Business Credit Cards vs Corporate Credit Cards

Business credit cards and corporate credit cards play an important role when it comes to making business purchases. Which one is ideal for your business? Today we are going to talk about what you need to know about business credit cards and corporate credit cards.

Both business credit cards and corporate credit cards are similar because they are both a revolving source of funds you can use anywhere Visa, MasterCard, Discover, and American Express are accepted. You get access to a pre-set credit limit that you can borrow against at any time. When you pay down the principal the credit becomes available to use over and over. Also, you can maintain a revolving balance on both business credit cards and corporate credit cards.

What is the Difference Between the Cards?

A business credit card is designed to be used for the business. You can get a business credit card issued to your company whether it is a startup or existing business. Approvals are based on the owner’s personal credit and in the majority of cases requires a personal guarantee.

A corporate credit card is issued to corporation with millions in annual revenue. Approvals are based on the company’s financial track record rather than an individual owner’s personal credit. The liability with a corporate credit card for non-payments falls on the entire business entity instead of an individual.

Do You Need a Personal Guarantee?

A personal guarantee is a promise from a business owner, and you are co-signing on behalf of the business. If your business fails to pay, then you are responsible to make good on those payments to the bank, creditor, or lender. A personal guarantee has nothing to do with credit reporting, but each bank card issuer has different terms, conditions, and credit reporting policies.

If you are an existing business that makes less than a million in revenue, you are classified as a small business, so banks are going to require a personal guarantee but there is an exception. You can show a bank or lender that you have a great financial report card as a business. This shows you paid responsibly, have lots of credit issued to your business and pay on time.

Business Credit Card Requirements

Let us talk about what it takes to qualify for business credit cards that report only to business credit reports not personal credit. The minimum score required is a 680 FICO score. It also is required that your business needs to be structured as a legal entity with an assigned employer identification number (EIN).

Although you are required to supply a personal guarantee, the bank card issuers under this program report only to the business credit reporting agencies. Upon funding completion, you may end up with several business credit cards with large amounts of revolving credit available for your business.

Corporate Credit Card Requirements

American Express is not only a payment network, but they are also a bank. Their corporate credit cards have no personal guarantee, and the minimum requirement is $4 million in revenue for the business. To apply you can complete an online application but expect to submit additional documentation for the business.

The Bottom Line

Remember, if you are a start-up or existing business and have strong personal credit, you can get several business credit cards that only report to the business credit reporting agencies. This strategy puts you on the fast track to building up your business credit report.