Credit card companies recognize the potential of small and home-based businesses – the driving force behind the U.S. economy. Small business credit cards are designed specifically for these needs and are relatively easy to obtain for any small business owner. Corporations, on the other hand, have a more difficult process to follow. Let’s talk about them both – corporate vs. small business credit cards:
Small Business Credit Cards
Small business credit cards are designed specifically for the needs of small businesses. Once approved, business owners are personally responsible for their new credit card accounts. Although multiple individuals can be approved as ‘authorized users’, responsibility for payment falls solely on the primary account holders, normally the owner(s) and/or manager(s), who may have to provide their personal information, such as SSNs, if business credit isn’t already established.
Although there’s definitely some minor differences from one small business card to the next, most offer the same basic features: an attractive APR, high credit limit and simplified expense and account reporting. Depending on the card, you may also have access to cash discounts, frequent flier miles and other reward perks. Small business owners who wish to apply for a business credit card can simply submit an application.
Here are some of the main benefits associated with business credit cards:
- Helps regulate and control cash flow.
- Simplified record keeping.
- The ability to earn rewards and bonuses.
- High credit limits.
- Emergency protection.
- Easy to apply by mail, phone or online.
* To learn more, see our article on the benefits of small business credit cards
Credit Cards for Corporations
Credit cards designed for corporations, nonprofit and government organizations are issued to the corporations themselves and not to the individuals within the corporation. Credit cards are issued in the name of the corporation, nonprofit or government entity name, with officers of the corporation taking responsibility for payments. American business laws consider a corporation a separate individual and the liability is placed on the entire organization – not the individuals using the card(s).
To obtain corporate credit cards, an authorized officer must enter into negotiations with the credit card company to work out specific details of the agreement and to determine how it will integrate into their corporate financial structure. Credit cards are then distributed to corporate employees who can purchase on behalf of the company.
The most significant difference between small business credit cards and corporate credit cards is the way payment is made. Large companies and organizations often need to track, review, approve and reimburse their employees travel and entertainment expenses. Instead of receiving dozens of different hotel, rental car and restaurant bills each month from different employees using various methods of payment, the company will receive one large bill broken down in various ways – by type of charge, by employee name and by date. With the complex expenses of a corporation, specialized software is generally required to keep things in order.
Corporate vs. Small Business Summary
- Small business credit cards are prepackaged and advertised online and through the mail. Business owners are personally responsible for repayment. Both small business and corporate credit cards help break down expenses to assist with record keeping.
- Corporate cards can only be obtained through complex negotiations. The corporation is liable for all charges. Corporate credit cards go much further in expense reporting and may even require customized software to help keep track.
* See a complete list of our best business credit cards →