Best Credit Cards for Contractors

Best Credit Cards for Contractors

Best Credit Cards for Contractors

Most contractors drive around a full-size pickup truck with hundreds of pounds, and often use thousands of dollars of construction equipment. Yet one of their most important tools can be a few grams of plastic in their wallet. The right small business credit card can help contractors track business expenses, finance materials and even earn valuable rewards.

How a credit card can benefit contractors

One of the most important benefits of business credit cards for contractors is the way they improve cash flow. You’ll have extra time to pay for purchases, and increase the opportunity to pay for those purchases out of revenues.

If you pay your credit card off in full each month, you’ll likely avoid interest charges. Some cards even offer introductory APRs of 0% for anywhere from several months to a year or more. That interest-free period can be valuable if you need to make a large purchase and pay for it over time. 

In addition, rewards programs can be very lucrative. Put the materials you purchase in your business on a rewards credit card and you can often earn thousands of dollars in cash back or other rewards. (Sign-up bonuses or welcome offers can also help you boost those rewards significantly.) 

What to consider when choosing a credit card for your construction business

If your business is construction, your first priority may not be travel rewards often offered with small business cards, including airport business lounge access, rental car coverage and other travel perks. (If you enjoy travel, whether for pleasure or business though, travel rewards can be very lucrative.) 

You may find cash back rewards to be a better fit. If so, make sure you carefully evaluate the card’s rewards rate. Do you earn a flat cash back rate (or points) for all business purchases or will you earn higher rewards in certain bonus categories? If the latter, make sure you choose a card that gives bonus points for the type of purchases you typically make. 

For small business owners who need to issue employee cards, look for employee spending controls and expense tracking. 

It’s also important to understand how your business credit card will impact your credit history. Some credit card issuers report all activity to the owner’s personal credit, most report to business credit (which can help build good business credit scores) and some report to both. If you know you’ll be carrying a balance frequently, for example, you may want to choose a card that will not appear on your personal credit reports, as those balances could impact your personal credit scores and impact your creditworthiness. 

Finally, if you know you will carry a balance from time to time make sure you understand the interest rates you may be charged for purchases and balance transfers. If you choose a card with a low intro APR, be sure to make a note on your calendar of when it expires, and try to pay off the balance before that happens. Otherwise, your cost can increase significantly.

Best Small Business Credit Cards for Contractors

Here are some of the small business credit cards that construction contractors will find valuable in their business:

1. Lowe's Business Rewards Card from American Express

The Lowe's Business Rewards Card from American Express offers valuable discounts at Lowe’s home improvement stores, but also offers rewards for other purchases. Earn 15.74%-24.74% for 0. Effective 8/31/21 points can only be redeemed for Lowe’s gift cards or used to cover specific, eligible statement charges on your account for a statement credit. When you use your points for eligible charges on your account, you can use points only toward the entire amount of an eligible charge.

Welcome offer: 5% cash back on purchases at Lowe’s for the first 6 months. 2% back after. New accounts only. Plus, get $100 back in the form of a statement credit upon approval.

There is a 15.74%-24.74% for 0. After that, the purchase APR is 15.74% - 24.74% Variable.

As with other American Express cards, you’ll receive expense management tools to help you track expenses and manage your account. There’s no annual fee for this card.

2. The Plum Card® from American Express

The The Plum Card® from American Express provides outstanding rewards to contractors who open new accounts and continues to offer strong value every year. When you need to finance a job, you can take up to 60 days to pay your statement with no interest charges. Cash flow fine? Paying early pays off: get a 1.5% Early Pay Discount, with no cap on what you can earn back..

This card has no preset spending limit and comes with American Express’s full suite of expense management tools. There is a $250.

Another solid choice from American Express is The Blue Business® Plus Credit Card from American Express which gives you the power to use your Card beyond its credit limit* with Expanded Buying Power. This can be very helpful when jobs require unexpected additional expenses to complete. (Note: The amount you can spend above your credit limit is not unlimited. It adjusts with your use of the Card, your payment history, credit record, financial resources known to American Express, and other factors.) It has an appealing welcome offer: Earn 15,000 Membership Rewards® points after you spend $3,000 in eligible purchases on the Card within your first 3 months of Card Membership.

3. Divvy Smart Credit Card for Business

Expense reports and expense management can be a huge pain point for contractors. With Divvy Smart Credit Card for Business you’ll eliminate expense reports, build your business credit, and never go over budget again. If you have employees or contractors who need to make purchases, you’ll love the fact that Divvy gives admins complete control over employee spending with enforceable budgets (that can be adjusted in seconds). On Divvy’s mobile app or desktop platform, you’ll see every transaction as it happens, bringing all your spend into one place.

With this card All charges made on this charge card are due and payable when you receive your periodic statement. There are rewards as well: Up to 7% points, based on payment settings..

4. Chase Ink Business Cash℠ Credit Card

The Chase Ink Business Cash Credit Card offers cardholders a competitive welcome bonus: $750 bonus cash back after you spend $7,500 on purchases in the first 3 months after account opening. 

The reward program is solid, though contractors may see more benefit from higher rewards in other spending categories. Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year. Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year. Earn 1% cash back on all other card purchases with no limit to the amount you can earn. 

*All information about the Chase Ink Business Cash℠ Credit Card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

5. Capital One 2% Spark Cash for Business

The Capital One Spark Cash for Business credit card provides outstanding rewards to contractors who open new accounts and continues to offer strong value every year. Earn a one-time $500 cash bonus once you spend $4,500 on purchases within 3 months from account opening.

You’ll also earn solid cash back rewards on an ongoing basis. Earn unlimited 2% cash back for your business on every purchase, everywhere, no limits or category restrictions. There is no annual fee for the first year; $95 after that. You’ll get free employee cards, which also earn unlimited 2% cash back on all purchases. Rewards won’t expire for the life of the account, and you can redeem your cash back for any amount.

*All information about the Capital One 2% Spark Cash for Business has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

How to qualify for a credit card as a contractor

Most small business credit cards require you to qualify based at least in part on your personal credit scores. You’ll also need to provide information about your business. Make sure you have the following information handy when you apply: 

  • The legal names, addresses and Social Security numbers for all owners or the business.
  • Your legal business name, address and business tax ID number (TIN) or Employer Identification number (EIN).

Alternative financing options for contractors

A business credit card can provide fast and flexible financing but there are times when you need larger financing amounts or a longer-term loan. A construction business loan provides working capital to start or run a construction firm. It can be used for equipment, overhead, or labor.

Here are other business contractor loan options to consider:

Term Loans

If you need financing for a specific project that doesn’t require short-term financing. A term loan may be a good choice. You’ll borrow a fixed amount of money for a specific period of time. Some SBA guaranteed loans are term loans, and term loans are also offered by banks and online lenders. 

Equipment Financing

If you need heavy equipment for your business, equipment leasing or financing may be an excellent option. The cost can be affordable and qualifications may be flexible since the equipment serves as collateral for the loan. Leasing may also offer tax advantages.

Vendor/supplier Financing

If you regularly purchase supplies from specific suppliers, you may be able to secure those supplies with no money upfront. This is referred to as vendor or supplier financing. For example, with net-30 terms you’ll have 30 days to pay. With strong business credit and a good payment history you may be able to get even longer terms, such as net-45 or net-60 terms. 

This article was originally written on June 1, 2018 and updated on August 12, 2021.

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ABOUT AUTHOR

Gerri Detweiler

Education Director for Nav

Gerri Detweiler is Education Director for Nav. Known as a financing and credit expert, she has been interviewed in more than 4000 news stories, and answered over 10,000 credit questions online. Her articles have been widely syndicated on sites such as MSN, Forbes, and MarketWatch. She is the author or coauthor of five books, including Finance Your Own Business: Get on the Financing Fast Track. She has testified before Congress on consumer credit legislation.

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