Frequently asked questions
What kinds of business credit card are there?
- 0% purchases: You won’t need to pay interest on the money you spend, generally up to a predefined amount or for a certain length of time.
- Cashback: You may get back some of the money your business spends in a year.
- Shopping and discounts: You may get vouchers or discounts with certain vendors as you build up reward points.
- Air miles and insurance deals: You may be able to reduce the cost of business trips with cheaper airline tickets and travel insurance.
Which business credit card is best?
If you’re an SME, you might consider the Santander business credit card, which gives 1% cashback. It has an annual fee of £30 a year and an interest rate of 23.7% per annum, though there’s an interest-free period of up to 56 days if you pay your balance on time.
If you’re a large business or a corporation, you might look at the American Express business credit card. It doesn’t have any spending limits, annual fees or an interest rate (because you have to pay the outstanding balance in full each month).
How do I apply for a business credit card?
- Your company name and contact details
- Your income and turnover
- The number of employees you have
- The date your business started
- The countries you trade with
You may also need to provide some identification documents – bank statements etc. – and, if you’re a sole trader, a provider may take a look at your personal finances.
They will base their final decision on credit limits and interest rates – and perhaps whether you qualify at all – on a number of factors. This may be what they think your business can afford, your company’s assets and your business’s credit history.
Will business credit cards affect my personal credit?
If you’re a sole trader, you and your business are considered one and the same and you’ll be liable for the debt you’ve taken on. If you’re in a business partnership, the liability for the debt will be split between the two of you. Any defaults or late payments are on you and will impact your personal finances.
But if you’re a limited company, your credit will be borrowed in the name of the company and you won’t be responsible for its payment. Late payments and defaults could lead to the liquidation of the company’s assets, but it won’t affect your own personal financial status.
As ever, check the terms on any deal you sign. They will make it clear where you stand. And if you’re ever struggling to cope with your business debt, you should seek advice straight away.
How do new businesses build credit?
Take quick action if anything goes wrong: There are free business credit monitoring tools to keep you up to speed on your credit score. Pay close attention and you’ll be able to react if anything looks unusual.
Diversify your business credit report: You should expand your profile to include credit accounts from a variety of lenders. If you’re paying everything off on time, a more diverse credit file makes you a stronger business.
Create a consistent business identity: Make sure your business name, address and phone number are the same across all your correspondence, invoicing and marketing materials. This will help business credit bureaus keep accurate files on your company’s credit.
Corporate cards aren’t right for every business. Read on to get a better idea if they’re right for you.
No matter how big your team gets, there are all sorts of ways to stay in control of company spending. Read on to find out how.