How To Get A Corporate Credit Card

A corporate credit card may sound like a good fit for your company, but if you’re like many business owners, you probably aren’t sure where to get started.

After all, personal and small business credit cards are ubiquitous, but you’re unlikely to encounter advertisements for corporate credit cards in your casual travels. You also won’t find easy, online sign-up forms for corporate credit cards.

However, as your business grows, you may find that you simply can’t handle your business expenses with just a small business card. After all, as your workforce grows, you can only add so many users to your small business credit card account.

Is a corporate credit card feasible for your business? How difficult is it to get a corporate credit card? And are you eligible for one? Let’s explore these questions and more with this step-by-step guide to the world of corporate credit cards.

1) Determine If You’re Eligible For A Corporate Card

Requirements for different corporate credit cards may vary, but they typically have some requirements in common. One requirement that should come as no surprise: Your business must be a corporation! Specifically, your business must be formally incorporated as an S-corp, C-corp, or LLC. For more information on what this means, check out our guide to different types of business structures.

Not only must your business be a corporation — your corporation must also turn a handsome profit. How handsome? Corporate card issuers typically require over $4 million in annual revenue. Since the issuer will be dedicating premium customer support services to your company — and without even the protection of a personal guarantee — they’re looking for an account with some serious clout.

Other requirements typically include expected annual credit card charges of at least $250,000, 15 or more card users within your company, and a good business credit score. Your company may also need at least one year’s worth of business history.

2) Consider The Pros & Cons Of Getting A Corporate Credit Card

One of the big advantages of corporate cards is that they streamline your company’s incidental and travel expenses. Your employees can charge work-related expenses to the company via their corporate cards, eliminating the need for subsequent reimbursement. This way, your employees won’t have to dip into their personal funds and your company will be spared the hassle of the reimbursement process.

At the same time, you can control how your employees use the corporate account. We’ll explain how this works in step 7.

Another corporate card perk is that the bank cannot come after your personal assets. That’s because corporate credit cards don’t require a personal guarantee. We’ll have more to say about different types of corporate credit card liability later.

Yet another benefit: Corporate cards are great for tracking expenses. You’ll be able to review the nature of your employees’ spending with a minimum of fuss. What’s more, card-holders can normally file their expenses electronically.

On the downside, your business must be well-established before you can even think of getting a corporate credit card (see the eligibility requirements from the previous section!). You won’t be able to rely on your personal credit score to get a corporate credit card. You’ll also want to demonstrate good corporate accounting practices. Banks will want to see good cash flow, for example.

Additionally, there are far fewer corporate cards available than there are small business credit cards, thus limiting your ability to shop around for the best deal.

Another drawback of corporate credit cards is that while many of them have rewards programs, they are often less generous that the rewards programs of small business credit cards.

For more on the pros and cons of corporate cards versus ordinary business credit cards, read our article on corporate credit cards vs. standard business credit cards.

3) Check Your Business Credit Score

When applying for a corporate credit card, the only credit score that matters is your business credit score. Again, your personal credit does not come into play.

Unfortunately, unlike with your personal credit score, you cannot obtain a free business credit report from the credit bureaus. Luckily, there are plenty of affordable services around that provide you with access to your business credit report.

So, how do you improve your business credit? Start off by making sure that your business has established credit with the big three business credit bureaus (Dun & Bradstreet, Equifax, and Experian). And if you haven’t already, be sure to open accounts in your business’s name, including a business bank account and a business phone line. You’ll also want to repay your business debts (early if possible) and remove negative marks from your business credit report.

For more on how your business credit score is calculated, what it means, and how to improve it, check out the following articles:

• Business Credit Scores: The Complete Guide
• The Ultimate Guide To Improving Your Business Credit Score
• Who Is Responsible For Business Credit Card Debt?

4) Know About The Types Of Corporate Cards Available

When getting a corporate credit card, your company can choose how to structure corporate card liability.

• Corporate Liability: With this arrangement, the company is solely responsible for all debts incurred. The company receives the bill directly from the card issuer. The issuer will not check your employees’ credit.
• Individual Liability: Under this arrangement, the employee using the corporate card is responsible for the debt incurred on the employee’s corporate card. The employee must pay the bill and then request reimbursement from the company. This arrangement requires that the issuer run a “soft pull” of the employee’s credit so that the employee’s credit score won’t take a hit.
• Joint Liability: Under joint liability, both the company and the employee are responsible for the debt. American Express issues this type of corporate credit card. Under this arrangement, if an employee’s corporate card is paid in full within 180 days, their personal credit will be unaffected, but beyond that, the issuer reports the delinquency to the credit bureaus and the employee’s personal credit score takes a hit.

Clearly, individual and joint liability programs pass more of the credit risk on to the employee, while corporate liability insulates employees from this type of risk.

5) Decide What Features You Want

Unlike personal and small business credit cards, corporate credit cards are not normally offered as a packaged deal. The sort of corporation that is eligible for a corporate credit card likely has very unique and specific needs. Corporations typically cut deals with corporate card issuers that are specific to the corporation in question, meaning two corporations could use the same corporate card but under completely different terms.

This means that you’ll have to work with the card issuer to determine the features your corporate card will carry. Most corporate cards come with rewards programs not unlike those of small business credit cards. You’ll still want to factor rewards programs into your calculations, but given the costs of maintaining a corporate credit card, rewards won’t play as significant a role as they do with the lower-tiered cards.

6) Find An Issuer To Work With

Corporate credit cards are issued primarily by large banking institutions, so there are far fewer options than there are with other credit cards. Since you’ll have access to far more customer service than would a personal or small business credit card holder, you’ll want to research those institutions’ corporate customer service policies and reputation.

Many issuers will want you to commit to a minimum number of cards and annual spending, so make sure you know what they expect from you.

Once you know what institution you want to get a card from, you’ll need to reach out to them by phone, in person, or submit an inquiry form to begin the process.

Corporate credit card issuers include American Express, Citi, Chase, and Capital One.

7) Create Guidelines For Employee Use

The main reason businesses use corporate credit cards is to streamline the work-related spending of your employees. This will require you to issue guidelines for how employees are to use the corporate card account, as corporate credit cards allow you to monitor and control employee spending.

You can place controls on the types of expenses and merchants for which employees can use the card, and you can limit how much your employees can spend, either overall or on a per-transaction basis. Employees pay the card issuer directly for any unapproved charges.

Make sure that the guidelines you establish for your employees make sense given the nature of your industry and of the expenses your employees are likely to incur in the course of their duties.

Final Thoughts

Corporate credit cards are an elite product for large, stable businesses with numerous employees. Expect more involved processes to apply, implement, and use a corporate card than you’d have with a personal or small business credit card. Think your business is a good fit for a corporate credit card? Take a look at Merchant Maverick’s favorite corporate cards.

Haven’t hit $4 million yet and still want a card? Consider a small business credit card or even a personal business credit card.