Best Credit Cards for Small Businesses

Do you want cash back or airline miles? Will you pay in full each month or carry a balance? Know the answers before choosing a card


Spotting a huge potential market, more credit card companies are intent on wiggling their way into the wallets of today's small-business owners. As credit card companies compete for their favor, small businesses can only benefit. Still, how do you choose the card that's right for your needs?

Besides providing an obvious separation between personal and business spending, small-business credit cards offer other advantages. For one, they can be a means of tracking spending and controlling expenses while maintaining an audit trail for tax season. The right credit card plan can help consolidate spending records, thereby decreasing paperwork and operating costs.

As with consumer credit cards, many small-business cards also offer valuable savings or rewards plans. And since a business will probably spend more than an individual, rewards such as airline miles or cash-back rebates can add up quickly.


  The credit card companies have indeed found a growth market in small business. Sastry Rachakonda, director of the Discover Business Card, estimates that only 10% of small-business spending is through small-business cards, and only 35% of small businesses use such cards. "Though the market for small- business credit cards has been growing very fast, the area remains very under-penetrated," says Rachakonda.

For their part, credit card companies are making it easier to use the cards, and much of the account management can be handled online. "The product itself has features that you can't get with consumer credit cards," says David Weinstock, chief accounting officer for Advanta (ADVNA), a small-business credit card provider based in Spring House, Penn.

Whether you plan to carry a balance from month to month determines what type of card you should consider. "Are you going to use it as a borrowing vehicle, or are you transferring balances?" asks Ben Woolsey, director of marketing for, a credit card offer comparison Web site. "That's a decision point that sends [small-business owners] in different directions.&quot


  Small companies that tend to carry a balance from month to month should seek out the lowest annual interest rate, or APR, they can find. But read the fine print, since rock-bottom introductory rates can give way to much higher charges, and balance transfer rates can vary wildly.

If you don't plan to carry a balance from month to month, then your options expand greatly. A credit card plan with different rewards programs may become your best option. The next question: does the card charge fees? Annual or other fees can eat into the savings your card is supposed to offer, so make sure fees don't negate the perks a card provides.

And what type of perk will provide the most benefit to your company? You might want discounts on the goods and services your business uses most, like air travel, shipping, copy and printing services, or computer hardware and software. If you travel often on business, find a card that offers bonus miles with no blackout dates.


  There are a lot of cards that offer airline miles programs. You can get a lot of bang for your buck on discount carriers like Southwest Airlines (LUV) and JetBlue Airlines (JBLU). For overseas flights, or if you have an affinity for one of the major airlines (American (AMR), United (DALRQ), or Continental Airlines (CAL), consider a card co-branded between the airline and a bank.

Numerous business credit cards offer cash-back rewards for business spending. As with airline miles, these rewards are a bonus for your company and they can be significant. But watch out for caps. Some companies enforce an annual cap, while others allow businesses to rack up unlimited rewards.

Like consumer cards, small-business credit cards also offer rewards for purchasing anything from electronics to gas. Business credit cards that offer points rewards typically earn at a rate of one point per dollar spent on the card, but some plans offer more. If it's merchandise you crave, seek out the plans that offer points for signing up or more than one per dollar purchase.

Once you've ironed out which, if any, rewards program you'd like, take a look at the other tools a card offers for monitoring your finances. Try to get a card that provides statements—particularly year-end statements—that help you monitor spending by purchase category. These statements also help you report rewards and simplify tax preparation. If you use programs like Quickbooks, then find a plan that allows direct downloading of statements into the program.

As competition between credit card companies heats up, the deals get better and better for small-business owners. Here are six to consider:


  Advanta, a company that caters specifically to small businesses, offers one of the best all-around deals for a small-business credit card. The Advanta Platinum Business Card offers a 0% APR for 15 months and a 7.99% fixed APR thereafter, while offering 5% cash back or travel rewards. And there's no annual fee for using the card and cardholders can choose a 2.99% fixed APR for life on balances transferred within the first three months of signing up. Another perk: "Customers put their own [business's] name on the front of the card. It brings instant credibility to a business," says Advanta's Weinstock.

The biggest downside to the Advanta card is that, though if offers 5% cash back on purchases like office supplies, Internet, and telephone service, there is a $300 annual cap on the rewards a small-business owner can receive. Therefore, this card might be best for very small businesses with controlled spending.

Discover has also recently released a multipurpose business card, geared toward a large segment of the small-business market. Its new Discover Business Card offers 0% introductory APR for purchases and balance transfers for 12 months, with a variable rate thereafter. It also offers a similar cash-back rewards program to Advanta's, including a 5% cash-back bonus on all office supplies, 2% cash-back bonus on gas, and up to 1% cash-back bonus on all other spending. There is no cap to the amount of annual cash-back rewards.


  The Discover Business Card also offers fee-free "PurchaseChecks" for vendors who do not accept credit cards. The checks offer the same cash-back rewards and the same APR and payment grace period as card purchases. Free employee cards with real-time customizable limits and monthly spending reports, as well as $0 fraud liability and no annual fee are more positives. Though Discover is just entering the market, cash back is its only reward program.

For those who travel a lot, an airline miles reward program might be the ideal choice. Some of the best airline miles cards are those that are co-branded between a major airline and a credit card company. The CitiBusiness/AAdvantage card offers 20,000 AAdvantage bonus miles after the first purchase, as well as the opportunity to earn one mile for every dollar a business spends on most purchases. There are no blackout dates and the miles never expire. The card also offers quarterly and annual account summaries, and additional cards for employees with adjustable credit limits.

As with many airline mileage programs, the downside is that the APR for the CitiBusiness/AAdvantage card is high—17.99%. And though it charges no annual fee for the first year, each following year is $75.

CitiBusiness (C) also offers another card with some appealing features, like 0% APR on balance transfers for 12 months, no annual fee, and 10,000 ThankYou points after your first purchase. ThankYou points are good for cash, gift cards, travel, and other purchases. The plan also offers three ThankYou Points for every dollar you spend on eligible business purchases, quarterly and annual account summaries, and free additional cards for employees with adjustable credit limits.


  Along with Advanta, American Express (AXP) has been in the small-business credit card field for a long time. Their Blue Cash for Business card offers up to 5% cash rebates, with no limit on cash rewards and no annual fee. It also offers a 0% APR during the first six months.

American Express also offers the Business Gold Rewards Card, which features complimentary enrollment in the Membership Rewards program and the ability to earn up to 100,000 points or more every year. There is no pre-set spending limit and no fees for the first year. This is a great card for business owners who may need to make large purchases on their card.

No matter what card you eventually choose, make sure to weigh the needs of your business against your desire for rewards. And don't be afraid to ask questions. After all, it's your money. When chosen wisely, the right credit card can be a good partner, saving your business time and money.