. That’s because your issuer wants to make sure that you, the business owner, are personally on solid financial footing before letting you borrow money. 

After that, small business cards generally fall into two categories: some report your account payment history only to commercial credit bureaus, while others report to both consumer and commercial bureaus. In the latter case, your good or bad spending habits on your small business credit card could affect both your personal and business credit.

These cards generally aren’t covered by consumer protection laws. As a courtesy, issuers today generally extend many consumer protections for personal credit cards to small business credit cards. But the law doesn’t require them to do so. The consumer-friendly Credit Card Act of 2009 set important limits on fees, interest calculations and disclosures for personal credit cards, but it doesn’t cover small business credit cards.

Small business cards aren’t corporate cards. There are two types of business credit cards: small business cards and corporate cards. If you’re just starting out and your revenue is in the thousands, not the millions, you’ll likely want to go with a small business credit card, the kind featured on this list. Once you hit the big time, you might want to switch over to a corporate card. This would limit your personal financial liability for the account.

Who can apply for a small-business card

Anyone who operates a business can apply. You don't need to be incorporated or have a formal structure such as an LLC or partnership. Sole proprietors are eligible, too, and your business can be your full-time job, a part-time operation or even just a side hustle. Be prepared to answer questions on the application about:

• Your business name (if it has one) and contact information.
• The industry you're in, how long you've been in business and how many employees you have.
• Your business's annual revenue and spending.

You do not need an existing business credit history. That's because, as described above, you will likely be personally liable for the debts of the business.

You'll need a federal Taxpayer Identification Number. For sole proprietors with no employees, this can just be your Social Security number. If you have employees or your business meets certain other criteria, you'll already have an Employer Identification Number. You can use that — but the application will still probably ask for your Social Security number, too.

How to choose a small business credit card

Chances are, you'll use your small business credit card quite a bit, so make sure you’re getting one with favorable terms. Here’s how:

Take stock of your business’s spending habits. If you plan on carrying balances from month to month, getting a card with a 0% APR period or low ongoing interest is more important than searching for generous rewards. Alternatively, if you plan on paying in full every month, a card with a big sign-up bonus and lucrative rewards could be a perfect fit.

Figure out what type of rewards you should go for. If earning big rewards is your goal, start by looking at your costs. For businesses that spend plenty on travel and office supplies, a card that gives bonus rewards in those categories would be an excellent choice. And for companies with spending that doesn't fit into the usual categories, a flat-rate rewards card would fit the bill.

Look for business-friendly benefits. Some cards come with programs that allow you to match photos of receipts to your card purchases in-app. Many also offer free employee cards and itemized end-of-year statements that help at tax time.

For more, see our guide to choosing a business credit card

Getting the most out of your small business card

Pay with your credit card whenever possible. For entrepreneurs who pay in full every month and don't overspend, using a rewards credit card for everything makes those points, miles or cash back add up fast. Avoid paying with a credit card when a convenience charge is added, if possible.

Know when your introductory 0% APR ends. Read your credit card statements and make a note of when your promotional offer expires to avoid unpleasant surprises.

Lock down that sign-up bonus. To get your card's sign-up bonus, you typically need to make a few thousand dollars' worth of purchases in the first few months after opening the account. Check your card's terms and track your spending to make sure you don’t miss out.

Deduct interest and fees on your taxes. If you’re using your card for business costs, fees and interest count as business expenses. That means you can deduct them at tax time.