business owner happy holding his commercial credit card
Betsy Wise
By: betsy_wise
Read in 10 minutes

Should I Get a Credit Card for My Small Business?

According to the Small Business Administration, roughly 65% of small business owners use a credit card to pay for budgeted expenses and improve cash flow. But is that the financial product you need?  

You’re probably asking yourself, “Should I get a credit card or apply for a small business loan?” These two loan options provide financial flexibility to help you grow your business and realize a profit.

To help you answer this important question, this post compares the advantages and disadvantages, reasons, and considerations of getting a small business credit card. After reviewing the information, you can determine if a commercial credit card is the right financial instrument to help your business run smoother and prepare for future growth.

So, let’s find out whether a small business credit card is right for you.

Black credit card on dollar banknote

Should I get a credit card? 10 Reasons to get one

To help you sort out your concerns about making purchases with a small business credit card, here are 10 reasons to get one:

1. Convenience

When entrepreneurs ask themselves, “should I get a credit card?” they realize they feel the same way consumers do when making purchases. They don’t want to write checks or pay with cash. A credit card fits inside a wallet or pocket, and most are accepted universally. You’ll be able to buy whatever your business needs, even unexpected expenses.

2. Higher spending limit

Compared to personal credit cards, small business credit cards can have limits as high as $50,000 to $100,000. That’s a lot to invest in your business growth.

3. Instant purchasing power

You can use a credit card to make all your business purchases or limit it for emergencies only. As long as you stay within the card’s limit and make regular payments, you gain access to cash immediately.

4. Rewards

Business credit cards may offer flat rate or bonus category options available as cashback or points so you can tailor spending to specific business needs. You don’t get these benefits with any other financial products.

5. Build Credit

Every time you make payments with a credit card, the credit card companies report those remittances to the credit bureaus. By using your commercial credit card responsibly, your business credit score increases, which qualifies you for credit increases. Should you decide to get a small business loan, the credit history may help you qualify for a bigger loan.

icon with a money sign representing business financing

6. Separate expenses

If your answer to “should I get a credit card?” is “No, because I use my personal credit card for business expenses,” you should reconsider.

As a rule of thumb, business owners should never use the same card for personal and business expenses. With some small business credit cards, you can separate your business purchases into categories to match your budget and avoid overspending.

7. Keep your money longer

Most credit card balances are due in 30 days. If your checking account earns interest, you make money during that time before submitting your payment.  

8. Help when paying your taxes

 Another benefit of paying business expenses with a credit card is that many companies provide an itemized year-end report to help you prepare your taxes.

9. Do business with cashless vendors

Some suppliers only accept credit cards as payment for services and products.

10. Other Perks

When choosing a credit card for your business, don’t overlook discounts offered for shipping, travel, business supplies, or advertising on social media sites. 

Moreover, frequent flyer miles add up quickly when you use a business card exclusively for purchases. Depending on how much you spend and the credit card program specifics, it’s possible to save 50 to 100% on your ticket price.

A small business loan is another way to access capital to make all your commercial investments.

smiling man asking himself "Should I Get a Credit Card?"

What to consider before getting a business credit card:

If these reasons were enough to convince you to get a credit card, make sure you consider the following points before applying for one:

A business credit card provides a steady influx of cash without committing to a long-term loan. In some instances, you can obtain one without needing to secure business assets.

However, getting a business credit card comes with risks. You should be able to pay off the balance each month to avoid adversely affecting your credit score. 

It’s also important to shop for the best deal. Compare interest rates and find out which companies charge an annual fee or provide purchase protection. 

Also, know what spending limits fit within your budget and make sure you can access your account online.

Additionally, make sure you don’t have a habit of spending more than you can afford. If that’s true, a credit card may not be the best financial choice for your business.

Pros and cons of using small business credit cards

A quick glance at these benefits and disadvantages can help answer the question: Should I get a credit card?

Cards may offer a 0% introductory rate for 12 months to make interest-free purchases when the balance is paid in full. Most credit cards include an annual fee which averages about $100.
Cash-back on purchases can add up. For example, a 5% cash-back offer could pay you $500 when spending $10,000 in one year. Credit card companies normally require a personal guarantee indicating the applicant is personally responsible for repaying the debt.
Fees and interest charged by credit card companies are tax-deductible business expenses. Cards carry high-interest variable rates averaging 12% to 22% APR compared to fixed rates on small business loans that stay the same.
Free cards available for employees. Cards can be susceptible to fraudulent charges by employees and identity theft occurrences.
Builds business credit when used wisely and helps restore cash flow. Not paying statements on time incurs late fees, decreases available credit, and reduces business credit score.

Are small business credit cards a good idea? 

A small business credit card offers rewards and bonuses you can’t get any other way. 

That said, entrepreneurs can get in financial trouble if they fail to repay the balance on a credit card each month. Likewise, you can overspend when you max out the spending limit each month rather than keep a cushion of money for emergencies, repairs, and other unforeseen expenses. 

Another financing option is to apply for a small business loan. Compared to credit cards, business loans allow you to make more considerable expenses that could help your business grow. You can use the money to buy equipment, add square footage to a building, build up your inventory, or consolidate debts into one loan.

A small business loan has many benefits over credit cards, such as qualifying for higher loans at lower interest rates when you make timely payments and getting a loan with monthly payments you can afford. 

The reality is that most of the time, business owners have both financial products: credit cards for small or unforeseen expenses and business loans for large purchases or investments that can help grow the business.

icon with hands holding cash and a credit card

So, should I get a credit card?

You started this article by asking yourself, “Should I get a credit card?” But, as you’ve probably figured out by now, a small business credit card comes with both advantages and disadvantages. In some businesses, they are the perfect financial solution. 

In other businesses, an owner makes more profit by getting a small business loan from an online lender such as Camino Financial.

We encourage you to review our products and services when alternative financing is a better option. To qualify for one of our loans, you don’t need a credit history, collateral, or a social security number (an ITIN is acceptable). 

And, it’s possible to pre-qualify for a loan within 24 hours and receive funds in your banking account in just a few days.

We honor our motto, “No Business Left Behind,” by finding the right loan for your business at every step of the loan process. Use our business calculator to determine how much money you can comfortably repay. 

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