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My Small Business Is Brand New — Do I Need a Business Credit Card?

One question you may be considering if you recently started a small business is, do I need a business credit card? Keep reading for major insight.

March 14, 2022

All businesses begin as an idea floating around in someone’s head. Then, one day, an entrepreneur takes action and an enterprise is born. 

One question you may be considering if you recently started a small business is, “do I need a business credit card?”

While using a personal credit card for business expenses may feel like an easy path forward — especially if your personal money is funding the new venture — there are some benefits to using a business credit card that are helpful to be aware of. 

Keep reading to learn how business credit cards work, when you should get one and how to go about doing so. 

How do business credit cards work?

Like a normal credit card, a business credit card gives the cardholder (in this case, the small business owner) purchasing power by granting access to a revolving line of credit with a set credit limit

If you don’t repay your balance in full each billing cycle, you’ll pay an interest charge. You can get a business credit card through banks or online lenders and it’s a good idea to shop around for the best rates and terms. 

A business credit card can come in handy when you need short-term financing. If you can pay the balance off before the introductory period ends, a business credit card with a 0% APR promotional offer can act as an interest-free business loan. 

You’ll also appreciate how easy it is to use a business credit card to keep track of your monthly business expenses. This can ensure you keep your personal and business purchases separate and organized, which will be particularly helpful when filing your taxes. 

Why should I get a business credit card?

There are quite a few benefits associated with business credit cards that can make running your business easier: 

  • Gain easier access to funding. If you need some startup cash to get your business operations flowing, you may find that a business credit card is easier to qualify for than a traditional line of credit or a loan. Typically, you can qualify for a business credit card without having a well-established business credit history, particularly if you apply for a secured credit card

  • Have a financial cushion. When you’re waiting for your next big invoice to be paid or to wrap up a massive order, you may need some short-term access to cash or to make a larger purchase that will lead to growth. A business credit card allows you to borrow money to help bridge the cash caps. 

  • Make purchases more convenient. Alongside making it easy to borrow money on a short term basis, using a business credit card is much more convenient than making all your purchases using cash or check. You can make online purchases more easily and enjoy some of the cardholder perks that come with your card. 

  • Enjoy rewards and incentives. Speaking of cardholder perks, plenty of business credit cards come with robust rewards programs that make it easy to collect airline miles, access shopping discounts and earn cash back on purchases. 

  • Streamline your bookkeeping process. Many business credit cards come with online recordkeeping tools to help business owners manage their accounts. Not to mention, those monthly and year-end account summaries can make it simpler for you or your accountant to track and manage business expenses. 

  • Build up your business credit. By using your business credit card responsibly — i.e. making on-time payments and paying more than the minimum amount due each month — you’ll begin to build your business credit, which will make it easier to qualify for a future line of credit or loan.

When to apply for a business credit card?

While only you can decide when it’s the right time to apply for a business credit card, the right time is typically when you’re ready to start making purchases for your business (even if it’s just a side hustle). You can use your personal credit cards to pay for business expenses in the meantime, but you’ll benefit by making the switch to a business credit card. 

Many business credit cards offer perks and features designed to help small business owners thrive, so it’s a wise idea to take advantage of them. Having a business credit card will also help you treat your business expenses as just that — business expenses — not personal ones. 

It’s important to remember that you need to be financially ready to take on a business credit card, since you’ll be responsible for making the payments and managing any debt you incur by using it. 

Business credit card issuers aren’t required to abide by the same consumer protections that are outlined in the Credit CARD Act, which affects only personal credit cards. For example, business credit cards don’t have the same limitations on late fees or require 45 days of notice before the credit card issuer can change the account terms significantly like consumer cards do.

How to apply for a business credit card

If you’ve answered “yes” to the question “do I need a business credit card?,” then it might be the right time to apply for one! 

It’s smart to consider more than one business credit card option to ensure you’re choosing the card that’s right for you. You can apply with multiple credit card companies to learn more about what types of interest rates you may qualify for. 

Before you start applying, it can be helpful to take a look at your credit report to make sure there are no errors that need fixing. It’s important for your personal credit report to be in tip-top shape to qualify for a business credit card, as the credit card issuer will review your personal credit reports during the application process. 

If you’ve built up a business credit score and report it through companies that create them (such as Dun & Bradstreet, Experian Business Credit, and Equifax Small Business), the issuer may also choose to review your businesses’ credit history. 

And if you want to work on your credit before applying for a business credit card, you can consider Tally​​†. Tally is an app that helps you pay down credit card debt, so you can focus on growing your business. 

​​†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.