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What are the benefits of business credit cards?

Man sitting at laptop and holding a credit card

Do you rely entirely on a personal credit card or small-business loan to help your business grow or get through rough financial patches? As useful as these financing options can be, they may be putting your personal finances at risk and not be adequately meeting your business's needs. Another financing option you may not have considered is a business credit card. Here are a few advantages of using a business credit card to help finance your business:

1. It keeps your personal and business finances separate

If you use a personal credit card to finance any of your business, you may be putting your finances at an unnecessary risk. For example, if your business starts to struggle, you'll be putting your own credit in danger. Additionally, mixing personal and business expenses on one card can make filing taxes a nightmare. By using a business credit card for your expenses, you make it easy to track business expenses and help protect your personal finances.

2. It helps your business build credit

As with your personal credit score, your business's credit score goes up when you regularly borrow money in the name of the business and pay it off in a timely manner. Borrowing money under your name, as with a personal credit card, prevents your business from building credit. By using a business credit card, your business's credit score can improve, possibly making your business eligible for lower-rate loans in the future.

3. It is easier to qualify for a credit card than a loan

Applying for a business credit card is typically a straightforward, quick process similar to applying for a personal credit card. On the other hand, applying for a business loan may have stricter requirements and take a longer amount of time before you receive funding (although you may be able to borrow a larger amount with a loan).

4. It provides ongoing access to credit

With a business loan, you borrow a lump sum of money all at once and after you pay it back, you can't easily borrow it again. With a business credit card, you can continuously make charges and repay what you owe. Having access to revolving credit like this makes sense if you frequently need to borrow smaller amounts of money for your business.

5. It can earn rewards

Similar to personal credit cards, many business cards now come with rewards programs. Business rewards cards typically come with special business-related perks. You can earn bonus points on expenses such as office supplies, telecommunications services, airline tickets, car rentals and more.

Fund your business

Depending on the needs of your small business, using a business credit card may be the right financing option for you. For more ideas on how to finance and grow your business, visit our Business Resource Center.

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The information contained herein may not represent the views and opinions of California Bank & Trust, a division of ZB, N.A. or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal or business advice.
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