Is a Corporate Credit Card Right for Your Small Business?

A corporate credit card is best for businesses that have $4 million+ in annual revenue and $250,000+ in annual card expenses. The primary benefit of a corporate credit card is that company owners have no personal liability. Since the balance must be paid in full each month, there is no APR.

If your business isn’t a good fit for a corporate credit card, check out a business credit card such as the American Express Blue Business Cash™ Card. It offers 2% cash back on purchases up to $50,000, and 1% thereafter. Employee cards are free and you can set individual spending limits for each one.

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What a Corporate Credit Card Is & How It Works

Corporate credit cards are a distinct type of card, different from small business credit cards, fleet cards, and small business fuel cards. Issuers authorize corporate credit card accounts based on the finances and creditworthiness of a small business and not the individual business owners.

They are given to select employees to pay for business-related expenses, such as travel.

Employers provide corporate credit cards to their employees for use on behalf of the company. Unlike a small business credit card, the owners of the company typically have no personal liability, and the balance must be paid in full each month. Businesses may also receive other special features, including spending restrictions, robust dashboards, and rebates.

Who a Corporate Credit Card Is Right For

A corporate credit card is right for growing small businesses with $4 million in annual revenue, a good business credit score, at least 15 credit card users, and expected annual credit card expenses of $250,000. They are also right for businesses that have significant cash on hand, as most corporate credit cards don’t charge APR and require balances be paid in full each month.

Corporate Credit Card Rates, Costs, & Terms

Corporate credit cards typically don’t incur monthly interest because balances have to be paid in full. Businesses may pay as little as $0 to as much as $395 per card per year in annual fees. Billing cycles are usually 30 days, but some issuers may offer a 14-day cycle in return for more favorable rewards.

Typical Rates, Costs, & Terms of Corporate Credit Cards

How to Qualify for Corporate Credit Cards

Businesses qualify for a corporate credit card based on their financial performance, time in business, credit rating, and size. Revenue, anticipated card transactions, number of users, and your business credit score are taken into account. A business owner’s personal credit is not considered.

The key factors issuers consider include:

• Revenue – $4 million in annual sales is typically the minimum requirement
• Expected annual transactions – Your business is expected to put $250,000 or more on the card annually, depending on the issuer
• Number of users – Issuers expect a business to have 15 or more corporate credit card users
• Business credit score – A “good” credit score, rated by one of four business credit bureaus: Dun & Bradstreet (80+), Experian (76+), Equifax (90+), or FICO SBSS (140+)

Check your credit score for free

If a corporate credit card isn’t the right fit for your small business, check out the American Express Blue Business Cash™ Card. You can get employee cards at no additional cost, set spending limits, and earn 2% cash back on all purchases up to $50,000. Apply online in minutes.

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Corporate Credit Card Providers

Corporate credit card providers may offer rewards of up to 5%, benefits like airport lounge access, and annual fees of $100 or less per card.

The top corporate credit cards are the:

• One Card from Capital One®
• JPMorgan Chase Corporate Card
• Citi Corporate Card
• American Express Corporate Platinum Card®
• American Express Corporate Gold Card

Business owners usually cannot apply online for a corporate credit card. Instead, issuers often ask that owners or managers with spending authority fill out an online form or call a toll-free number to speak directly with a banking representative. Corporate credit cards are issued based on a business’ financial performance, credit rating, and size.

Note: The information related to the JPMorgan Chase Corporate Card has been collected by fitsmallbusiness.com and has not been reviewed or provided by the issuer of this card.

Types of Corporate Credit Card Liability

Reducing risk is the primary reason to consider switching from a small business credit card to a corporate credit card. Corporate credit cards do not require a personal guarantee, but instead place liability on the business itself or between the business and the cardholder.

The two types of liability are:

1. Full corporate liability – The owner makes no personal guarantee to repay. The business itself is liable for all card charges.
2. Joint corporate and cardholder liability – The company and the cardholder share liability. Employee cardholders typically pay for their card charges based on the firm’s corporate credit card policy and are reimbursed by the company. Employees may be liable for certain charges, like those that are personal in nature.

Now let’s look in detail at how each type of corporate credit card liability works:

1. Full Corporate Liability

Under this type of card, the business is responsible for card debt, not the owner or employee cardholder. Card issuers are willing to issue corporate credit cards with no personal guarantee because they have offset the risk by setting minimum revenue and business credit thresholds.

Full corporate liability may be easier on employees because they don’t:

• Have to fill out expense reports in all cases
• Pay the bill themselves and wait to be reimbursed
• Risk their personal credit with a guarantee

Team members are responsible for paying vendors for any unapproved or personal charges, depending on the company’s corporate credit card policy. Perks and rewards may be credited directly to the main corporate account or to the individual cardholder.

A business may favor full corporate liability because it can:

• Use a centralized dashboard to track and analyze credit card expenses in real-time.
• Place spending and transaction limits on the entire corporate account as well as on individual corporate credit cards.

If your company doesn’t have enough revenue to qualify for a corporate credit card from a traditional issuer, Brex is a good alternative. Brex, which offers corporate credit cards to early-stage technology companies, determines approval and credit limits based, in part, on how much money your company has in its bank account. There is no personal liability.

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2. Joint Corporate & Cardholder Liability

This type of corporate credit card liability places the responsibility for paying the monthly bill on the employee, who must submit an expense report and wait for reimbursement. Employees may have to pay late fees or be held liable for personal expenses.

Employees carry more risk under this form of liability because:

• An issuer may check the employee’s personal credit before issuing a card.
• Employees can be held liable for the activity on their individual payment card, which could hurt their credit score.
• They may be responsible for late charges unless a company’s corporate credit card policy dictates otherwise.

Anyone held personally liable will see the corporate credit card on their personal credit report. Make sure you check with your banking relationship manager regarding the liability of individual payment cards. Similar to cards that come with full corporate liability, cards that offer joint liability allow for spending and transaction caps, which could save the business time and money.

Why You Need a Corporate Credit Card Policy

A corporate credit card policy is good for companies that want clearly-documented rules and regulations surrounding corporate credit card usage. A corporate credit card policy outlines the procedures followed by all internal stakeholders and defines cardholder liability and responsibility.

Pros & Cons of Corporate Credit Cards

A corporate credit card can be a great financial tool for businesses of a certain size. They offer strong incentives to certain types of businesses, but corporate cards also have drawbacks. Let’s look at the pros and cons of corporate credit cards.

Pros of Corporate Credit Cards

The four major benefits of a corporate credit card are:

1. No Personal Guarantee

Corporate credit cards waive personal liability in favor of full corporate liability or joint corporate and employee cardholder liability. Corporate card history is not recorded on the owner’s personal credit file, but will be reported to business credit bureaus.

If you want a business credit card that doesn’t require a personal guarantee, but your firm can’t qualify for a corporate credit card, consider a business prepaid card like Bento. Since this is a prepaid credit card you load using your own funds, there is no credit check required. Try Bento for free for 60 days with two free prepaid debit cards and no setup fees.

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2. Scalable Financial Controls

Corporate credit cards offer businesses the ability to monitor and control employee spending, both in total money an employee can spend and across spending categories.

These controls save a business money and its employees time by offering:

• Centralized dashboards – A real-time ledger where businesses can track overall corporate credit card spending, as well monitor individual cardholder use. This helps a business better manage operating expenses and provides a powerful analytics solution that’s built to scale larger than other business credit options.
• Spending controls – Can be tailored for the entire company or across individual cardholders to restrict spending to a certain dollar amount or category.

3. Ongoing Rewards & Enterprise Perks

Like small business credit cards, corporate credit cards may offer ongoing cash-back rewards and free benefits like airport lounge access.

Corporate credit card rewards, and additional benefits for card use, include:

• Cash-back rewards of 1% to 5% – Rates on ongoing rewards vary by card issuer and type of expense. Business-specific transactions, such as office equipment or business travel, for example, may offer higher returns.
• Enterprise perks – Ancillary benefits may include free access to airport lounges and travel insurance.

4. Low Annual Fees

The cost of a corporate credit card is usually between $0 and $100+ per card per year. This may be lower than you’d find on some small business credit cards.

Cons of Corporate Credit Cards

The five major drawbacks to a corporate credit card are:

1. Must Have Established Business Credit

Business owners may open a small business credit card to help build their business credit. To qualify for a corporate credit card, you must have already established a solid business credit score. Corporate credit cards are not ideal for young businesses.

2. Fewer Card Choices

Most of the big issuers of corporate credit cards also issue small business credit cards, but there are fewer cards to choose from. One issuer may offer a dozen or more small business credit cards, but just one or two corporate credit card options. You may not be able to find the right card for your business.

3. Smaller Introductory & Ongoing Rewards

Small business credit card rewards may be more lucrative than their corporate credit card counterparts. Here’s a look at the differences between Capital One’s corporate credit card and its small business card:

• One Card from Capital One® – This corporate card offers no introductory rewards, 1.5x points on all spending if you choose a 14-day billing cycle, or 1.25x points on all spending if you choose a 30-day billing cycle.
• Capital One® Spark® Cash for Business – This small business credit card offers an introductory $500 bonus when you spend $4,500 in the first three months from account opening, plus 2% cash back on all spending.

4. Potential for Individual Credit Checks

If your business opens a corporate credit card with joint liability, your employees may have to undergo a credit check at the time of application, and their ongoing use could impact their credit down the line. Employees who receive authorized user cards on small business credit card accounts are not subject to credit approval.

5. Large Annual Spend Required

Corporate credit cards are meant for companies that use their credit cards frequently. You’ll typically have to demonstrate your business spends $250,000+ annually on your cards in order to qualify. Because of the high spending requirement, corporate credit cards carry no APR and must be repaid monthly.

Alternatives to Corporate Credit Cards

If your business can’t qualify for a corporate credit card or the benefits don’t appeal to you, there are a few alternatives to consider that also allow you to monitor and control employee spending, including small business credit cards, fleet cards, and prepaid business cards. Some options even allow you to earn rewards.

Some of the best alternatives to corporate credit cards are:

Small Business Credit Cards

A small business credit card is a good choice for small business owners looking to separate business from personal expenses. Business credit cards can offer firms great rewards of up to 5% on the types of spending they do most—with little or no annual fee requirement. Choose a business credit card that offers the perks and rewards you want to receive.

To get a business credit card, you’ll need a personal credit score of at least 670. Before applying, though, be sure you know how a business card works.

Fleet Cards

A fleet card is ideal for businesses that regularly use two or more company vehicles and use between 1,000 and 5,000 gallons of gas per month. They are used exclusively to pay for the fuel, repair, and maintenance of company vehicles. They offer discounts with participating gas stations, mechanics, and maintenance facilities.

Business Prepaid Cards

Business prepaid cards are good alternatives for businesses that have cash on hand to fund day-to-day expenses. They don’t require a credit check, making them a fine choice for new businesses or owners with damaged credit. Your credit limit is determined by the amount of money you deposit in your prepaid account.

Frequently Asked Questions (FAQs) About Corporate Credit Cards

If you still have questions about corporate credit cards, here are some of the most frequently asked questions. If you don’t see an answer to your question, please post a comment below.

Some common questions about corporate credit cards are:

Do Corporate Credit Cards Check Your Credit?

Business credit is always checked, but personal credit checks are not always required.

Issuers may check an employee’s personal credit depending on the issuer and type of liability the card requires. Employees may be subject to a hard credit pull, which could have a temporary impact on their credit score.

Can Corporate Credit Cards Affect Your Credit?

Business credit is always checked, but personal credit checks aren’t always required. If your credit is checked, it could have a small negative impact. If you’re issued a corporate credit card with joint liability and don’t pay your bill, you could be liable for the charges, with any delinquency reported to the consumer credit bureaus.

How Do I Get a Corporate Credit Card?

You cannot apply for a corporate credit card online. You must either fill out a form online at a major issuer seeking more information or contact the issuer by phone. To qualify, your business must have $4 million+ in annual revenue and $250,000+ in documented annual credit card expenses.

Bottom Line

Corporate credit cards can be an excellent financing option for a business to gain more scalable financial controls over their employees’ spending. A corporate credit card program can also reduce a business owner’s personal liability. You’ll need to prove your business can meet minimum revenue and spending requirements.

If you don’t qualify for a corporate credit card or just prefer the convenience of being able to order a card online, check out the American Express Blue Business Cash™ Card. It offers 2% cash back as well as competitive rates. Also, you can get employee cards at no additional cost and set spending limits for each card.

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For rates and fees on American Express Blue Business® Plus, please click here.