Business credit cards

Looking for a credit card for your business? Know Your Money covers all the frequently asked questions. Just click on the headings below for the answers to your most frequently asked questions.

aqua Classic Credit Card
Apply online
  • 29.7% APR (Variable)
  • Start with a credit limit of £250-£1,200 and you could get an increase on your 4th statement
  • Free unlimited access to your credit report
  • Text reminders, so you need never miss a payment
Representative Example: Assumed borrowing of £1,200 for 1 year, at a Purchase Rate of 29.71% (variable), representative 29.7% APR (variable). Credit available subject to status.

Business credit cards quick facts:

  • Business credit cards provide a flexible means of borrowing for commercial organisations

  • Your personal finances will affect and be effected by your business credit card if your are a sole trader or run a partnership

  • Business credit profiles also affect your application - you can check your profile with the three major credit ratings agencies

  • Business credit card fees and interest are tax deductible, if the purchase was solely made for business purposes

  • Business credit cards are not covered by 'Section 75' purchase protection as consumer credit cards are, however other purchase protection and insurance is available

How do business credit cards work?

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Business credit cards work in much the same way as personal ones. You are issued with a card and a set maximum limit and you can spend up to that limit in outlets, online and through cash advances. You are charged interest on any negative balance that remains on your card at the end of your billing period.

The key differences from personal credit cards is that the card will be registered in your the name of your business, rather than your own, and you may be able to negotiate a significantly higher credit limit than would be typically available to individuals.


What are the benefits of business credit cards?

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Business credit cards offer small commercial organisations a flexible source of casual borrowing that can provide pivotal liquidity in times of need. You are able to borrow at will, transaction by transaction, up to your credit limit. You then pay the debt back equally as flexibly, in instalments and a period of your choosing.

This means the card can be used in emergencies or in lieu of expected payments, or otherwise as suits your needs. Business credit cards sometimes offer additional benefits such as cheaper rates on commercial products and services or business advice.


What are 'business charge cards'?

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Business charge cards work in very similar way to business credit cards, except for one key difference: with a charge card account, you must pay off all of your spending at the end of each month, whereas with a credit card you can leave debt remaining on your account. Charge cards are therefore an effective way to allow you and your employees to buy items for your business without the risk of running up large debts over a long period of time which must be serviced with accumulating interest.

As providers don't make money form interest (unless you fail to pay your bill) they usually charge an annual fee for running an account, starting at around £100 per year for a single card.


Who offers business credit cards?

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Business credit cards are offered by all major banks and building societies as well as specialist providers such as business-specialist financial institutions, credit unions, trade bodies and others. Credit cards for small business - typically classed as up to around £10m annual turnover or 100 employees, differing form bank to bank - are usually offered through banks' retail divisions, as opposed to their commercial factions. The latter offer services to larger organisations.

However, the services for small business may be offered through a dedicated arm of the retail bank and might not necessarily be fully serviced through branches. Paying your bill over the counter will not usually be a problem, and you can access services online and over the telephone.


Who can apply for a business credit card?

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Banks set out different rules for who can and who cannot apply for a business credit card, but as a general rule of thumb they usually make stipulations of a minimum annual turnover for your business and a lack of personal or business county court judgements within the last six years. The banks may also stipulate that you have been a customer for a set length of time before applying, or that you hold certain accounts.


Will my personal finances affect my business credit card and vice versa?

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Whether or not your personal finances and financial history affect and are affected by your business credit card depends on the type of business you run and your position within it. As a sole trader or a member of a partnership you will usually be held personally liable for business debt and your previous personal financial history will be taken into account within your application. If you run a limited company your business affairs will be independent of your personal finances.


How much can I borrow with a business credit card?

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Businesses can often obtain credit limits of tens of thousands of pounds. In some cases they can even access unlimited debt, once they have proved that they are stable and economically sound.

However, your credit limit could be capped significantly while your business is in the start-up stage, if you have low-level income, or if you have experienced financial difficulties in the past.

The actual credit limit you are offered will be dependent on your business's credit rating, age, turnover, liquidity, accounts and similar factors. Your personal credit rating may be factored in as well.


How do I check my business credit rating?

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The three major credit ratings agencies are Experian, Equifax and CallCredit. All three hold credit reports on your business, detailing items from your financial history such as accounts held, credit granted and applied for, and any financial judgements made against you by courts.

The major information held will be the same across the three, although there could be smaller discrepancies between them. When you apply for credit through your business, the loan provider will usually select one of these three as their point of reference for your business' credit worthiness.

You can check your rating with each company as either a one-off in exchange for a small administration fee, or on an on-going basis through a subscription. You can also sign up for auto alerts when something on your file changes. It's a simple process to sign up or check your rating as a one off. Both can be actioned through the companies' websites.


How does debit interest work on business credit cards?

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As with personal credit cards, you will need to pay interest on any debt that you do not clear within your billing period. The way this works in practice is that you will receive a bill after your first month or so of having the card and will be given a further period - usually 28 days - in which to make a payment of anything between a minimum level (usually 2-3% of the total bill) and the entire debt. Any balance that you have left on the card at the end of the billing period from the first month's spend will be subject to debit interest, which will be added to your debt.


What other fees do I have to pay with a business credit card?

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As well as debit interest, business credit cards often charge an annual fee for the use of the account, and sometimes each card issued on it. This charge typically sits at around £30 per card per year, although it can differ significantly from provider to provider.

You will also be subject to individual fees on certain transactions, charged either at a percentage of the total transaction value or at a set amount. Fees are usually charged on cash advances and balance transfers but can be imposed on payment transactions too.


Are business credit card fees tax deductible?

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Normal fees, charges and interest paid as a result of using a credit card for business purposes are tax deductible. However, there are exceptions and complications when the transaction could be deemed to be for personal benefit, either to you or an employee who uses the card. Check with your bank, accountant, or HRMC about what you can and can't deduct.


Are business credit cards good value?

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Business credit cards often carry a more expensive APR (annual percentage rate) than a business loan but have the flexibility of being able to be pad off quicker, meaning less interest could be paid overall. Business credit cards are usually comparable in interest rate to business overdrafts, although this depends on individual circumstances.


How do I choose a business credit card?

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When choosing a business credit card it is important to weigh up the finances involved, including all interest rates, maintenance fees, late payment charges, and transaction fees. You must also consider how you will access the account, whether that's online, over the telephone, in branch or in third party outlets. Finally, you can consider the additional benefits and services offered through the card such as cashback, air miles and business support facilities.

You can weigh up a range of leading business credit cards using Know Your Money's comparison tables here.


What alternatives are there to business credit cards?

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Alternative forms of financing for small businesses include business overdrafts, commercial loans, peer-to-peer lending, crowd-funding and venture capitalism.


Can I have more than one card on the same account?

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Most business credit card providers will allow you to have multiple cards on one account, to be issued to and used by your employees. You may have to pay additional fees for each card you use. Each card will be issued with an individual pin number.


Can I keep track of my employees' spending?

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Business credit card providers usually offer separate statements or itemised billing associated with each individual card, meaning you can track each transaction or overall spending levels to each employee you issue a card to. You can also put individual credit limits on each card, as well as temporary blocks if needed.


Can I get interest free offers on a business credit card?

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As with personal credit cards, there are 'zero per cent deals' available on business credit cards where you won't have to pay interest on balance transfers and/or purchases for a set amount of time, sometimes up to two years.


Can I transfer my balance from one business credit card to another?

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As with personal credit cards, if you have a large balance on a business credit card which you don't intend to pay off in the near future it may be prudent to transfer the debt to a new card that offers an interest free period on balance transfers. This period can last up to two years, during which time you won't pay any interest on the amount you move over.

However, be aware that repeatedly transferring a balance from one credit card to another may be perceived negatively by banks. They might then deny access to further services in the future. Banks subjectively analyse all instances of credit, granted and applied for, registered on your business - and sometimes personal - credit profile.


Do business credit cards qualify for 'Section 75' purchase protection?

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Business credit cards do not qualify for 'Section 75' purchase protection. The protection -which automatically protects purchases over £100 made using personal credit cards - is covered by the Consumer Credit Act, and therefore does not apply to commercial credit cards.


What other purchase protection and insurance is available for business credit cards?

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Business credit card providers often offer purchase protection, either for free or for an additional fee. The protection usually offers a guarantee on purchases made over a certain value, claimable for a fixed length of time following the transaction. It will see the provider issue refunds where the goods or services purchased fall short of what was advertised, within the protection providers' terms and conditions.

Further insurance is sometimes offered against misuse of the card or fraud.


What other business benefits are offered through business credit cards?

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Additional business benefits often offered through commercial credit cards include access to professional business services and facilities, discount and rewards schemes on travel, business advice, software, and membership of trade unions and support organisations.


Important Notice
This guide is intended for general information only and is not intended as, and does not constitute, any form of advice, recommendation or endorsement by us of any particular product(s) or services and you should rely on your own further research and professional advice in relation to your specific requirements and circumstances before purchasing any products or services. Use of this guide is subject to the Terms of Use of the KnowYourMoney site.