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What Is A Corporate Credit Card & Does Your Small Business Need One?
Corporate cards can be a great choice for certain businesses, offering good benefits and flexible spending, but there are definite pros and cons to these credit cards.
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WRITTEN & RESEARCHED BY
Senior Staff Writer
UPDATED
Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.
A corporate credit card can be a must-have tool for big organizations. But can a small business benefit from using a corporate card, too? What is a corporate credit card, anyway? How are corporate cards different from business credit cards, and which one is best for your business?
Corporate credit cards aren’t a good option for every small business. In fact, not every small business will qualify for a corporate card. (In that case, you can choose one of the best business credit cards instead.) Getting a corporate card isn’t as simple as filling out an online application. And properly managing a corporate card program takes some work.
Ready to learn everything you need to know about corporate cards? Let’s dive in!
Table of Contents
- What Is A Corporate Credit Card?
- Two Types Of Corporate Credit Cards
- How Does A Corporate Card Work?
- How Is A Small Business Credit Card Different From A Corporate Card?
- Advantages & Disadvantages Of Corporate Cards
- Should You Use A Corporate Card?
- How To Get A Corporate Credit Card & Use It
- The Bottom Line On Corporate Credit Cards
- Corporate Credit Card FAQs
What Is A Corporate Credit Card?
A corporate credit card is similar to a standard business credit card, at least on the surface. You can use one to make purchases and earn rewards. But a corporate card often comes with added tools for tracking spending, free cards for employees, and useful integrations to business software you may already be using.
One key difference is that corporate cards usually target large companies. Although there are exceptions, not every corporate card will be a good fit for a small business. Some business types, such as sole proprietorships and unincorporated businesses, may not qualify at all for a corporate card.
Two Types Of Corporate Credit Cards
The best way to understand corporate credit cards and how they work may be to look at some actual corporate cards.
Let’s start with some corporate cards from familiar names in the traditional banking space:
Next, here are some newcomers from the financial technology world, also known as fintechs:
How Does A Corporate Card Work?
Corporate cards are designed to help companies track and control employee spending and often feature strong financial toolsets.
In many cases, corporate cards function as charge cards. Charge cards operate a bit differently from normal credit cards. Instead of carrying a balance from month to month, users must pay off their card balance in full regularly.
Many businesses give employees their own corporate cards. These cards can be used to make purchases and often deliver rewards for spending, just like traditional credit card rewards.
Corporate cards can also give companies deep insights into individual employee spending, potentially spotlighting misuse before things get out of hand.
Some corporate cards are directly tied to the business’s bank account. Corporate card issuers may provide flexible terms so that companies can choose how often they pay off their balance, with rewards rates sometimes tied to payoff frequency.
Between rewards, tools for expense management, flexible terms, and employee spending controls, corporate cards deliver excellent benefits for many companies.
How Is A Small Business Credit Card Different From A Corporate Card?
While corporate cards and business credit cards function similarly in terms of making purchases, a few key differences emerge. The table below highlights the most common differences, though are some exceptions.
| Small Business Credit Card | Corporate Card | |
|---|---|---|
| Who Can Apply | All business types | May be limited to corporations; no sole proprietors |
| Personal Guarantee | ||
| Carry A Balance | ||
| Cash-On-Hand Requirements | ||
| Credit Check | ||
| Employee Cards | 10-15 | Unlimited |
| Expense Management | ||
| Rewards | ||
| Annual Fee | Some |
Let’s take a closer look at three key differences:
Advantages & Disadvantages Of Corporate Cards
Unsurprisingly, you’ll find both benefits and drawbacks when you consider using a corporate card. Here’s a summary of some key benefits of corporate cards:
Cards For Employees Who Need Them: Typically, you can get business credit cards for only 10-15 users within your company. Most corporate cards offer unlimited cards for employee use, and that often includes one-time-use virtual cards.
Control Employee Spending: Because you can set custom limits and rules for each employee to control spending, you won’t waste time and effort coordinating the details. Whether they’re traveling on company business, entertaining clients, or purchasing supplies, they’ll only be able to spend in approved categories up to approved limits.
Easy Expense Management: You won’t need to preapprove purchases, and you won’t have to review and track every receipt. You’ll see all employee expenditures on a single statement each month. Most corporate cards have a mobile app so that employees can submit receipts electronically, and you can monitor them on the go.
Easier Record-Keeping: Corporate cards make business transactions fast and traceable. Some corporate cards allow employees to submit receipts electronically, and those expenses can be coded automatically, too. And you won’t have to worry about lost receipts anymore. Most corporate cards let you view and monitor expenditures in real time.
Those benefits are undeniably impressive. But using a corporate card won’t be the right move for every business. Let’s take a look at some of the drawbacks of corporate cards, too.
Eligibility Limitations: Your business may not meet the requirements for approval. Most corporate cards exclude very small businesses, including sole proprietorships. Many have strict requirements for annual income, annual spending, the number of employees, and the amount of cash you need to have on hand.
Repayment Requirements: Most corporate credit cards function as charge cards. You will not be allowed to carry a balance on a corporate card. You may have to pay off your balance with daily repayments.
Potential For Misuse: The more employees you authorize to spend company resources, the greater the potential for misuse. Although most corporate cards offer easy-to-access tools for monitoring employee spending, those tools won’t help you unless you put them to use.
Should You Use A Corporate Card?
A corporate card and a traditional business credit card are both reliable methods of managing business spending. So, how can you be sure which is the right choice for your business? Here are our suggestions.
How To Get A Corporate Credit Card & Use It
Now that you know more about corporate cards, you’re probably wondering how to get one. Luckily, the process isn’t complex, and it’s similar to the process of applying for a personal or small business credit card.
To start, make sure your company qualifies for a corporate card. This usually means your company must be an S corporation, a C corporation, or an LLC. On top of that, you might need to hit certain cash, revenue, or credit requirements. These vary by card provider, so be sure you understand these requirements before you apply.
Next, determine which issuer you want your company to work with and reach out to learn its application process. Fortunately, most corporate cards make it easy to apply online, and decisions often are issued very quickly.
Once you’re approved to use a corporate card, you can immediately start to use it. You won’t even have to wait to receive your card in the mail! Most corporate cards come with unlimited virtual cards, so you and your employees can start making charges right away.
Get a more detailed look at the process of getting your company a corporate card with our guide, How To Get A Corporate Credit Card.
The Bottom Line On Corporate Credit Cards
Corporate credit cards are getting a lot of positive press these days. Relative newcomers like Divvy, Ramp, Brex, and Rho continue to shake up the world of business spending, to cardholders’ benefit. At the same time, there’s nothing wrong with going the tried-and-true route and using a traditional business credit card for your company’s spending.
If you decide that it makes sense to apply for a corporate card and give cards to employees, spend some time setting up an effective corporate card policy to make sure workers use their cards correctly and your business assets are protected. Whether you issue corporate cards to a large number of employees or business credit cards to a select few, you should learn about the right way to give credit cards to employees.
One final word of caution: Whether you choose a corporate card or a traditional credit card, make sure that you and your employees use it only for legitimate business expenses. Mixing business and personal expenses is never a good idea.
Corporate Credit Card FAQs
Kate Hoots
Senior Staff Writer at Merchant Maverick
Kate started writing on business topics in 1996, working for groundbreaking B2B newsletters Communication Briefings and The Competitive Advantage. She joined Merchant Maverick in 2020 and is an expert in business banking, insurance, and eCommerce. She has been featured on NBC TODAY, Yahoo News, GoBankingRates, Scripps News Syndicate, and CBS Radio. She has a bachelor's degree in English literature from Lewis & Clark College and lives in Canby, Oregon.
View Kate Hoots's professional experience on LinkedIn.
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