More than half of small-business owners don’t have a business credit card, instead depending on personal credit cards to pay for business expenses, according to a survey by small business-focused financial platform Hello Alice.
The number of small-business owners using personal credit cards to cover operating expenses balloons to 80% when considering the “new majority” of business owners, which includes Black, Indigenous and people of color (BIPOC), women, LGBTQIA+ and immigrants.
Telling people to use business credit cards for business expenses and personal credit cards for personal expenses sounds simple. However, many of the small-business owners surveyed have reported not knowing how to complete a business credit card application or how to check their business credit score. Some also report applying for credit cards but being rejected — for both personal and business credit cards in many instances.
If you are a freelancer, entrepreneur, independent contractor or running a small business of some type, here’s what you should know about business credit cards — including why these can help your business and some good first cards for your business to consider.
Related: Who qualifies for a business credit card?
Why businesses should have a credit card
Why is it important to use a business credit card? And why shouldn’t you use your personal credit cards to cover these expenses?
First, keeping receipts organized and completing your tax returns can become more complicated when business and personal expenses are mixed together on the same credit card. Second, having large business expenses on your personal credit card can affect your personal credit score due to large balances or maxing out your credit cards for operating expenses to keep your business running.
Business credit cards do not affect your personal credit score in the same way. While a bank will typically check your personal credit report during the application process, most business credit cards will not show up on your personal credit report. This means spending heavily on a business card won’t show high credit usage on your personal credit report.
Related: Do business credit cards affect my credit score?
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Why many small businesses lack business credit cards
According to the survey of 5,000 small-business owners in this “new majority,” 90% of these owners believe having a business credit card would positively impact their business because it could help cover unexpected expenses and accelerate growth.
“We’ve seen that having access to $5,000 to $25,000 of credit makes a big difference,” said Carolyn Rodz, CEO and co-founder of Hello Alice. “This allows business owners to cover everyday expenses until sales and revenue come in.”
However, a full 45% of respondents reported a credit card denial in the past year, according to Rodz. Often, this was due to a combination of poor personal credit and a lack of credit history, either personally or for the business.
Unfortunately, many small-business owners lack knowledge about business credit scores, according to Rodz.
For example, Black small-business owners are twice as likely as their white counterparts to lack both a business credit card and a personal credit card, according to the survey. For many respondents, this was due to poor credit and a lack of knowledge about improving their credit scores.
If a business lacks credit, starting with a secured credit card is a great option. This allows businesses to build credit through a history of paying on time and by establishing a relationship with the issuing bank.
After some time has passed, usually several months, holders of many secured cards have the option to request that the bank convert this card into a traditional credit card. Sometimes, the bank may swap a cardholder to the unsecured version on its own, without requiring a request.
Related: 3 real ways to boost your credit score in 30 days
Good options for your first business credit card
Assuming you’ve done the work to get your personal and business credit into a good place and are ready to apply for a business credit card, which one should you choose? There are many, and the options may feel overwhelming.
Consider a few things before getting started. If you’re looking for your first business credit card, you probably want a card with a low annual fee or possibly no annual fee at all.
The second consideration is your business’s most common expenses. You should look for a card that earns bonus cash back or business rewards in the categories where your business is spending the most.
In addition to looking at where you can earn the most rewards for your spending, consider what you can do with those rewards. Can they only be redeemed for cash back? Can you use them for any travel by earning free hotel nights or free flights?
Thinking about what type of rewards you’d like to earn and how those can help you, your loved ones, your employees and your business will be important.
Related: 10 considerations for your small-business credit card strategy
Ink Business Unlimited Credit Card
If you’re a fan of Chase and searching for a no-annual-fee business card, the Chase Ink Business Unlimited® Credit Card may be a great option.
Current welcome offer: Earn $900 bonus cash back after spending $6,000 on purchases in the first three months from account opening.
Annual fee: $0
Earning structure: Earn 5% cash back on Lyft rides (through March 2025) and 1.5% back on all other purchases.
Why we like it: The Ink Business Unlimited is simple: You don’t pay an annual fee, and you will earn 1.5% back without tons of categories to keep track of.
The real power of this card comes when you also hold a card that earns Chase Ultimate Rewards points — such as the Chase Ink Business Preferred® Credit Card (discussed below), Chase Sapphire Reserve® or Chase Sapphire Preferred® Card.
Holding one of those three cards allows you to turn your cash-back earnings into Ultimate Rewards points, thereby doubling the value of your earnings, according to TPG’s September 2024 valuations.
To learn more, read our full review of the Ink Business Unlimited card.
Apply here: Ink Business Unlimited Credit Card
Ink Business Cash Credit Card
If your business spends a lot of money in specific categories and you’re in the market for a Chase card, look no further than the Ink Business Cash® Credit Card.
Current welcome offer: Earn up to $750: $350 bonus cash back after spending $3,000 on purchases in the first three months, and an additional $400 after spending $6,000 on purchases in the first six months from account opening.
Annual fee: $0
Earning structure: As a cardholder, you will earn 5% cash back on the first $25,000 in combined purchases in these categories each account anniversary year: office supply stores, internet services, cable services and phone services.
In addition, you’ll earn 2% cash back on the first $25,000 in combined purchases in these categories each account anniversary year: gas stations and restaurants. You’ll earn 1% back on all other purchases and on purchases above the $25,000 annual threshold in the Ink Business Cash’s bonus categories.
Why we like it: Some businesses spend a lot at office supply stores or on their communications services; the ability to earn 5% back on up to $25,000 of these expenses each year can be extremely valuable.
And, as mentioned above, these cash-back earnings can be turned into Ultimate Rewards points or used for elevated redemption rates with Chase’s Pay Yourself Back feature if you have another, eligible Chase-issued card.
To learn more, read our full review of the Ink Business Cash card.
Apply here: Ink Business Cash Credit Card
Ink Business Preferred Credit Card
Business owners who want to earn lucrative Chase Ultimate Rewards points will appreciate what the Chase Ink Business Preferred Credit Card has to offer.
Current welcome offer: Earn 90,000 bonus points after spending $8,000 on purchases in the first three months after account opening. As of September 2024, TPG values this bonus at $1,845.
Annual fee: $95
Earning structure: Earn 3 points per dollar on the first $150,000 of combined spending in these categories during your cardmember year: shipping purchases, internet services, cable services, phone services, travel and advertising purchases with social media and search engines.
Earn 1 point per dollar after passing the $150,000 spending threshold and on all other purchases.
Why we like it: According to TPG’s valuations, the points earned with this card are worth 2.05 cents each, meaning businesses that spend heavily on advertising or shipping can get a roughly 6% return on these expenses. Plus, the card offers perks like purchase protection and cellphone protection for a low annual fee.
To learn more, read our full review of the Ink Business Preferred card.
Apply here: Ink Business Preferred Credit Card
The Blue Business Plus Credit Card from American Express
If you want to earn American Express Membership Rewards points without paying an annual fee (see rates and fees), look into The Blue Business® Plus Credit Card from American Express.
Current welcome offer: New cardmembers can earn 15,000 bonus points after spending $3,000 in eligible purchases on the card within the first three months of cardmembership. According to TPG’s September 2024 valuations, this welcome offer is worth $300.
Annual fee: $0 (see rates and fees)
Earning structure: Earn 2 points per dollar on all purchases, on up to $50,000 of spending per calendar year. After that, earn 1 point per dollar on every purchase.
Why we like it: American Express Membership Rewards points are worth 2 cents each, according to TPG’s valuations. That means you’re earning a 4% return on purchases without needing to track any bonus categories (on the first $50,000 in spending per calendar year, then an estimated 2% return).
These points can be transferred to over 20 airline and hotel programs to redeem for travel or redeemed as cash toward purchases or your credit card bill.
To learn more, read our full review of the Amex Blue Business Plus card.
Apply here: The Blue Business Plus Credit Card from American Express
American Express Business Gold Card
You may already be familiar with its consumer version, but the American Express® Business Gold Card is worth looking into if you’re a fan of earning Membership Rewards points.
Current welcome offer: New cardmembers can earn 100,000 bonus points after spending $15,000 on purchases in the first three months of cardmembership. As of September 2024, TPG values this bonus at $2,000.
You may be targeted for a higher welcome offer through the CardMatch tool. Offers are subject to change at any time, and not everyone will be targeted for the same offer.
Annual fee: $375 (see rates and fees)
Earning structure: Earn 4 points per dollar in your top two spending categories each billing cycle (up to $150,000 in combined spending each calendar year, then 1 point per dollar) and 1 point per dollar on all other purchases.
Eligible bonus categories include transit purchases; U.S. purchases for online, TV and radio advertising; monthly wireless phone service charges made directly from U.S. service providers; U.S. purchases at gas stations; U.S. purchases at restaurants; and U.S. purchases from electronic goods retailers and cloud system providers.
You’ll also earn 3 points per dollar on flights and prepaid hotels booked on AmexTravel.com.
Why we like it: Rather than choosing a preferred category where you earn extra rewards, the Amex Business Gold automatically applies your rewards in the categories where your business is spending the most.
That’s one less thing for your business to keep track of, and you’ll earn an 8% return on these purchases, according to TPG’s valuations (up to the first $150,000 in combined spending each year, then an estimated 2% return). While the annual fee can appear high, getting an 8% return on $150,000 in annual purchases is worth your attention.
To learn more, read our full review of the Amex Business Gold card.
Apply here: American Express Business Gold Card
Bank of America Business Advantage Customized Cash Rewards credit card
Bank of America often slides under the radar when compared to major issuers like Chase and American Express, but business owners should absolutely consider the Bank of America® Business Advantage Customized Cash Rewards Mastercard® credit card.
Current welcome offer: Get a $300 statement credit after making $3,000 in purchases within 90 days of account opening.
Annual fee: $0
Earning structure: You’ll earn 3% back in the category of your choice: gas and electric vehicle charging stations, office supply stores, travel, TV/telecom and wireless, computer services or business consulting services.
You’ll also earn 2% back on dining purchases and 1% back on other purchases. Note that the 3% and 2% earning categories are limited to a total of $50,000 in combined spending each calendar year; after that, you will earn 1% back on these purchases.
Why we like it: You can choose an earning category that fits your business model, and you can change this category each month to adapt to your business operations. Cash back can be redeemed into a checking or savings account with Bank of America or as a statement credit.
Plus, those who are members of the Bank of America Preferred Rewards® program can earn rewards at up to 75% higher rates, meaning you could get up to 5.25% back on your chosen category with this card. The bonus rate you receive depends on the amount of money you have within this program.
To learn more, read our full review of the Business Advantage Customized Cash card.
Apply here: Bank of America Business Advantage Customized Cash Rewards Mastercard
Hello Alice Small Business Mastercard
If a business credit card from a major issuer isn’t your cup of tea, check out the Hello Alice Small Business Mastercard®.
Current welcome offer: Get a $50 statement credit after spending $1,000 on purchases in the first three billing cycles after account opening.
Annual fee: $0
Earning structure: Earn 4 points per dollar on wireless telephone services and business software purchases, 3 points per dollar on office supplies and shipping purchases, 2 points per dollar on ride-hailing and restaurant purchases and 1.5 points per dollar on all other purchases.
Why we like it: Business owners can use points for cash back and can earn extra points for various activities in their accounts, aimed toward rewarding business owners as they learn and grow.
Additionally, cardholders can sign up for two separate one-on-one coaching sessions on topics of their choice each year, helping them understand various issues that business owners face while starting and growing their businesses.
Click here for more details about the Hello Alice Business card.
The information for the Hello Alice Business card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Southwest Rapid Rewards Premier Business Credit Card
Southwest is one of the most popular airlines in the United States; if your business frequently flies with them, it may be time to open the Southwest® Rapid Rewards® Premier Business Credit Card.
Current welcome offer: Earn 60,000 bonus points after spending $3,000 on purchases in the first three months from account opening. As of September 2024, TPG values this welcome offer at $840.
Annual fee: $99
Earning structure: Earn 3 points per dollar on purchases with Southwest Airlines, 2 points per dollar with Southwest’s hotel and car rental partners, 2 points per dollar on local transit and commuting (including ride-hailing apps) and 1 point per dollar on other purchases.
Why we like it: Southwest Airlines remains popular. You may travel for business or personal reasons, but one of the most compelling reasons for putting your business spending on a Southwest credit card is the ability to earn points toward a Companion Pass, which lets you bring someone with you on all of your Southwest Airlines flights for the rest of that year and the entire following year — just pay the taxes for that person.
Cardholders also get 6,000 bonus points on each account anniversary and two EarlyBird check-ins each year, as well as the ability to earn tier-qualifying points toward A-List status through credit card spending each year.
To learn more, read our full review of the Southwest Premier Business card.
Apply here: Southwest Rapid Rewards Premier Business Credit Card
Bottom line
A lot goes into starting a small business. Understanding and building your business credit score can help you gain access to more credit, which will free up capital to help your business do what it needs to do financially.
Unfortunately, this is more complicated for some business owners than others. New-majority business owners are less likely than previous generations of business owners to have a business credit card.
From the resources in this article, you should have a better understanding of what business credit is, how to establish it and then some quality options for a first business credit card that can suit your needs.
Related: How to maximize points and miles when starting a business
For rates and fees of the Amex Blue Business Plus card, click here.
For rates and fees of the Amex Business Gold card, click here.