Small Business Funding

Small Business Credit Card: A Guide for SMBs

September 5, 2023
6 min read

If you’re a small or medium-sized business (SMB) owner looking to better manage your business finances as you grow and scale, a small business credit card might be the solution you’re looking for. 

For starters, this type of credit card can help provide the capital you need to help unlock your company’s true potential

While delivering immediate access to funding, small business credit cards can also bring exciting rewards, 0% introductory APR, purchase protection, streamlined expense tracking, and more. 

But we’re getting a little ahead of ourselves. 

Read on for our complete guide to small business credit cards (and the many benefits they deliver).

What Is a Small Business Credit Card?

A small business credit card is a credit card designed specifically with the interests of SMBs and entrepreneurs in mind. 

Although it may seem similar at first glance to a personal credit card, a small business credit card has much more to offer, including higher credit limits, broader rewards categories, and stronger business-related perks.

For example, let’s say Lucas wants to upgrade the espresso machine in his downtown café.
Urban coffeeshops are competitive, so he wants to purchase the best machine possible. 

The model he has in mind costs $12,000, nearly double his personal credit limit. While that’s far too much to charge on his personal credit card, it’s perfect for his small business credit card

After all, his small business credit limit is $50,000 (roughly average for American entrepreneurs).

Thanks to his small business credit card, Lucas can purchase the espresso machine with ease. 

And while he’s serving delicious coffee, he can also enjoy his card’s great reward system, like earning travel miles, gift cards, and cash back.

Why Should SMBs Consider a Small Business Credit Card?

The financial benefits of a small business credit card are undeniable.

As we’ve mentioned, it can provide fast access to capital—with a high credit limit— while offering amazing perks along the way.

But that’s only the beginning.

Small business credit cards can also provide 0% introductory APR, which empowers SMBs to hit the ground running.

As you make purchases for your business, this type of card will help separate your personal and business expenses. At the end of each calendar year, it will also provide an itemized report for you to use during tax season.

It’s like having a personal business accountant right in your wallet.

This not only spares you the headache of organizing your business finances, but it helps position you to receive an enhanced tax refund that you can immediately reinvest back into your company.

It’s a win-win-win. 

The (Many) Benefits of a Small Business Credit Card 

For a tiny piece of plastic, a small business credit card offers some massive advantages. 

While we’ve already introduced the basics, the following list affirms how many benefits a small business credit card can provide, including:

  • High credit limits.
  • Enhanced cash flow.
  • Long interest-free periods.
  • Enticing rewards programs.
  • Itemized expense reports.
  • Zero liability protection.
  • Car rental insurance.
  • Sign up bonuses/statement credits.

Oh, and there’s another feature worth a mention, which deserves its own section.

How an SMB Credit Card Can Help Build Business Credit

A small business credit card can even help you build business credit and promote the longevity of your company.

In simple terms, business credit provides a way for financial institutions to evaluate the financial health of your company. It’s a key metric that they use to determine how much money they are willing to lend your business.

As with your personal credit score, a strong business credit score can help you secure a higher loan, and more favorable loan rates and terms. 

There are many ways to build business credit—a small business credit card can help you do it fast. 

In many cases, small business credit cards can be obtained even without a preexisting business credit profile. 

Just like with personal credit, on-time monthly bill payments and low credit utilization—i.e., borrowing below 30% of your total available credit limit—go a long way to building your company’s business credit. 

When you use your credit wisely and pay your bills on time, your business credit score will quickly grow.

Conversely, any missed payments or delinquencies will quickly lower your business credit.

Paying your credit card bills on time does more than protect your credit profile—it helps you save money by avoiding the cost of compound interest.

Better yet, as you grow your business credit, you will continually show lending institutions that you’re a responsible borrower. Over time, you will qualify for improved borrowing terms, perks, and loans. 

In other words, a small business credit card can help establish a firm foundation for your company’s financial future.

Choosing the Right Small Business Credit Card

Which SMB credit card is right for your business? It depends on what you value most. 

Start by determining the credit limit you need (and can reasonably acquire). In most cases, the higher your business credit score and gross annual revenue, the higher your business credit limit will be.

Once you find a few compelling offers, look closely at the details and determine your priorities.

For example, maybe you want a small business credit card that provides certain rewards, like cash back for office supply purchases or extra points for client dinners. 

Or, maybe you want to keep interest rates down and choose a card with 0% intro APR. 

Perhaps you want to avoid annual fees—or at least keep them as close to zero as possible.

You may also want the option to issue employee cards and set individual spending limits for your team. 

Take your time, and carefully research all available options.

It’s important to remember that while perks and extras can be great, they can also be distracting (who doesn’t like cashback, right?). The goal is to find a long-term financial partner that offers a card that aligns with your business’ strategic priorities

Small Business Credit Card FAQ

Business finance can be confusing, especially when it comes to small business credit cards.

Before we discuss how to apply for a small business credit card, let’s answer some of the most common questions we typically receive from our community of SMBs and entrepreneurs. . 

1. Does My Business Need To Be Registered or Incorporated To Qualify?

No. In fact, sole proprietors, partnerships, and freelancers can all qualify for a small business credit card. While it may be helpful to have an employer identification number (EIN), it’s not required. 

2.  I Don’t Have Any Employees, Can I Still Apply?

Absolutely! For most credit card providers, you don’t need to have any employees to qualify for a small business credit card. Plus, as we mentioned above, freelancers, gig workers, LLCs and home-based companies can easily qualify. 

3.  Are My Personal Credit Score and Business Credit Score the Same Thing?

No. Your personal and business credit scores are independent of each other.

However, your personal credit history may have an influence on your business credit applications.

Your personal credit score—also known as your FICO® score—helps financial institutions determine how much credit to lend you (and at what rate). Credit bureaus like Experian, Equifax, and TransUnion oversee your credit report. 

In a similar way, your business credit score helps financial institutions determine if your company is a good candidate for corporate debt financing. 

The major business credit bureaus include companies like Equifax and Dun & Bradstreet, both of which employ a 100-point scale to rank your business credit (as opposed to the 300–850 FICO® scale).

4.   Can My Employees Have Their Own Credit Cards?

Yes! Most credit card providers allow cardholders to assign credit cards to their employees. Some do so for free, while others charge a small fee per card. 

While your business card program will establish an overarching credit limit for your company, you will be able to set spending limits for your individual employees.

5. What Kind of Expenses Can a Small Business Credit Card Be Used For?

A small business credit card can be used for various expenses integral to your business operations, including buying office supplies, equipment, and furniture necessary for day-to-day activities. 

It’s also used for purchasing inventory and raw materials, facilitating sales or production. Additionally, business credit cards can cover travel costs, utility bills, advertising, and even professional services like legal or consulting fees.

How to Apply for a Small Business Credit Card

While it may take some time to choose the right business credit card provider, the actual application process is typically quite simple. 

Here’s what you’ll generally need to apply for a small business credit card:

  • Business name and contact information, including the address and phone number used to register your company. If you run a home-based business, you can use your home address.
  • Time in business, which means when your business was formally established (i.e., the number of years your business has been open).
  • Federal tax ID, which may include your employer identification number (EIN), your individual tax identification number, or your Social Security number (SSN), depending on your business structure.
  • Business structure, which indicates if you’re a corporation, an LLC, a nonprofit, a partnership, or a sole proprietorship.
  • Number of employees, meaning everyone on company payroll (except yourself).
  • Business revenue (and expenses), which lists your annual business revenue and an estimate of the monthly charges you expect to make on your small business credit card. 

To acquire a small business credit card, some of your personal financial information will also be required by the card provider. 

 To that end, be prepared to provide the following:

  • Full legal name.
  • Date of birth.
  • Social Security (SSN) or individual taxpayer identification number (ITIN).
  • Home address.
  • Contact information.
  • Annual income (this includes all income streams, not just from your business).

Remember, the process may vary from provider to provider. In most cases, what you need to apply can be easily found on a given provider’s website. 

Earn, Redeem, Grow: The Hello Alice Small Business Mastercard®

Small businesses are the heart and soul of America. 

As an entrepreneur, you’re doing more than supporting the economy. You’re connecting people, families, and communities with amazing products/services and the promise of a brighter future.

At Hello Alice, we’re dedicated to guiding your business venture with funding opportunities, expert advice, and a supportive community that has your best interests at heart.

That’s why we’re thrilled to provide entrepreneurs with the Hello Alice Small Business Mastercard®—the card that comes with connections. 

Interested in learning more about our card and its benefits? Check out our small business credit card features page.

Cards are issued by First National Bank of Omaha (FNBO) pursuant to a license from Mastercard International Incorporated. Mastercard is a registered trademark and the circles design is a trademark of Mastercard International Incorporated.

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