Things to consider before switching to a corporate credit card

Sep 1, 2020

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Small business credit cards can help you carefully manage your company’s expenses while earning valuable cash back or travel rewards. At some point, as your profits and employee headcount increase, you may start to outgrow the cards you originally started with. Today, we’re going to take a look at things to consider when you are thinking of switching to a corporate credit card.

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In This Post

Be prepared to share financial data

Not all business owners can qualify for a corporate credit card. Issuers set minimum revenue benchmarks and require that you have an established business credit score, among other specific criteria.

American Express, for example, requires your company to have grossed more than $4 million in the previous fiscal year, have a business address separate from your home address and have been in business for at least 12 months to qualify. Additionally, you can’t be classified as a sole proprietorship.

You’ll also have to meet minimum spending requirements. For instance, Capital One says its commercial card program is designed for businesses with a minimum annual card spend of at least $1 million.

Of course, you’ll have to prove to the issuer that your company meets all of those criteria. Amex says to expect to be asked to provide the following:

  • Recent audited financial statements
  • Details on your company’s structure and organization
  • Tax information, including a federal tax ID
  • Contact information for your company’s authorizing officer

If you’re looking to take the next step in your company’s credit needs but don’t quite meet the thresholds established by the major issuers, you could also look into applying for the Brex card, a relatively new product from high-flying fintech startup Brex. This is designed to be a corporate card for startups, but the company uses innovative technology to improve its underwriting standards and make the card more accessible to companies that are still in the growth stage.

Related: Brex corporate card for startups review

Limiting personal liability

One big reason to switch to a corporate credit card is to rid yourself of the personal liability to repay charges. All small business card applications require your personal social security number, and it’s your personal credit report that’s used to approve the application. Your corporate card can be set up so that your company is responsible for repaying the debt, not you personally. Depending on how much your business is charging to its credit cards, this reason alone might push you to switch to corporate card sooner rather than later.

Close-up of a pensive young woman on a coffee break at cafe, enjoying a fresh cup of coffee while using a tablet for an online transaction.
A corporate credit card might make sense if you’re looking to limit your personal liability for company credit card charges. (Photo by gruizza/Getty Images)

Headcount and expense management

If you’re happy with your Ink Business Preferred Credit Card, for example, you don’t have to switch to a corporate card just because your business is growing. But Chase says you should start thinking about a corporate account if the number of employee cards you’ve distributed approaches 100.

Related: Small business credit card vs. corporate credit card: Which is right for your business?

Corporate accounts also come with more sophisticated expense management tools than you might otherwise find on small-business card accounts, including software that will allow you to integrate card spending with your general ledger to reduce manual data entry. And, much like with small business cards, you’ll be able to monitor and restrict individual employee spending based on the amount or category of spending.

Yes, there are still rewards

Corporate cards still offer rewards and travel benefits, but you may find the programs aren’t quite as lucrative as you’ll find on small business cards. The One Card from Capital One offers tiered rewards: 1.5x on all spending if you choose a 14-day billing cycle or 1.25x points on all spending if you choose a 30-day billing cycle.

That’s a noticeably lower return than you’d get on either the Capital One Spark Cash for Business or the Capital One Spark Miles for Business cards, but businesses spending hundreds of thousands of dollars each year will still rack in a pretty penny in rewards at those rates.

You may also have a higher annual fee for employee cards when you go corporate than you are charged with small-business cards. But the higher cost does come with more flexibility in how earned rewards are distributed. American Express says you can consolidate earned points from multiple corporate cards for company redemption or allow employees to redeem them individually through the Membership Rewards program. Going the second route could serve as an employee incentive, and absolve you from having to manage your companies ever-growing stash of points.

Bottom line

If you’re a business owner and your firm is big enough to qualify for a corporate credit card, it may be worth exploring, if for no other reason than you’ll be able to protect yourself better from liability. That can be a strong incentive. But you may also be looking for a more robust way to track your employees’ spending. When you have dozens or even hundreds of employees, the tools business credit cards offer just may not be appropriate for your needs.

Featured photo by FangXiaNuo/Getty Images

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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