Unlock Extra Reward Points with Business Credit Cards
If you have a small business, the world of available credit cards includes a lot more options. Alongside the many “personal” travel and reward credits cards are dozens of credit cards targeted at small businesses.
The same credit card will be often available in both a personal and a business version, allowing you to double-up on signup bonuses (or valuable hotel or companion certificates). In addition, there are some unique and valuable credit cards that only available in business versions.
Business cards are available even to the smallest businesses. You don’t need to be incorporated, it doesn't need to be your full-time job, and you don’t even need to have made any money yet. If you sell stuff on eBay, do a little bit of consulting, or do anything on the side to make money (or that might eventually make some money), you have a business and are qualified for a business card.
Most people who have any kind of small business should take advantage of business credit cards.
The Covid pandemic is causing a lot of economic disruption, especially for small businesses. As a result, banks are getting nervous about extending credit. For the time being, it is difficult to get approved for new small business credit cards. You are more likely to be approved if you conduct your business banking with the credit card company.
Benefits of business credit cards
- Getting small business cards allows you to double-up on your signup bonuses (and certificates). Many cards are available in both a personal and business version. If you sign up for both, you can earn twice the number of points. For example, you can apply for both the personal and business versions of the Marriott cards to earn a total of 160-200,000 bonus points. Or you can apply for both the personal and business version of the Alaska Airlines card to earn double the signup bonus and get two companion certificates every year, instead of just one. Quickly accruing large number of points in the same program can be critical when you are trying to book a premium cabin international flight or make other expensive point redemptions.
- Some of the best cards are only available in small business versions. For example, the Ink Preferred card has the biggest Chase Ultimate Rewards bonus (normally 80,000 points), and the Business Platinum card has the biggest Amex Membership Rewards bonus (normally 75-150,000 points).
- Getting at least one business card is the only way to easily earn the Southwest Companion Pass. The Southwest Companion Pass allows two people to fly for the price of one on Southwest Airlines. It works on both paid and award tickets, for up to two years. The only way to qualify without a lot of flying (or a lot of credit card spending) is to earn the signup bonus on two Southwest Airlines cards in the same year, and the only way to do that is for at least one of them to be a business card. Get 2 for 1 Travel with the Southwest Airline Companion Pass.
- If you like frequent flyer miles, the Amex Blue for Business card is the most rewarding credit card for everyday spending. If you are planning to use your reward points for frequent flyer tickets, the Business Blue Plus Card is the best general purpose reward card, earning 2x Membership Rewards points on every purchase. But it is only available in a business version. Advanced Options for Everyday Spending.
- Small business credit cards don't usually show up on your personal credit report, making it easier to get approved for new cards. Since most business credit cards aren't listed on your personal credit report, they are counted when Chase or Bank of America are determining the number of cards you've gotten in the past 12 or 24 months. Signing up for business cards lets you delay, or sometimes even avoid, hitting Chase's and BOA's limits. This maintains your flexibility to get new cards you are interested in.
- The only cards that earn good reward bonuses for office supply stores are small business cards. Many business cards come with lucrative bonus rewards at office supply stores and on telecommunication services (usually including Cable TV). These bonus categories aren’t usually available with personal cards and are particularly easy to take advantage of.
- Signing up for both personal and business cards gives you access to a larger overall number of signup offers. If you are collecting signup bonuses in earnest, you will eventually start running out of new cards to get. Having access to business cards increases the total number of available possibilities
Note that if you aren't fully committed to dealing with the hassles of frequent flyer tickets, we recommend earning Ultimate Rewards or cashback instead.
Businesses can also get the Amex Platinum Business Card and use their Membership Rewards points to purchase certain airfares on the Amex website at 1.54 cents each (instead of only 1 cent). Using the cards together, you can earn over 3% "cash back", with the additional upside of also having the option to use your points for good frequent flyer opportunities.
Besides these hard barriers, many banks are sensitive to the number of your new cards. So, keeping some of your cards off your personal credit report increases the chance for an approval.
If you want to optimize your credit card earning, you’d ideally want to have at least one small business card that earns bonus rewards in these categories.
You can get small business cards, even if you have a very small business
Small business cards aren’t limited to owners of well-established businesses. If you conduct any independent business at all, such as selling stuff on Etsy or doing occasional consulting work, or if you are in the process of starting a business, you are eligible for a small business card.
- You (usually) don’t even need to be making any money yet. Most small businesses start out spending money, before they ever earn their first dollar. It is natural to want to be able to use a business credit card for your start up purchases. The banks are eager to get your business—that’s what the signup bonuses are fundamentally about in the first place. You may not be able to get a huge credit line, but you can generally get approved for business credit cards, even for a side business you are just setting up.
- Your business doesn’t need to be incorporated. Many smaller businesses are simple sole proprietorships. If you have a sole proprietorship, you are personally responsible for any debt and your personal credit report will be pulled when you apply for the card. Instead of using a business Federal ID number, you can just enter your personal social security number into the Federal ID number box on the credit card application.
- Banks will ask for information about your business, such as your annual revenue, but most credit card companies don’t require you to send them any records or other information. Never lie about your business. If your revenue is zero, just put zero into the signup form. You’re still likely to get approved.
- Ideally, you'd open a business checking account and make sure you have any necessary business licenses before you start applying for business credit cards. If you look around, you should be able to find a bank or credit-union that will give you a checking account without any monthly fees.
Amex and Chase sometime require that your small business generate over $1,000 in revenues. But many people believe that the revenue question on their business credit card application represents a prediction of the current year's revenue, rather than a summary of the previous year's.
But you can also apply with an Employer Identification Number (EIN) instead. You can very quickly go online and acquire a free EIN for your sole proprietorship.
Once you get a business card, you can usually use it for non-business-related purchases
The thorniest issue with business credit cards is whether you can use them for personal spending.
By law, business cards don’t have the same protections as personal credit cards. As a result, banks need to be sure that they can’t be accused of skirting the personal credit card regulations by promoting small business cards for personal use. Therefore, you’ll never see any materials from the bank saying that you can put personal charges on a business card. And the official rules for the card will typically prohibit using the card for personal spending.
However, putting personal expenses on small business cards is very widely done, especially by people who like to collect points and miles. While keeping your small business expenses on your small business cards and personal expenses on your personal cards, makes it much easier to keep track of your spending when it is time to file your taxes, there are no laws that require you to do so.
You need to make a personal decision about whether you are comfortable putting personal expenses on a business card. Conventional wisdom is that banks really don’t care—don’t ask, don’t tell. However, there is theoretically some risk to violating these terms. The worst-case scenario is that the bank will shut down the card, pull back the rewards points they gave you, and decline to do business with you in the future. We've never heard of this, but it is conceivably possible.
Of course, if your business is large enough, where meeting initial spending requirements is not a problem, it is an easy decision. You want to get rewarded for your business spending, as well as your personal spending.
Business cards affect your credit differently, and have different protections
For most small businesses, your personal credit report will be used to determine whether you get approved for a business card. However, once you get the card, it will generally not be listed on your credit report.
(While most business cards are not listed on your personal report, some cards are—you can check this list at Doctor of Credit to see whether it will be listed or not. At this time, you don't need to worry about Chase, Amex, Citibank, Bank of America, Barclays, US Bank, or Wells Fargo. Of the larger credit card companies only Capital One and Discover reports their business cards on your personal report.)
This means that business cards impact your credit score differently than personal accounts.
- When you first get the card, you’ll experience the same 2 to 5-point drop in your credit rating (from the hard inquiry) that you would receive from any other card. As with personal cards, this will go away in a year.
- Unlike a personal card, the credit limit of your new card won’t be get added to your “total credit”, and thus won't improve your credit utilization score.
- However, any charges you put on the business card also won’t be included in the total of the amount of credit you are using, which will contribute to a better utilization score.
Business cards are also not subject to the “Credit Card Act of 2009”. The penalties for late payments can be more onerous than for a personal credit card. You always want to pay off your credit cards in full every month, but the ramifications for not doing this on a small business card can be worse.
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