What You Need to Know About Business Credit Cards in 2020

Ezra Cabrera

October 19, 2020

The process of financing a startup or a small business can be a challenge and companies will often turn to banks or alternative lenders for funding. If your small business has a poor credit score or you haven’t operated long enough to build a substantial credit history, it can make the process of securing financing that much more difficult. Luckily, there are some creditors willing to offer business credit cards for bad credit.

Here we’ve broken down all you need to know about business credit cards and listed which cards are currently available to businesses with a weaker credit score.

What is a Business Credit Card?

A business credit card functions like a regular credit card that’s used exclusively for business-related expenses. Cardholders will be given a prearrange credit limit, from which they can purchase goods, services, equipment, etc. as long as they don’t exceed the limit and repay the lender for the amount used.

Interest rates (floating or predetermined) accumulate when repayments are made past the grace period. Unlike personal credit cards, business credit cards are issued under the company name rather than the owners’.

What Are Some of the Perks of Business Credit Cards?

Once your application has been approved, you can instantly take advantage of business credit card perks that are extended to cardholders. The best cards offer a combination of benefits, such as:

Sign-Up Bonuses

Sign up bonuses are given to cardholders who spend a certain amount within the first few months of having your card. There are several ways you can redeem the points, including paying off your card balance or transferring them to partner accounts, but the specifics vary from card to card.

Here’s an example: Chase Ink Business Preferred cardholders can earn a sign-up bonus of 100,000 points if you spend $15,000 in the first three months.

Reward Multipliers in Certain Categories

You’ll most likely earn points for every purchase you make, but some card companies give point multipliers in specific categories like social media, paid ads, travel, shipping, utilities, and more. This means that you will receive points for every dollar spent on items or services in any of these categories.

Here’s an example: Holders of the Chase Ink Business Preferred Credit Card can earn 3x points for every $1 on the first $150,000 spent on the following purchases: shipping, social media and search engine advertising, travel; internet, cable and phone services.

Software Discounts or Free Subscriptions

Most business owners use cloud-based platforms to manage their operations. There are credit cards that offer free or discounted subscriptions for certain tools. For instance, some cards offer a free one-year subscription to G Suite, which comprises several tools like Google Docs, Sheets, Slides, and Drive.

Here’s an example: The Brex Corporate card offers credits for tools like Zendesk for customer support, Salesforce for customer management, Amazon Web Services for web hosting, and other tools that are useful for small businesses.

Travel Benefits

Many business credit cards offer discounts on travel expenses and other travel-related benefits like VIP airport lounge access, boarding privileges, travel insurance, discounted hotel prices, and more.

Here’s an example: The Bank of America Business Advantage Travel Rewards World Mastercard credit card offers excellent value for travel-oriented business owners. You can earn $1.5 for every dollar spent and three points per dollar on business travel booked through the card company’s Travel Center.

Airline Miles

Airline miles are one of the most common business credit card perks. If you fly a lot for business, you can earn around five points for every dollar you spend, or you can get a yearly airline fee bonus. Some cards offer more points if you book the flights through the credit card provider itself. The airline miles can be accrued and put towards discounted flights or passed on to other employees.

Here’s an example: With a credit card from Capital One Spark Miles for Business, you can earn 50,000 miles if you can spend $4,500 during the first three months.

No Annual Fees

Many entry-level business credit cards do not charge annual fees for the first year (or ever). These cards will grant you access to rewards, perks, and other privileges without paying a yearly service fee to maintain your account.

Here’s an example: Chase Ink Business Unlimited charges zero annual fees and a 12-month 0% intro APR period.

Best Business Credit Cards for Businesses with Bad/No Credit

Fortunately, several credit card companies extend financing to businesses with bad or no credit history. Here are some of the most popular options for small business owners:

Ink Business Preferred Credit Card

Credit Score: 670 to 850

Regular APR (%): 15.995 to 20.99% variable

Annual Fee: $95

Cash Advance APR (%): 24.99%

Rewards Earning Rate: 3 points for every $1 on the first $150,000 spent in combined purchases on travel, shipping purchases, search engine and social media advertising. You can also earn one point for every dollar spent on other expenses.

Why we love it: The Chase Ink Preferred Credit Card is one of the best cards for general purchases and travel. It offers a one-time bonus worth $1,250 when used for travel expenses, as well as 3x points for travel and other purchases on select categories.

A $95 annual fee is reasonable, given the perks and rewards you can earn. But remember that you’ll need to spend $150,000 to qualify for the bonus, so this card is suitable for small businesses that are financially healthy to meet the said requirement.

Capital One® Spark® Cash for Business

Credit Score: 670 to 850

Regular APR (%): 20.99% variable

Annual Fee: $0 for the first year and then $95 for the following years

Cash Advance APR (%): 26.99%

Rewards Earning Rate: Earn 2% cashback for all purchases

Why we love it: Credit cards from Capital One Spark Classic for Business come with a $0 annual fee and a 1% cashback on all purchases. It’s a great card for businesses that want to build or rebuild both business and personal credit.

First Progress Platinum Select Mastercard

Credit Score: No required minimum credit score and no credit history required

Regular APR (%): 13.99% variable

Annual Fees: $39

Cash Advance APR (%): 19.99%

Why we love it: The First Progress Platinum Select Mastercard is one of the leading business credit card providers for companies with no credit history. This business credit card is a great choice for those who want to build a reputable credit score because Platinum Select reports to all three credit bureaus (TransUnion, Experian, and Equifax). This business credit card is not available in New York, Iowa, Wisconsin and Arkansas.

Wells Fargo Business Secured Credit Card

Credit Score: 350 to 850

Regular APR (%): 15.15% variable

Annual Fee: $25

Cash Advance APR (%): 23.99%

Rewards Earning Rate: Earn 1x point or 1.5% cashback and receive 1,000 bonus points if you spend at least $1,000 in any monthly billing period

Why we love it: Wells Fargo Business Secured Credit Card is one of the best options for small business owners with bad credit. Cardholders can receive a credit line of up to $25,000, which you can put towards travel expenses, marketing costs, day-to-day expenses, and more.

OpenSky Secured Visa

Credit Score: No credit check required

Regular APR (%): 17.39% variable

Annual Fees: $35

Why we love it: OpenSky Secured Visa is best for startup companies with no credit history. This credit card provider does not require applicants to undergo a credit check. OpenSky reports to all three credit bureaus, making it a great way for startups to build a positive credit history. However, you may need to secure a deposit of at least $200.

The Bottom Line

According to a study by the Federal Reserve Bank of Chicago, more than 97% of small businesses with poor financial health were denied funding from traditional banks. These business credit cards we’ve compiled are a viable source of flexible working capital for those small business with less than stellar credit. Utilizing a business credit card also allows companies to build their credit history and improve their score, as long as they make repayments on time.

Ezra Cabrera
Ezra Neiel Cabrera has a bachelor’s degree in Business Administration with a major in Entrepreneurial Marketing. Over the last 3 years, she has been writing business-centric articles to help small business owners grow and expand. Ezra mainly writes for SMB Compass, but you can find some of her work in All Business, Small Biz Daily, LaunchHouse, Marketing2Business, and Clutch, among others. When she’s not writing, you’ll find her in bed eating cookies and binge-watching Netflix.

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