Starting a new Business is an exciting but challenging time. As an entrepreneur, you have a million things to think about – from developing your product or service to marketing and everything in between. One decision you’ll need to make early on is choosing a Credit card specifically suited for your startup business needs.

Selecting the right credit card can provide much-needed flexibility and rewards during the crucial early stages of your company. The wrong card can saddle you with fees, high-interest rates, and a lack of buyer protections that can put your business at risk before it even gets off the ground.

In this comprehensive guide, we’ll explore the key factors you should consider when choosing a startup Business Credit card so you can find the perfect match.

Why Do Startups Need Business Credit Cards?

Getting a credit card designed for startups offers some unique benefits over using your personal credit card or debit card for business expenses. Here are some of the main advantages:

Separates Personal and Business Finances

Using a dedicated business credit card helps keep your personal and business expenses separate. This makes accounting and taxes much simpler compared to mingling funds across personal and business accounts.

Builds Business Credit History

Making on-time payments with a small business credit card helps establish your company’s credit history independently from your own personal score. This business credit profile will be useful when applying for loans, lines of credit, and other financing down the road.

Offers Better Protections

Business credit cards provide special protections from fraud that consumer cards lack. For example, $0 liability policies for unauthorized charges are common. Some cards also offer extended warranty, purchase protection, and other benefits.

Provides Flexible Spending Power

Credit cards offer quick access to revolving credit lines so you can spread expenses over time. This flexibility helps startups handle uneven cash flow or emergencies without tapping savings or taking out loans.

Earns Valuable Rewards

Many small business credit cards offer cash back, points, miles, or other rewards that can add up quickly. You can use these perks to reinvest in your company or offset other expenses.

Key Factors to Consider When Choosing a Startup Business Credit Card

Not all business credit cards are created equal. You’ll want to weigh several factors carefully to find the right card for your particular startup’s spending patterns and financial circumstances. Here are some of the most important considerations:

Credit Requirements and Approval Odds

As a young company, your business likely won’t have an extensive credit history yet. Many traditional small business cards require good personal credit, years in business, and significant annual revenue to qualify.

Look for startup business credit cards designed specifically for newer companies with more lenient approval requirements. This helps increase approval odds early on. Pre-qualification tools can give you an idea of your approval chances before formally applying.

Interest Rates and Fees

Focus on cards with fair interest rates and minimal fees to avoid racking up excessive borrowing costs as your business gets off the ground. Look for:

• Intro 0% APR periods on purchases and balance transfers
• Low long-term purchase and balance transfer APRs
• No annual fee
• No foreign transaction fee for international purchases

Avoid cards with predatory terms like annual fees over $100, balance transfer fees, cash advance fees, etc. Read the fine print!

Credit Limit

The credit limit on your startup card should align with expected monthly spending needs without going overboard. Aim for a limit between $1,000 – $10,000 to start. It’s easier to get limit increases after demonstrating on-time payments.

A card with too low of a limit may not provide enough purchasing power. But an excessively high limit you can’t repay could signal overspending and hurt credit scores.

Rewards and Perks

Determine what types of rewards or perks would be most useful for your business. Options include:

• Cashback – Simple and flexible. Can be redeemed as statement credits or deposited into your bank account. Usually 1-2% back.
• Points – Can be redeemed for travel, gift cards, or other redemptions. Most valuable for frequent business travel.
• Miles – Best for frequent flyer miles to offset travel costs. Only helpful if your business travels regularly.
• Category bonuses – Increased rewards for specific purchase categories like gas, office supplies, internet services, etc. Useful if your startup spends heavily on those bonus categories.
• Perks – extras like rental car insurance, extended warranty protection, etc. Read the details to see if they match your needs.

Aim for a card whose rewards incentivize your most common business expenditures without restrictive redemption rules or limitations.

Acceptance and Payment Processors

Check that the card brand (Visa, MasterCard, American Express, Discover) is widely accepted by vendors you plan to use often. If selling products/services online, verify the card can integrate with your e-commerce platform or payment processor.

Mobile App and Account Management

Look for an intuitive mobile app and online account system to easily track spending, make payments, set spending alerts, view statements, etc. The ability to add employee cards and set customizable spending limits is also useful. Prioritize secure account management features to prevent fraud.

By considering these key factors, you can zero in on a startup business credit card well-matched to your company’s unique needs and financial circumstances during the early stages of operations. Let’s look at some top recommended cards for startups next.

Recommended Business Credit Cards for Startups

Based on the criteria above, here are some of the best business credit cards for startups and new small businesses today:

Chase Ink Business Unlimited

The Ink Business Unlimited card from Chase is a great flexible option with no annual fee. It offers:

• 0% intro APR on purchases for the first 12 months (then 13.24% – 19.24% variable)
• 1.5% cash back on every purchase with no cap on rewards earned
• $0 annual fee
• $0 foreign transaction fees

There are no bonus category restrictions on the unlimited 1.5% back earning rate. This makes the card easy to use for any type of expenditure without keeping track of rotating bonuses. New businesses also benefit from 0% intro APR for the first year. Note that you’ll need good personal credit to qualify.

Capital One Spark Cash Select

The Capital One Spark Cash Select provides generous cash-back rewards with flexible redemption options and a lower credit barrier to qualify compared to other Spark cards. Key benefits include:

• $200 cash bonus after spending $3,000 in first 3 months
• Unlimited 1.5% cash back on all purchases
• Redeem cash back as statement credits or bank account deposits
• 0% intro APR for first 9 months (then 16.24% – 22.24% variable)
• No annual fee
• Pre-qualification with no impact on credit score

With no category limitations on rewards and a lower credit requirement, this is an excellent option for newer startups aiming to maximize cash-back benefits from day one.

American Express Blue Business Plus

Amex makes it easier for startups to qualify with cards like the Blue Business Plus. It provides:

• 2x Membership Rewards points on all purchases up to $50,000 annually
• 0% intro APR for 12 months on purchases and balance transfers (then 13.24% – 19.24% variable)
• No annual fee
• Employee cards available
• Pre-qualification available

This is a great entry point to earn valuable Amex Membership Rewards points that can be transferred to airlines and hotels. The 2x earning rate and intro 0% APR offer provide solid rewards and financing flexibility.

Bank of America Business Advantage Customized Cash Rewards

If your startup spends heavily in common categories like gas, office supplies, travel, dining, etc., the Bank of America Business Advantage card can maximize category bonuses with:

• 3% cash back in your choice of category
• 2% back on dining
• 1% back on all other purchases
• $0 annual fee
• Pre-qualification available with no credit impact

You get to choose your 3% bonus category from options including gas, travel, office supplies, phone services, and more. This customization makes it easy to align with your largest spending areas.

Brex Corporate Card for Startups

Brex issues corporate cards tailored specifically for startups and high-growth tech companies. Benefits include:

• Up to 7x points on rideshares, flights, cloud computing, and other common startup purchases
• 60 days interest-free credit
• No personal credit check or guarantor required
• Integrates with QuickBooks, Netsuite, Expensify, and other accounting platforms
• Real-time expense management and reporting

Brex does charge annual fees starting at $29/month depending on card limits. But for fast-growing startups who can benefit from Brex’s management tools and points-earning multipliers, it’s a compelling option.

This covers some of the top contenders, but there are even more great choices on the market. The best card depends entirely on your particular business circumstances and spending patterns.

Now let’s walk through the process of how to apply for a small business credit card and use it effectively once approved.

How to Apply for a Startup Business Credit Card

Ready to move forward with getting a credit card for your startup? Here are some tips for a smooth application process:

Check Pre-Qualification Options First

Many leading business cards let you check your pre-qualified offers through the card issuer’s website. This “soft inquiry” gives you an idea of approval odds before formally applying. Review pre-qualified cards first before doing further applications.

Have Your Business Information Ready

When applying, you’ll need to provide basic information about your business, such as:

• Business name and address
• Type of business (industry, LLC, S-Corp, etc.)
• Number of employees
• Time in business
• Annual revenue/income

Be Ready to Supply Your SSN and Personal Information

As a startup, your personal creditworthiness is still tied closely to your company’s. Issuers will evaluate your personal credit score and income along with your business profile when deciding on approval.

Select Your Preferred Rewards and Benefits

Some cards allow you to pick and choose reward structures or bonus category options when applying. Choose carefully based on your expected spending.

Watch Out for Business Credit Card Alternatives

Some banks also offer business charge cards or business lines of credit in addition to credit cards. Make sure you are applying for the right type of financing for your needs.

Read the Fine Print Carefully Before Accepting

If approved, read all terms and conditions closely before accepting the card. Verify you understand interest rates, fees, and other costs so there are no surprises later.

With a smart application approach, you can increase your chances of securing the ideal startup business credit card from the get-go.

How Startups Should Use Business Credit Cards

Once approved for your new startup business credit card, it’s crucial to use it strategically and responsibly. Here are some tips:

Use for All Eligible Business Expenses

Use your card for as many legitimate business purchases as possible, no matter how small. This builds your credit profile and earns maximum rewards.

Avoid Personal Purchases

Only charge business-related expenses. Do not mix any personal transactions on your business credit card. This blurs finances and makes accounting messy.

Pay the Balance in Full Each Month

Avoid interest charges by paying off your balance in full every billing cycle. Set payment reminders and automate payments. Carrying a balance leads to credit score damage and wasted money on interest.

Stay Below 30% Credit Utilization

Try to keep your monthly balance below 30% of your total credit limit. High credit utilization drags down credit scores. Ask for a higher limit if needed.

Take Advantage of Cardholder Perks

Check your card’s statement credits, insurance protections, and other perks. Take full advantage of all the benefits you’re entitled to as a cardholder.

Set Up Account Alerts

Enable text or email alerts for big purchases or suspicious activity so you can catch unauthorized charges right away. Alerts also notify you when your bill is ready or a payment is due.

Check Statements for Errors

Review your monthly statements closely and dispute any fraudulent or inaccurate transactions with your issuer right away. This protects against liability.

Properly managing your new business credit card from the start helps maximize value for your startup while avoiding pitfalls like interest and fees.

Related Posts

• Difference between startup capital and working capital
• How to get a startup business loan with no money?
• How to start a business with no money?
• What are the Ways to Begin Saving Startup Capital?
• What are the different business startup costs and how to reduce them?

Final Thoughts on Choosing the Best Credit Cards for Startups

As we’ve explored in this guide, selecting the right startup business credit card involves more than just comparing rewards programs. You need to weigh factors like approval odds, interest rates, fees, management tools, spending limits, and other aspects that impact the card’s financial fit.

The good news is that as competition in the small business credit card space heats up, more issuers are catering to the unique needs of younger, less-established companies. This makes it easier than ever to find a card well-matched to your startup’s circumstances.

No single card is necessarily the “best” for all startups. You need to consider your own short-term financing needs and long-term goals. With a little research, you can find a great card to provide key financing flexibility and rewards as you work to build your business credit history in the early stages of your company’s journey.

The post Credit Cards for Startup Businesses: A Guide to Choosing the Right Card appeared first on Tactyqal.