Ever felt the weight of managing business expenses, especially when you’re just starting out? Trust us, we’ve all been there. But did you know that not all business credit cards are created the same? Some are like those customizable suits, tailored just for your brand-new LLC, while others are like that one-size-fits-all t-shirt.
Intrigued? Stick with us, and by the end of this article, you’ll be equipped with insights on some of the best business credit cards for startups. Let’s dive in and find the perfect financial fit for your business!
5 Best Business Credit Cards for Startups
The best credit card for your business will depend on your specific needs and financial situation. However, we can provide you with a list of 5 best business credit cards for startups that are well-regarded.
1. American Express Business Gold Card
- Annual Fee: $295
- Credit Limit: Varies, based on your spending and payment history, since it’s a charge card.
- APR: Charge cards usually expect you to pay the balance in full every month, so they may not have a traditional APR like other credit cards. However, in some cases, they might offer a “Pay Over Time” feature with a variable APR.
- Interest Rate: Not applicable if the balance is paid in full.
The AmEx Business Gold Card is a standout option for new LLCs and business owners. To get approved for this card, you will need to leverage both your new LLC and your personal credit. The key requirement is a personal credit score of at least 700. The benefits of this card, however, make it worth considering. If you are looking for the best business credit cards for startups, then you should definitely consider this card.
Why Choose the AmEx Business Gold Card:
- Four Times Reward Points: For every dollar spent in your top two business spending categories, you receive four times the reward points. This can significantly boost your ability to reinvest in your business.
- Charge Card: Unlike traditional credit cards, this card is a charge card, which means it has a preset limit based on your business spending. You can use this feature strategically to gradually increase your credit line.
- Soft Pull for Existing American Express Customers: If you already have a relationship with American Express, they will only perform a soft pull to qualify you for this business credit card, making it easier to apply.
2. Capital One Spark Classic Card
- Annual Fee: $0
- Credit Limit: Varies based on creditworthiness.
- APR: Variable, usually in the mid-20% range.
- Interest Rate: Based on the APR.
The Capital One Spark Classic Card is another excellent option, especially for those with lower credit scores. Unlike the AmEx Business Gold Card, this card reports to both business and personal credit bureaus, which has its pros and cons.
Why Choose the Capital One Spark Classic Card:
- Lower Credit Score Requirements: You can get approved for this unsecured business credit card with a credit score as low as 580, making it accessible for many new business owners.
- Credit Reporting: It reports to both business and personal credit profiles, helping you build both types of credit. However, be cautious about high credit utilization, as it can affect your personal credit.
3. Capital on Tap
- Annual Fee: This varies based on the plan you choose.
- Credit Limit: $1,000 to $50,000 for new businesses under two years old.
- APR: APRs could be in the mid to high, depending on the creditworthiness of the business.
- Interest Rate: Based on the APR.
Capital on Tap is a fintech company that offers an online business credit card solution. It provides approval limits ranging from $1,000 to $50,000 for new businesses under two years old. What sets this card apart is the soft credit pull they use during the application process. If you are looking for the best business credit cards for startups, then you should definitely consider this card.
Why Choose Capital on Tap:
- High Approval Limits: You can secure approval for up to $50,000, making it a valuable tool for funding your business.
- Soft Credit Pull: Unlike traditional banks, Capital on Tap conducts a soft credit pull, which doesn’t negatively impact your credit score during the application process.
4. Chase Ink Business Preferred Credit Card
- Annual Fee: $95
- Credit Limit: Varies based on creditworthiness.
- APR: Variable, usually in the mid-teens to mid-20% range.
- Interest Rate: Based on the APR.
The Chase Ink Business Preferred Credit Card is unique in that it does not require a structured business entity like an LLC. You can apply for this business credit card using your social security number, making it accessible for sole proprietors and freelancers.
Why Choose the Chase Ink Business Preferred Credit Card:
- No Business Structure Needed: You don’t need to have an LLC or a separate business entity to apply for this card. Your personal credit is sufficient.
- Rewards and Sign-Up Bonus: You still get valuable rewards and sign-up bonuses, making it an attractive option for small business owners.
5. Sam’s Club Credit Card
- Annual Fee: $0, but you would need a Sam’s Club membership.
- Credit Limit: $2,000 to $21,000.
- APR: Variable, often in the high teens to mid-20% range.
- Interest Rate: Based on the APR.
The last credit card on our list of best business credit cards for startups is the Sam’s Club Credit Card. It is an unsecured business MasterCard that offers credit limits ranging from $2,000 to $21,000. It’s an excellent choice for new business owners who have properly structured their businesses.
If your credit score is not good, then you can rebuild your credit using these best credit cards.
Why Choose the Sam’s Club Credit Card:
- No Personal Credit Check: This card doesn’t require a personal credit check, so it won’t impact your personal credit score.
- Unsecured Business Credit: You can access a credit limit based on your business’s creditworthiness, helping you fund your business expenses.
Frequently Asked Questions
Q1. What is a business credit card, and why should startups consider using one?
A business credit card is a financial tool designed specifically for business expenses. It can help startups manage their finances, build business credit, and separate personal and business expenses, making accounting and tax reporting more straightforward.
Q2. What are the key benefits of using a business credit card for a startup?
Business credit cards offer several advantages, including:
- Expense Tracking: They allow you to track and categorize business expenses, simplifying budgeting and financial reporting.
- Building Business Credit: Responsible use of a business credit card can help establish and improve your business credit profile.
- Rewards and Perks: Many business cards offer rewards, such as cashback, travel points, or discounts on business-related purchases.
- Financial Flexibility: Business credit cards provide a revolving credit line that can help with cash flow management.
Q3. What’s the difference between a personal credit card and a business credit card?
While both types of cards offer credit, business credit cards are intended for business-related expenses and typically offer features like expense tracking, employee cards, and business-focused rewards. Personal credit cards are for personal expenses and may not provide the same benefits for business use.
Q4. Can a startup with no credit history or poor credit obtain a business credit card?
Yes, it’s possible. Some business credit cards are designed for startups with limited credit histories or lower credit scores. These cards may have lower credit limits and fewer rewards, but can be a valuable tool for building credit.
Q5. Are there any downsides or risks to using a business credit card for a startup?
Yes, there can be downsides. Business credit cards may have higher interest rates than traditional loans, and carrying a balance can lead to interest charges. Additionally, personal liability for the debt is a concern with some cards, so it’s essential to understand the terms and conditions.
Q6. How can startups improve their chances of approval for a business credit card?
To increase approval chances, startups can:
- Build Business Credit: Establish a strong business credit history by paying bills on time and working with vendors that report to business credit bureaus.
- Maintain Good Personal Credit: Many business cards consider the owner’s personal credit when approving applications.
- Choose the Right Card: Research and select a card tailored to a startup’s credit profile and spending needs.
Q7. Are there any fees associated with business credit cards that startups should be aware of?
Yes, business credit cards may have annual fees, late payment fees, and balance transfer fees. Startups should carefully review the terms and conditions of the card they choose to understand any associated fees.
Q8. Can a startup use a personal credit card for business expenses?
While it’s possible, it’s generally recommended to use a business credit card for business expenses. Using a personal card for business expenses can make it challenging to separate personal and business finances, potentially causing accounting and tax complications.
Q9. How can startups use business credit cards to build and improve their business credit?
Startups can build and improve their business credit by using business credit cards responsibly. This includes paying bills on time, keeping credit utilization low, and maintaining a positive payment history.
Q10. Can a startup’s business credit affect the owner’s personal credit?
In some cases, yes. If the business credit card issuer reports account activity to both business and personal credit bureaus or if the owner provides a personal guarantee, the owner’s personal credit can be impacted by the business card’s activity.
Conclusion
The best business credit cards for startups may vary depending on your specific situation and needs. Consider your credit score, business structure, and spending habits when choosing the right card for your new venture. Each of these cards offers unique advantages for new LLCs and small businesses, helping you build your business credit and access the funds you need to grow.