As the founder of a budding new company, there are plenty of good reasons for you to consider using a business credit card.
Not only can it help you keep personal and business finances separate, it can come in handy covering cash flow, building your credit history, and saving money through various perks and rewards. But what are the best business credit cards for startups?
How to Choose the Best Business Credit Card for Startups
When considering a business credit card for your young business, you need to ask yourself a few questions:
- Are you getting a business credit card to build business credit?
- Do you travel a lot?
- Are you looking for cash back rewards?
- Do you want a 0% interest introductory APR?
Once you’ve answered questions like these, you can narrow down your choices. We’ve picked four of what we consider the best business credit cards and have categorized them to help you with your choice.
How to Make the Most of Your Business Credit Card for Startups
A business credit card is a great way for a newer business to build business credit. If the card reports to the business credit bureaus (not all of them do), a good payment history will help you demonstrate the ability to make timely payments—one of the first steps to building a good business credit profile (even if your credit is less-than-perfect right now).
Picking the right rewards card will help you leverage the purchases you’re already making to get rewards, discounts or cash back. And, a 0% APR introductory rate will help your business access a little extra cash when you need it at 0%—provided you make your credit card payments on time. Most card providers will cancel the introductory rate if a payment is late, so make sure you stay on top of when credit card payments are due.
How to Get A Business Credit Card For Startups
Nav’s business credit card marketplace is a good place to start, but the bank where you have your other business banking accounts might also offer a business credit card. Business owners that use Nav’s MatchFactor are 3.5X more likely to get matched to a credit card. All it takes is for you to share some information about your business and personal credit score to get matched.
How To Qualify For A Business Credit Card For Startups
You might be thinking, “It takes a business credit history to qualify for business credit.” And you’d be right. Fortunately though, most business credit cards will use your personal credit score to determine whether or not they’ll offer you a card. This makes them a great option for startups (provided you have a good personal credit score).
The 4 Best Business Credit Cards for Startups
- Capital One® Spark® Classic for Business: Best for fair credit
- Capital One® Spark® Miles for Business: Best for travelers
- The Blue Business® Plus Credit Card from American Express: Best 0% promotional financing offer
- The Business Gold and Green Rewards Cards from American Express OPEN: Best for controlling spending
Not all cards are created equal. You’ll want to choose one that best fits the needs of your new business. If you’re required to travel often, for example, you might want to go with a card that offers great airfare and hotel rewards. If you’re looking to transfer existing debt from a high cost loan or credit card, you’ll want to choose a card with a low or zero balance transfer fee. Others who plan to carry a balance might choose one with a low interest rate.
Why would I use a business credit card for my new business instead of my personal credit card?
Well, glad you asked. Here are three serious advantages to using a business credit card for business purchases:
- Having a business credit card allows you to keep your personal and business expenses separate. You’ll be able to track business expenses more easily, making tax time, as well as maintaining a company budget, much less of a headache.
- By getting a card in the name of your business you’ll start to establish a business credit score separate from your personal one. That means that if you have to make a late payment, your business credit will take the hit instead of your personal credit (there are exceptions—read about which business credit cards report to personal credit bureaus here).
- As you start to establish a business credit profile, you’ll build your business’s credibility. When it comes time to apply for other business financing, solid business credit scores can help you qualify for more financing at better rates.
Let’s take a closer look at a few business credit cards for new businesses that might help you take your company to the next level. Here’s a quick overview of the card categories we’ll cover:
Best for fair credit: Capital One® Spark® Classic for Business
- Credit needed: fair (625 personal credit score)
- $0 annual fee
- Rewards: 1% Cash Back on every purchase
- No foreign transaction fees
- High interest rate
- Late payment fee
The Capital One® Spark® Classic for Business card allows cardholders to earn rewards with no annual fee, and you don’t need an excellent personal credit scores to qualify. As a huge bonus, business owners who make on time payments and keep their balances low can build business credit. It’s worth noting, however, that Capital One may report your business payment history to personal credit reporting agencies, thus your personal credit scores could be affected by your business spending.
Best for travelers: Capital One® Spark® Miles for Business
- Generous rewards: 2 Miles per $1 on every purchase, everywhere
- Bonus offer: 50000 Miles once you spend $4,500 on purchases within 3 months from account opening
- Annual fee: $0
- Requires great credit.
The Capital One® Spark® Miles for Business has a very basic travel rewards structure. Unlike many business credit cards for travel, you don’t need to spend money on travel related expenses to rack up the rewards with this card—you can earn a healthy amount of miles with everyday purchases. This makes it a great business credit card for new businesses where the nature of what you spend on is unpredictable, but you do want to earn reward miles.
Best promotional financing offer: The Blue Business® Plus Credit Card from American Express
- Long 0% APR period: for 12 months
- $0 Annual Fee
- Solid rewards: Earn 2X Membership Rewards® points on everyday business purchases such as office supplies or client dinners. 2X applies to the first $50,000 in purchases per year, 1 point per dollar thereafter.
- Foreign transaction fee: 2.7% of each transaction after conversion to US dollars.
The Blue Business® Plus Credit Card from American Express is a great, flexible card for startups with a 0.0% intro APR on purchases and a variable rate, 13.24% – 19.24%. This means that if you need to make larger purchases on the card that you don’t yet have the cash flow to pay for, you could put them on this card without worrying about the cost of carrying a balance. As a bonus this card offers generous rewards for everyday purchases.
Business charge cards: A solid option for startups to control their spending
Some entrepreneurs may be hesitant to use credit because they are afraid they will be tempted to run up debt. Thus, a charge card can be the best business credit card option for some new businesses. Charge cards must be paid in full each month, making it a good alternative to business credit cards for startups which allow you to carry a balance from month to month. Here are some charge card options.
Business Green Rewards Card from American Express
- Flexible charge card with rewards for business owners: Earn one Membership Rewards® point for each dollar you spend on eligible purchases. Earn double Membership Rewards® points for each dollar of eligible purchases made when you book on the American Express Travel website
- Lower annual fee than other charge cards: $0 introductory annual fee for the first year, then $95
- The rewards structure is not as strong as other charge cards and there is a foreign transaction fee
Business Green Rewards Card from American Express OPEN allows you to earn Earn 15,000 Membership Rewards® points after you spend $3,000 in eligible purchases with the Business Green Rewards Card within the first 3 months of Card Membership. You can choose rewards from over 500 leading brands in travel, gift cards, merchandise or entertainment.
*All information about the Business Green Rewards Card from American Express has been collected independently by Nav . The Business Green Rewards Card from American Express is no longer available through Nav.
American Express® Business Gold Card
- Generous rewards program compared to many charge cards: Get 4X Membership Rewards® points on the 2 select categories where your business spent the most each month.
- Great welcome offer for a charge card: Earn 35,000 Membership Rewards® points after you spend $5,000 on eligible purchases with the Business Gold Card within the first 3 months of Card Membership.*
- Annual fee: $295
The National Small Business Association conducted a survey in 2017 that showed business credit cards to be the second most popular source of financing for small businesses. Carefully determine which type of business credit card you need, and join the ranks of entrepreneurs whose mastery of this important resource plays a continuing and vital role in their success.
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