Business Credit Cards VS. Corporate Credit Cards

Business credit cards and corporate credit cards are both viable finance management options for business purchases, but there are some significant differences between the two that every business owner should know about before applying for either option.

Here’s what you need to know about the key differences between business credit cards and corporate cards and when to use them.

How Are Corporate Credit Cards Different Than Business Credit Cards?

Corporate cards and business credit cards are classic examples of the “every square is a rectangle, but not every rectangle is a square” phenomenon.

A corporate card is a type of business credit card. There are many types of business credit cards: charge cards, corporate cards, secured cards, and travel cards. While a business credit card can be a corporate card, when most people say “business credit card” they are often referring to a very traditional, run-of-the-mill business credit card that allows business owners to make purchases and carry monthly balances.

The big functional difference between corporate cards and business credit cards is that corporate cards are geared toward large corporations and operate as charge cards, meaning you can’t carry a monthly balance. In contrast, business credit cards target small businesses of every shape and size and often include APR rates, which charge interest on balances carried month-to-month.

The 7 Key Differences Between Corporate & Business Credit Cards

While corporate cards and business credit cards have some similarities, there are more differences than not between them. The good news is that these key differences make it really easy to tell which option is right for your business.

Here are the seven biggest differences between corporate credit cards and business credit cards.

Liability

One of the biggest differences between corporate cards and business credit cards is liability. When it comes to corporate cards, the business, not the business owner, is responsible for the debt, protecting the owner’s personal credit score and assets.

Traditional business credit cards, on the other hand, are usually based on the business owner’s credit score and often require a personal guarantee, meaning that the business owner is on the hook for any debt or delinquency.

Employee Liability

Because business credit cards do not have the personal liability protection that corporate cards do, employees with a business credit card may be subject to a credit check before becoming an authorized cardholder. With a corporate credit card, this wouldn’t be required since all of the liability is on the business, not the business owner.

This makes corporate cards ideal for issuing and managing employee cards.

Eligibility Requirements

Here’s the kicker about corporate credit cards — with great power comes great requirements? The tradeoff of having limited personal liability is that corporate cards are much more difficult to qualify for. You have to prove that your business is well-established, which means high revenue (think $1M+ in most cases) and large cash reserves in order to qualify.

Business credit cards have much more flexible eligibility requirements. Requirements will vary from issuer to issuer and card to card, but there will be options for every business history, credit score range, you name it. Business credit cards are also available for all business types, whereas almost all corporate credit cards require your business to be an S-corp, C-corp, or LLC (there’s only one corporate card issuer at this time that accepts sole proprietors).

Repayment Structures

Corporate credit cards function similarly to charge cards in that you have to pay off the balance regularly. Depending on the card, you’re looking at daily, weekly, or monthly repayments. This means there’s no APR with corporate cards.

It’s worth noting that some up-and-coming popular fintech companies are disrupting the traditional corporate credit card seen and offering more flexible repayment options with some ranging from 30-90 days, but you’re likely looking at even steeper eligibility requirements in order to unlock these repayment terms.

If you’re looking to carry a monthly balance, a traditional business credit card is a better way to go. If you carry a monthly balance, you will likely face interest charges in the form of APR (unless you get a card with 0% intro APR).

Employee Spend Control Features

While corporate cards and business credit cards have some similar cash flow and card management features, a key draw to corporate credit cards is their ability to set spending rules and purchasing limits on employee cards. This enables your company to manage budgets and cash flow more easily without dealing with the hassle of approving every employee purchase. Business credit cards may have some tools to manage employee spending, but they often won’t be as robust as what a corporate card offers.

Additionally, corporate credit cards generally don’t place a limit on the number of employee cards your company can request. While a few business credit cards allow an unlimited number of employee cards, many apply a cap.

Rewards Programs

With a few exceptions, corporate credit cards tend to offer bare-bones rewards schemes — such as just generating 1 point for every dollar. Business credit cards, meanwhile, tend to have unique and interesting rewards programs. Often, these cards incorporate bonus purchase categories targeted toward business spending — such as extra points for making office supply purchases.

Flexibility

While business credit cards may feature more appealing rewards programs upfront, corporate credit cards can offer a bit more flexibility when it comes to rewards structures and available benefits. It’s not uncommon for issuers to work with a company to design a card that best fits the company’s spending profile. With business cards, you usually won’t have any sort of customization — although there are many more options available.

Should You Choose A Business Credit Card Or Corporate Credit Card?

Ultimately, the best option for your business will depend on your specific use case. Generally, though, smaller businesses with only several (or no) employees will be best suited to apply for a business credit card. Larger companies with more significant cash flows will fully be able to take advantage of what a corporate credit card offers. Businesses in between a large business and a very small business may have a harder decision to make, so let’s dive into what might make you choose one option over the other.

Choose A Business Credit Card If…

• You run a business that only needs a few employee credit cards (less than 10-15)
• Your business doesn’t generate millions in annual revenue or lacks much cash in the bank
• Your business is not likely to meet corporate card eligibility requirements
• You wish to carry a balance
• You want to spread out payments for large purchases and/or wish to pay off a large purchase within a credit card’s 0% intro APR window

Get A Corporate Credit Card If…

• You need many employee credit cards (more than 10-15)
• Your company needs a robust way to control employee spending
• You want your company to be held liable for credit card debt
• You have an established business or well-funded startup that meets common corporate card requirements

If you think that a corporate card is a good fit for your business, take a look at the best corporate cards for businesses. If a corporate credit card seems like overkill, or if your business isn’t yet big enough to qualify for one, check out our top picks for the best business credit cards to see what your options are.

Can You Use Both A Business Credit Card & A Corporate Credit Card?

You can absolutely use both a corporate credit card and a business credit card.

When would using both be a good idea?

You may want to consider using both options if you want to maximize your spending rewards, or if you need a corporate card for employee spend management but want a business credit card for large purchases that you want to pay off over a period of time.

This is a particularly helpful tactic if you qualify for a business credit with a 0% intro APR window that allows you to pay off a purchase in full with no interest over a period of a few months without taking out a small business loan or line of credit.

If you go this route, check out our additional credit card resources like:

• How To Get A Corporate Credit Card
• How To Get A Business Credit Card
• Creating An Effective Corporate Credit Card Policy