Business credit cards UK

Also known as corporate credit cards, business credit cards are a great way for a business to access additional funds quickly when it’s needed. They’re great for managing cash flow, keeping track of expenses, and spreading costs as well as some other key features which we explore here;

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Business credit cards UK

How do you get a business credit card?

Similar to a personal credit card, a business credit card is issued to a business account instead of a personal bank account. A business credit card will give you a credit limit based on your business’s credit score which establishes the agreed maximum limit that can be outstanding on the card.

When looking for a business credit card, you might focus on the interest rate which applies if you don't pay off the balance. There are a few other things to think about too, for example, most lenders offer an interest-free period on their corporate credit cards. This means you’ll only pay interest on the outstanding amount if you exceed this period. The usual period is 45 days but some allow up to 90 days.

Do business credit cards build credit?

You can improve your business credit score by paying your credit card bills on time consistently. In doing so, your business could be eligible for more credit down the line because you’ve shown the lender your company is trustworthy.

It works the other way round too, as failure to keep up with repayments can have a negative impact on your business credit.

The benefits of a business credit card

There are many benefits a business credit card offers your business;

  • They help spread costs

  • Facilitates staff spending

  • Helps businesses keep track of short-term expenses

  • Several cards can be issued to the same account, giving employees the same access

  • Manages cash flow

Whilst there are many more benefits of having a business credit card, it’s important to bear in mind that the credit limit remains the same, and all spending will be taken out of the same account.

Who can get a business credit card?

As long as you’ve registered a business and have started trading, you should be eligible for a credit card.

As company credit cards are a type of unsecured lending, the criteria are fairly stringent and the limits are strict. As such, they’re most often used for convenience by already creditworthy companies. Like all unsecured lending, the things that matter most to the lender are your credit rating, trading history, turnover and profit.

How to get approved for a business credit card

Applying for a business credit card is reasonably easy, and can be done either in a bank branch or online. It’s important to remember, if you’re applying for a card with your bank, you typically need to be an existing customer. Whilst the application may be quick and easy to fill out, it can still take time for a business credit card to actually be processed as the lender will need to understand your eligibility. To apply, you will need to answer a few questions about your business, your desired credit limit, and the number of cards you’d like to have. When applying for a business credit card, lenders will most likely look at your business credit score, as well as additional documentation such as bank statements. In some cases, they would want to check your personal credit score too. This can be the case if your business is very new, and therefore doesn’t show much of trading history. Depending on your business’s credit rating, the credit limit can vary from £1,000 up to £10,000. Even other features of your business credit card such as interest rate, interest-free period, or rewards depend on your credit report. The rule of thumb to remember is: the better the credit rating, the better the offers. Start your application today

Can you get a business credit card with no credit check?

Here’s the thing ― you’ll always have to go through a credit check since none of the lenders offers business credit cards without any credit check at all. If you have a bad credit score, lenders might be reluctant to offer you a business credit card. But that doesn’t mean you can’t get one. Some lenders might give you a very low credit limit to start with, but by paying back the funds consistently you can build up your credit score — and therefore might be able to get a higher credit limit or better rates later on.

Are credit card fees tax deductible for businesses?

Yes—business credit card charges can count as an allowable expense, so they can be deducted when calculating your taxable earnings (although you should check with your accountant, as everyone's individual situation is different). Once you’ve set up your credit card, you can improve your business credit rating by using the credit limit and paying back the balance each month and on time.

Managing cash flow with a business credit card

A corporate credit card can be used for managing cash flow short-term expenses in cases where you don’t have enough working capital which means it can be seen as a revolving credit facility. Whether you need to pay a supplier, redecorate, buy more stock or simply need working capital, a business credit card can be your emergency lending — provided the limit is high enough. You can also track and limit employee expenses which can be useful for businesses that accrue daily expenses as part of their day-to-day work. Many credit cards offer the ability to specify limits for each employee too, which also helps business owners stay on top of spending.

Business credit card rewards

Business reward credit cards are great and can be really useful when you want to earn points as you spend, no charges for ATM use, and even get money off flights. This is particularly beneficial when you’re travelling a lot for business purposes.

As with all credit cards, there are certain factors you need to bear in mind before choosing your reward credit card. For instance, if you don't pay off the full balance every month, interest charges might outweigh any rewards. Rewards can be external benefits such as:

  • Cashback

  • Reward points

  • No FX UK ATM charges

Sometimes, membership rewards points can be redeemed on office equipment, corporate entertainment, or business travel. It’s best to be beware of any annual fees ― with most credit cards, you might find that the greater the number of rewards, the higher the fees. It’s also worth mentioning that some business credit cards exclude rewards on international purchases.

It’s important to choose a corporate credit card that suits your needs, so you should ask yourself whether you’d benefit more from an interest-free period or cashback, for example.

Many of the providers offering personal credit cards also offer them to businesses, the major players being MasterCard and VISA. Many of the high street banks offer corporate credit cards, as well as independent lenders, who sometimes combine their existing revolving credit facilities with the credit card.

How to compare business credit cards

With so many business credit cards available in the market, it can be tricky to know where to start when you’re comparing them. Cards can be designed to be used for particular purposes such as buying materials and stock or transferring balances. When you’re comparing business credit cards these are the key factors you should look into:

Interest rates

Business credit cards can be expensive if you don’t pay the outstanding balance each month as interest rates are higher than personal cards. The interest rates for credit card purchases are usually between 15-25%.

A lot of providers offer an interest-free period on business credit cards which can be a real bonus to businesses so you should definitely check whether yours has one.

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Extra charges and fees

Some business credit cards charge annual fees so when you’re weighing up different businesses credit cards, check the benefits offered by a particular card aren’t cancelled out by an annual fee.

Some providers also charge inactivity fees, a charge that’s applied if you haven’t used the card for a set period of time, which is worth thinking about if your business needs flexibility.

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Credit limits

This is the maximum amount that can be outstanding on the credit card. Your credit limit will be based on your business’s creditworthiness and usually varies from between £1,000 and £10,000.

Initially, lenders may give you quite a low credit limit as you’re a new customer and they don’t know how consistent you’ll be with payments. If you establish yourself as a responsible customer, the provider might be able to give you a higher credit limit.

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Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

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A lot of business card providers offer rewards for taking a card out with them. These are things like air miles, cashback and shopping points. Business credit card rewards can be a great way to make back some of the money spent on the card.

It’s worth thinking about how much value the rewards will have for you — if a card offers you air miles as a reward but you don’t take flights for business trips, that card’s reward isn’t for you and you might be paying a premium for something you won’t use. Find out more about business credit card rewards.

Looking for finance?

Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

See your Funding Options

Are business credit cards personally guaranteed?  As company cards are a type of unsecured finance, lenders often require a personal guarantee to reassure them that if your business is unable to pay the debt, you will. This means a lot of lenders will ask for a personal guarantee. There are some lenders out there that don’t require a personal guarantee for business credit cards but it’s quite a rare feature.

How long should a business keep credit card receipts?

As with other records, HMRC suggests businesses should keep receipts for at least six years - even longer in some cases. If they show a transaction that covers more than one of the company’s accounting periods, as an example. For more information, see the HMRC website.

How to get a business credit card for new a business

When it comes to applying for a business credit card, you'll naturally want to shop around to find the best fit. However, as there are so many options to choose from it can be difficult to know where to look. Why not use our platform to compare the different business credit cards your business may be eligible for.

Downsides to business credit cards

The most obvious downside to business credit cards is that they are fairly expensive if you don’t clear the full balance every month. Whilst APRs vary, they tend to be in the 15–25% range, meaning the interest can quickly stack up if you let the outstanding balance carry over.

Another drawback of a company credit card is the limit is usually quite low compared to other types of business finance. With a limit of £10,000, for example, you’ll have enough for a month’s worth of business expenses, but that amount wouldn’t suit bigger investments or even growth projects.

It’s also important to consider the impact even the best cards can have on managing cash flow. Businesses need to pay careful attention to the statements to ensure they’re not letting the interest build up. The way the repayments work doesn’t suit all businesses either, as an interest-free period of 45–60 days means you’ll have to pay in July for things you bought in May. This can make it easy for overspending to creep up on businesses.

Finally, your suppliers won’t necessarily accept payment via credit card, often preferring to issue invoices, in which case you’ll have to pay them via bank transfer. For these cases, a business credit card won’t be much help.

Business Credit Cards

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