Corporate Credit Cards: How Do They Work and Are They Right for Your Business?

Corporate cards are credit cards issued for business purposes rather than covering personal expenses. Businesses can use corporate cards in a variety of cases - to make eligible purchases, pay employees, cover travel expenses, and so forth.

Corporate cards typically have higher credit limits than personal credit cards. Just like personal cards, they may also offer rewards, such as cash back or points, but these can be used solely for business expenses.

When a business decides to apply for a corporate credit card, the credit card issuer will consider the business’s credit history and financial stability. If the business is approved for a corporate card, the company will be responsible for making all of the required payments. 

The corporate card may have a business name on it or an individual employee’s name. In either case, the company itself will be held responsible for all charges made on the card.

Difference Between Corporate and Business Credit Cards

There are a few key differences to point out here. 

For one, corporate cards are usually issued by larger banks and financial institutions, while smaller banks and credit unions typically only offer business credit cards.

Corporate cards also tend to have higher credit limits and APR rates than business credit cards. Additionally, corporate cards often come with certain perks and rewards, such as free travel insurance and concierge services that business cards don’t typically offer.

Finally, corporate cards are typically only available to employees of larger companies, while business credit cards are generally open to any small-business owner.

Benefits to Consider

Corporate cards can be a valuable tool for companies of all sizes. There are many advantages that come with using them. Some of these are:

It’s Easier To Get Approved

Because corporate cards are issued by larger banks and financial institutions, they tend to be easier to get approved for than business credit cards. This is especially true if your business has a good credit history.

Increased Visibility and Control

When you use a corporate card, all of your business’s expenses are consolidated into one statement. This makes it easy to track your spending and see where your money is going. 

Additionally, many corporate cards come with some advanced online tools allowing you to set spending limits and track employee spending.

Higher Credit Limits

Corporate credit cards typically have higher credit limits than business credit cards. This can be helpful if your business often has large expenses.

Rewards and Perks

These cards usually come with a number of rewards and perks, such as cash back, points, or discounts on business expenses. Such perks can save your business a hefty sum of money in the long run.

Builds Business Credit

Using a corporate card can help you build your business credit. This can be helpful if you ever need to take out a loan or line of credit for your business.

Potential Disadvantages

While there are many advantages of using this type of card, there are also some disadvantages you should be aware of. Here are some of them:

It Can Be Too Expensive

One of the main disadvantages of corporate cards is that they can be quite expensive, with higher APRs and fees than “regular” cards.

Complicated Application Process

Another downside is that these cards often have a more complicated application process than regular business credit cards. This is because you’ll need to provide a lot of financial information and documents to qualify for one.

It May Require a Personal Guarantee

Another thing you should keep in mind is that some card issuers may require a personal guarantee. This means that you’ll be personally responsible for repaying the debt if your business is unable to do so, which can be a risky proposition. 

Limited Acceptance

Finally, corporate cards can sometimes be difficult to use because some businesses don’t accept them.

Qualifying for a Corporate Credit Card

Corporate cards are a great way to manage expenses and build business credit. However, qualifying for a corporate card can be difficult, especially for new businesses. 

To qualify for one, you must have a good personal credit score and a strong business financial history. In addition, you’ll need to provide a detailed business plan and proof of income. 

Once you have met these requirements, you can request a card online or through your local bank. And when you get approved, you’ll receive a credit limit based on your business’s financial history.