Franco Brutti
If you have a business or are thinking about starting one, it’s important that you know about all the financial options available to you.
One of the most useful tools for businesses is business credit cards, which offer a wide variety of benefits that can help you keep your business on track.
We’re well aware that not everyone knows about them and the truth is that, at certain times, they are of enormous help.
That’s why we’ve made it our mission to explain what they are, how they work, and how to apply for them so that you can resort to this financial option if you need it.
What are business credit cards?
When we talk about business or corporate credit cards, we’re talking about one of the financial products that banks offer to entrepreneurs and business owners.
It arises as a response to a problem that is undoubtedly present among many entrepreneurs.
Many people tend to use their personal credit card to invest in improvements for their company or store, and this is something that should not be done.
As you can imagine, mixing personal money with business money is not good at all and later on it can cause problems when it comes to making numbers.
Faced with this situation, banks started to offer credit cards that are specially designed for entrepreneurs.
In addition, they usually have their own characteristics and a series of extra benefits, unlike ordinary credit cards.
Defining Characteristics of Business Credit Cards
Before going any further, it’s necessary to be clear about the characteristics of business credit cards.
Thus, if you have any doubts about their definition, this list will help you clarify them:
The credit limit can be adjusted to the specific needs of the company and the interest rates are not so frightening.
It allows businessmen to closely follow all the transactions made with the card.
It’s a great help to have better control of corporate expenses.
Among some of the extra services that the bank can offer you is purchase protection and insurance.
Some cards of this style allow you to accumulate points that can be exchanged for other benefits (this may vary depending on the bank).
They are characterized by great flexibility in payments.
You can receive detailed reports on the expenses you make with the card.
It will help you improve your credibility with your company's suppliers.
How does such a card work?
Now, as far as the operation of this type of card is concerned, it should be clear that it’s quite similar to personal ones.
That is to say, you will receive an amount of money that will be offered as a credit that you will have to pay back within a specific period of time.
Of course, you will receive a card that you will be able to swipe in all kinds of establishments, and that will allow you to pay your suppliers without any problem.
In addition, you will be able to enjoy immediate liquidity so you can start making the economic changes you need from the minute you leave the bank.
Benefits of applying for a business credit card
Without a doubt, the benefits business owners receive with this card are varied and eye-catching.
If they weren't, no one would be applying for them and we probably wouldn't even be writing this article.
So, if you are still not convinced that applying for this credit card is a good idea, you need to be aware of its main advantages:
They work as a means of payment for all types of transactions.
They have a high level of security to take care of the money you are borrowing.
You can even use it to cover the expenses of a business trip.
You will have the opportunity to use it to deduct tax expenses.
You will have a means of payment that is better than checks or cash.
You will not have to worry about limits and interest since they are easy to manage.
You will have efficient control of the money you receive.
You will be able to save a lot of time when it comes to making the necessary payments.
Business credit card vs. personal credit card
We know that terminology-wise, right now you may still think that you can and should use a personal credit card for this kind of thing.
Because of course, if you already have it, why go through a new banking process?
Yes, we know that this kind of process can be tedious, but seriously, it’s better to have this kind of card as well.
In case the reasons are still not clear to you, you should understand the differences between both types of cards:
The use that can be given to it: while a personal one is used for personal purchases and everyday expenses, a business one should be used for business-related expenses.
Expense tracking: you can use business credit cards as an expense tracking and control tool that can help your company have better financial control, which you would not do as well with a personal one.
The credit limit: In most cases, the credit limit on a business credit card is usually higher than on a personal credit card, since business expenses can be higher.
Bank rewards programs: Business credit cards have rewards programs that are often designed to offer benefits and discounts on business-related products and services.
Purchase protection: These types of cards often include additional protections on purchases made with the card, such as insurance and extended warranties.
The level of liability: with a personal credit card, the responsibility for debt repayment rests with the cardholder, while with a business credit card, the liability may rest with the company or the cardholder, depending on the terms and conditions of the contract.
Application requirements: On this point, business cards usually require a greater number of documents and additional requirements for processing, such as a company registration, financial and tax information.
Impact on credit history: Responsible use of a business credit card can help build a credit history for the company, while responsible use of a personal credit card can help build a personal one.
Tax benefits: Business expenses incurred with a business credit card may be tax deductible, which can offer many tax benefits to the company.
Customer support: While business credit cards offer customer support focused on your business needs, personal credit cards typically offer general customer support.
How do I get a business credit card?
If you are now interested in applying for this credit card for your business, you are probably wondering what you have to do to obtain it.
The first thing you should know is that this may vary according to each bank and the country you are in.
However, in most cases, the steps to follow are usually similar.
Of course, the first thing to do is to choose the bank you want to do the procedure with, after having evaluated the options available in your region.
Once this is done, you must go to the bank with the necessary requirements for the credit score review.
This is a kind of bank evaluation to determine how good a customer you are and to verify that you do not have any type of current debt.
So, the better habits you maintain with your bank accounts, the better your credit score will be.
If you get the bank's approval, it will be time to send the application and formalize the process to get your business credit card.
What are the most common requirements?
Again, the answer to this question will vary from bank to bank and country to country.
Therefore, we cannot give you a single answer that will work for all cases.
However, we can shed some light on the most commonly requested documents:
Personal identification documents.
Business tax identification documents.
Bank reference.
The company's articles of incorporation.
The card application form.
Tips for choosing a business credit card
As you can imagine, when you start researching which banks offer business credit cards, you will find many.
Of course, while they will all serve the same purpose, the features, benefits, and requirements vary from bank to bank.
So, how can you be sure to choose the best option for your company?
To help you with this, here are some tips to follow before applying for a business credit card:
1. Review all available options
Undoubtedly, the first thing you should do is review all the banking options available to you.
If you already know which banks are in your city, you should find out if they have business credit cards.
Luckily, this is something you can do without leaving home since almost all banks have websites where you can find all the information you need to know.
2. Read about the card's features
Now, for each option that catches your attention, you should verify the characteristics of the business credit card they offer.
That is to say, research about the requirements, interest rate, credit limit, customer service, payment flexibility, additional costs, etc.
Always keep in mind that these are points that vary from bank to bank.
Therefore, taking into account the differences between each one of them will allow you to establish a ranking of the best options.
3. Compare the options with each other
At this point, you should already have with you all the information you need to know about this type of card in the banks in your city.
It’s then that you should sit down and analyze which bank is the best one for you to work with.
Believe it or not, even if the difference in interest is minimal, you will be able to notice it when you have to pay back the money.
In addition, although aspects such as attention or bank rewards may not seem entirely relevant, the truth is that when you become a customer of that bank, you will be grateful for having chosen the best of all.
That's why you should take all the time you need in this step so that you can be sure of making a good decision.
4. Choose the best one for your business and contact the bank to clarify doubts.
After you have spent time comparing options, you will be ready to make a final decision and you can rest assured that you have chosen the option that best suits your business.
At the end of the day, the aspect that you should always keep in mind throughout this process is to think about the stability of your company.
Even if it’s a small business, this type of financial option can help you grow.
Choose the best one for your business and contact the bank to clarify doubts.
Undoubtedly, in complicated economic situations or even to get a business off to a good start, it’s very useful to have a card of this type.
That’s why we invite you to evaluate if it’s an alternative that can be of help to you so that you do not hesitate to resort to it and start enjoying all the benefits offered by a business credit card.
If you are interested in learning more about this type of topic, remember that our blog is full of articles that will surely help you have a better professional future.
Oct 14, 2022
