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Business Credit Cards

Business credit cards, also known as corporate credit cards, are a useful way of getting some additional funds when needed. They’re also convenient for managing cash flow, keeping track of expenses, and spreading costs. Let’s have a look at the main features of business credit cards.

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How do they work?

A business credit card is similar to your personal credit card, but is issued to your business instead of your personal account. A business credit card will give you a credit limit based on your business’s creditworthiness — the agreed limit is the maximum amount that can be outstanding on the card.

When looking for a business credit card, you might focus on the interest rate which applies if you don't pay off the balance. But there are a few other things to think about too. Most lenders offer an interest-free period on their corporate credit cards ― this means you only pay interest on the outstanding amount if you exceed this period (often 45 days, but can be up to 90 days).

Who can get a business credit card?

Because company credit cards are a type of unsecured lending, the criteria are fairly stringent and the limits are strict. As such, they’re most often used for convenience by already creditworthy companies. Like all unsecured lending, the things that matter to the lender are your credit rating, trading history, turnover and profit.

How to get approved for a business credit card

Applying for a business credit card is reasonably easy, and can be done either in a bank branch or online. Bear in mind though, if you want to apply for a card with your bank, you normally need to be an existing customer. As easy as the application may be, it can still take a while to set up your card since the lender needs to assess your eligibility. To apply, you will need to answer a few questions about your business, your desired credit limit, and the number of cards you’d like to have.

When applying for a business credit card, lenders will most likely look at your business credit score, as well as additional documentation such as bank statements. However, in some cases they would want to check your personal credit score too. This can be the case if your business is very new, and therefore doesn’t show much of a trading history.

Depending on your business’s credit rating, your allowed credit limit can vary from £1,000 up to £10,000. Even other features of your business credit card such as interest rate, interest-free period, or rewards depend on your credit report. The rule of thumb is: the better the credit rating, the better the offers.

Can you get a business credit card with no credit check?

Here’s the thing ― you’ll always have to go through a credit check since none of the lenders offer business credit cards without any credit check at all. If you have a bad credit score, lenders might be reluctant to offer you a business credit card. But that doesn’t mean you can’t get one.

Some lenders might give you a very low credit limit to start with, but by paying back the funds consistently you can build up your credit score — and therefore might be able to get a higher credit limit or better rates later on.

Capital On Tap prepaid card

Capital On Tap's prepaid card is designed for firms with minimal or poor credit. If you're not ready for borrowing yet, their alternative debit card can be loaded with your own funds. They'll then assess a few months of your income and outgoings, and potentially be willing to offer you a credit card on that basis.

Check eligibility

Business credit card benefits

Whether you'd like to spread costs, facilitate staff spending, or simply keep track of your short-term expenses, these are only a few of the benefits a business credit card offers. It works like a line of credit, and makes it easy to manage your cash flow. Additionally, several cards can be issued to the same account which means that several managers or employees have access to the funds. However, bear in mind that the credit limit remains the same, and all spending will be taken out of the same account.

Another useful feature is that business credit card charges can count as an allowable expense, so they can be deducted when calculating your taxable earnings (although you should check with your accountant, as everyone's individual situation is different!).

Once you’ve set up your credit card, you can improve your business credit rating by using the credit limit and paying back the balance each month and on time.

Manage cash flow with a business credit card

A corporate credit card can be used for managing cashflow short-term expenses in cases where you don’t have enough working capital. Therefore, a business credit card can be seen as a revolving credit facility. Whether you need to pay a supplier, redecorate or simply require working capital, a business credit card can be your emergency lending — provided the limit is high enough.

You can also track and limit employee expenses ― this can be useful for businesses that accrue daily expenses as part of normal day-to-day work, and many cards offer the ability to specify limits for each individual employee.

Business credit card rewards

Business reward credit cards can be useful when you want to earn points as you spend, join a loyalty scheme, or get money off flights ― the latter is particularly beneficial when you’re travelling a lot for business purposes. But, there are certain factors you need to bear in mind before choosing your reward credit card. For instance, if you don't pay off the full balance every month, interest charges might outweigh any rewards.

Rewards can be external benefits such as:

  • Cashback
  • Reward points
  • Concierge services
  • Travel rewards – hotels, travel insurance, airmiles, or airport lounge access

Sometimes, membership rewards points can be redeemed on office equipment, corporate entertainment, or business travel. But beware of annual fees ― with most credit cards, you might find that the greater the number of rewards, the higher the fees. It’s also worth mentioning that some business credit cards exclude rewards on international purchases.

It’s important to choose a corporate credit card that suits your needs, so you should ask yourself whether you’d benefit more from an interest-free period or cashback, for example.

Find out more about business reward credit cards

Business credit cards in the UK

Many of the providers that offer personal credit cards also offer them to businesses. The major players are MasterCard and VISA, and using these providers, many of the high street banks offer corporate credit cards. Some independent lenders offer them too, sometimes combined with their existing revolving credit facilities — the Capital On Tap card is a good example of this.

Lloyds business credit card

With a Lloyds business credit card you can issue up to 20 cards to employees, each with their own spending limit — although there is a £32 annual fee per card. This company credit card offers 45 days of interest free credit.

NatWest business credit card

There’s no annual card fee for the first year with a NatWest business credit card. You can choose to pay the full amount or the minimum each month by Direct Debit and change between the two at any time. NatWest offers rewards on their credit cards such as travel accident insurance, access to their management information tool that allows businesses to easily monitor and analyse company expenditure (SmartData Online), and access to CardOnline to track card activity.

RBS business credit card

Royal Bank of Scotland's business credit card is the same as NatWest's above, because both banks are part of the Royal Bank of Scotland Group.

HSBC business credit card

The HSBC business credit card offers a fee-free first year, and up to 56 days' interest-free credit. You can choose how to pay – full balance or minimum repayment — by Direct Debit each month.

American Express (Amex) business credit card

American Express offers business charge cards, which have no interest rate because you must pay off the outstanding balance in full each month. This is why there’s no pre-set spending limit. But no pre-set spending limit doesn’t mean you’ll have unlimited spending. With your use of the Card, your payment history, credit record, financial resources, and other factors, your purchasing power can adjust. The main downside of the Amex card is the annual fee of £125, which may cancel out the benefits of any rewards.

We've put together a list comparing the business credit cards from all the major high-street banks

Compare bank credit cards

Downsides to business credit cards

The most obvious downside to business credit cards is that they’re fairly expensive if you don’t clear the full balance each month. APRs vary, but are generally in the 15–25% range, meaning the interest will stack up quite quickly if you let the outstanding balance carry over.

Another drawback of using a company credit card is that the limit is usually quite low compared to other types of business finance. With a limit of £10,000, for example, you’ll have enough for a month’s worth of business expenses, but perhaps not enough for bigger investments or growth projects.

It’s also important to consider the impact even the best cards could have on managing cashflow — you’ll have to pay careful attention to the statements to make sure you’re not letting the interest build up. The way the repayments work might not be ideal either, because an interest-free period of 45–60 days means you’ll have to pay in July for things you bought in May — which makes it easy for overspending to creep up.

Finally, your suppliers won’t necessarily accept payment via credit card, often preferring to issue invoices, in which case you’ll have to pay them via bank transfer. For these cases, a business credit card won’t be much help.

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