Small Business Credit Cards


A small business credit card is a credit card that you use to pay for business or work related expenses such as photocopying supplies or entertaining clients, and is generally issued in the name of the business.


Credit Card providers have invested heavily in developing a range of Small Business Credit Cards loaded with features with a focus on helping small businesses owners safe time, ease cash flow management and simplify reporting and reconciliation. With the rise in the number of small buisnesses in Australia we have also seen the credit card providers introduce lucrative introductory offers to entice applications from new customers in what has become an increasingly competitive category of credit cards.




Small Business Credit Card Guide


Small Business credit card are designed to deliver a number of specific benefits to businesses, beyond the convenience of cashless payments, as the credit card providers are aware that the needs of a small business are quite different to that of personnel credit cardholders.


The benefits built into small business credit card can include:


Interest Free Period on Purchases - A benefit borrowed from the personnel credit cards this period of 0% interest on purchases offers a simple way to ease the monthly cash flow.


Tools to help manage the business finances - One of the many challenges of running a small business is keeping the business accounts up to date so the month, quarter and financial year end can be completed quickly and easily. To ease the strain of reconciliation of expenses charged to small business credit cards the credit card providers have developed tools to make this a simple and seamless process, with automatic synching of your credit card bill into your accounting software.


Supplementary Cards with monitoring at employee level - Supplementary credit cards can be issued on Small Business credit card accounts, and each of these cards can be individually managed in terms of the credit limit set on the credit card and the facility also exists to limit the types of purchases allowed on the card. At the month end each supplementary cards expenses can be viewed individually, with reconciliation still occurring from a single synching of the credit card data.


High credit limits - Small business credit cards typically carry credit limits higher than those offered on Personal Credit Cards, making it easier to make major business purchases that you would not otherwise be able to make using your personal credit card or cash.


Building your Business Credit Profile - Responsibly using a small business credit card - which means paying the bill on time, paying more than the minimum due, and not going over the credit limit - can be an easy way to build up a positive credit report for your business. The establishing of a good credit report will be a valuable asset should the business wish to apply for a business loan or line of credit, as not only will it significantly improve the chances of acceptance it will also influence the deal offered by the lender


Separating your business credit from your personal credit - A small business credit card stands on its own, meaning your personal credit rating is not reflected in your transactions. In addition, by having a separate credit card for a small business, organizing your tax returns for both the business and yourself is simplified, as the transactions are already divided according to business or personal expenses.


Rewards for Business Spending - The rewards offered on small business credit cards are typically business related and may include discounts on business travel and cash back in conjunction with points based programs which offer points for each dollar spent using either the primary or any of the supplementary credit cards.


Protect your Purchases - Small Business credit cards offer extra layers of protection and insurance on your business purchases, examples include travel accident coverage, identity theft coverage, and various misuse policies, details of the protection available are:


  • Replacement, repair, or reimbursement of items purchased via credit card in the event of theft or damage
  • Extended warranty protection for purchased goods, given on top of the manufacturer’s warranty
  • Complete travel insurance for trips charged to the card
  • Fraud monitoring for online purchases and transactions
  • Protection against employee misuse of their credit card privileges
  • While you may not need this entire range of security features, it still helps if you are aware beforehand what type of protection you are entitled to. If you have several business credit cards on your shortlist, this factor may even tip the scales towards the credit cards that would be most suitable for you. For instance, choosing between comprehensive travel insurance and enhanced online fraud protection should be easy enough if online purchases are usual transactions for your company.


Take note though that these features are often only available for high tier cards so it’s important to evaluate whether the higher annual fees would be worth the added security.


How to choose the Best Small Business Credit Card


As with your choice for a personal credit card, choosing the best small business credit card requires a thorough evaluation of your business’ financial needs and spending cycle.


When comparing small business credit cards, the following should be included in your appraisal of the credit card options:


The cost of holding and using a small business credit card


The potential cost of a small business credit card is highly contingent on two properties of the credit card:


  1. The annual credit card fee - a fixed fee charged annually to continue to hold and have the ability to use the credit card. Supplementary cards may attract an additional credit card fee.
  2. The Purchase Rate - The interest rate that will be charged on any purchases which are made using the small business credit card and are not fully repaid within any interest free period.


To minimize the costs of a small business credit card a good starting point is look for cards that offer a combination of a low purchase rate and a low annual fee. However, the best deal for your business would still depend on how you intend to use your small business credit card, and so a broader range of considerations may come into play, two points which are frequently important considerations are outlined herewith:.


100% certainty of repaying the monthly card bill in full - with careful cash flow management and the discipline of paying bills on time, the repayment of the card bill in full each month is certainly achievable. Under this situation the credit cards purchase rate becomes less important as if you do clear the card charges in full each month you will incur no interest charges, your focus should therefore be on the level of the annual card fee as this is a fixed fee regardless of payment history or levels of usage.


High chance probability of not repaying the card bill in full each month - this is not an unusual situation for small businesses where cash flow can be patchy. Where this is the situation the credit cards purchase rate becomes very important as it is this will impact the level of interest charges that are incurred against the debt carried on the credit card. The lower the Purchase rate the more money you will save on interest charges.


Interest Free Period on Purchases


A credit cards interest free period, is the period within which purchases are not charged any interest. The number of interest-free days varies from one credit card provider to another, but it is usually within the 44 to 55 days range. A longer interest free period means you can utilize your cash resources for a while longer before having to pay off your small business credit card.


The actual number of days that your purchases are free of interest depends on when you use your small business credit card; that is, purchases made at the start of your billing cycle (say day 1) enjoy the full interest free period. A key condition of interest free days is that to benefit from them the credit card bill needs to re-paid in full, on time each month.  If you choose to pay only a partial amount of the balance off at the end of the month, the balance will be charged interest starting from the day the purchase was charged to the credit card.



Earning Rewards Points on small business credit card expenditure


Increasingly Small Business Credit Cards are being offered with rewards programs, whereby the small business gets rewarded with points for every $1 spent using the credit card. When the small business credit card is used as the primary means of making purchases for the business, the accumulation of rewards can be relatively quick. The good news is that the rewards offered on small business credit cards are directly relevant to small businesses, and are selected on their ability to help small businesses prosper and grow.



A popular reward with small businesses is the, cash back incentive that can be used in any way you want to, and is generally based on giving the small business back a % of the total spend made using the card. Other popular rewards include frequent flyer points, and points that are redeemable for business related products such as printers, computers and even entertainment packages.


When accessing the relevance of the small business credit cards that include reward programs it is important to consider that these rewards business credit cards do tend to attract higher annual fees, and if you are not 100% confident that the balance of the credit card will not be fully repaid each month, refocus your thinking back toward low purchase rate cards.



Approval criteria for a Business Credit Card


The process of applying for a small business credit card is very similar to the process of applying for a personal credit card, with the primary difference being the information that is requested from a small business credit card applicant. As it is this information that the credit card provider relies on to make an assessment of your businesses historical ability to manage debt and repay any debt incurred in the future on a small business credit card.


All small business credit card applications are evaluated by credit card providers based on your credit score. To the credit card provider the credit score is one of their most reliable indicators of whether the business can keep up with their payments and be able to pay them on time. The credit score, which is central in the assessment of all business credit card applications, is calculated not by credit card provider, but by a specialist credit bureau.


There are currently three major credit reporting bureaus operating in the Australia - Veda Advantage, Dun and Bradstreet, and the Tasmanian Collection Service. These credit bureaus are the agencies that issue credit scores, and while each agency has its own set of standards to aid them in their computation of business credit scores, some criteria may be common among them. These include:


  • The type and age of the business, and the number of employees
  • Payment history (especially delinquencies) and the number of inquiries into the business
  • Amount of credit utilized versus the available credit
  • Current payment status, and any liens and collections which may be in force


As a general rule when assessing applications for Small Business Credit Cards credit bureaus also consider the personal credit history of the business owner or the principal. Consequently it is important that when you make any application for a Small Business Credit Card you ensure that your personnel credit report is in good order with no blemishes.


Here's a checklist of information to have to hand before commencing your Small Business Credit Card Application:


  • Personnel financial details - to include salary, wages, pension and any other sources by annual or monthly value.
  • The applicants details - name and address details (Note: These personnel details will maybe used by the credit card provider as part of a Personal Legal Liability on the credit card, details of this are explained below)
  • Current employment - Company and position in the company
  • Company Details - Name, Business Type (Sole Trader, Charity, Pty Ltd etc.) & business category (selected from a drop down list)
  • Australian Business Number (ABN) which is issued once your business has been registered as a trading entity on the Government Business Website 
  • Company Contact details - mobile number, email address and the address from which the company trades
  • Personnel financial commitment details - to include details of any mortgages, loans, credit cards and monthly living expenses
  • Driver's license (Optional)
  • Your accountant's details (Optional) - provision of these will potentially help your chances of a sucessful application and also speed the decision process up.
  • Balance Transfer Details - Details of any credit card or loan and value of any balance transfer on these that you might wish to make to the small business credit card. (Optional)


Potential Drawbacks of Small Business Credit Cards


High Purchase Rates - The convenience and ease of small business credit cards come at a price - they typically charge a much higher interest rate than a bank loan or fixed line of credit. That interest can add up quickly if your credit card activity is not repaid on time and in full each month. In addition, without a system to regularly and carefully monitor your credit card usage it can be easy to accidentally overextend your company financially by going over your company’s credit limit or incurring late fees or penalties.


Personal Legal Liability - Most small business credit cards require a personal-liability agreement (your personal security) to repay debt. This means that any late or nonpayment could result in a negative personal credit report which would impact your ability as an individual to secure loans, mortgages, credit cards or even mobile phone or utility contracts

Small Business Credit Cards - Frequently Asked Questions

Potentially Yes, as there maybe some potential advantages of holding a Small Business Credit Card with the same provider as your Personal Credit Card. 

When you make an application for a small buisness credit card it is not only the businesses circumstances which are taken into account on the application, but also the named applicant are also considered, so if you apply for a business credit card from the provider of your personal credit card your history of managing that credit card could help secure your chosen Small Business Credit Card, and in turn could potentially see you being offered a higher credit limit on your Business credit card.

On the other hand, if you have excellent personal credit and more so if your business has already started to establish a good credit history on its own, the advantages associated with sticking to the provider of your personal credit card are not so strong.

Yes, many Australian small business credit cards now offer rewards points, with rewards ranging from points, to cash back and even discounts at partner stores such as business supply stores. 

Business credit cards with Frequent Flyer Rewards are available with either Qantas or Velocity Frequent Flyer Points. The frequent flyer points earned from expenditure on reward business credit cards may be used for any business purposes such as when you need to travel, entertain business partners and clients, or to reward employees.

This will depend on the guidelines or policy set by the business regarding the usage of credit card rewards points.

If you are the business owner however, then redeeming rewards will really be at your discretion. Since the rewards for business credit cards will be of the same nature as personal credit cards - cash back, merchandise, gift cards, travel, entertainment, etc. - you can opt to use these for your personal needs or plow it back to the business. For instance, free flights can be used for business-related travel, entertainment rewards utilized for promotional offers, and gift cards.

Yes increasingly the credit card providers are using introductory offers to entice new customers to choose their small business credit card over a competitors. 

Introductory offers may include discounted annual fees in the 1st year, discounted purchases rates for a fixed intial period or sign up bonus rewrad points, subject to meeting some spend levels in the early months of holding the new credit card.

Personal Legal Liability - Most small business credit cards require a personal-liability agreement (your personal security) to repay debt, so essentially if your business fails to repay the debt on the credit card, as the named liable individual (as collected at the point whe the crdit card was applied for) that debt becomes your responsibility.This means that any late or nonpayment could result in a negative personal credit report if you personnaly do not rey these debts originally acrued by the buisness.