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Your Guide To Business Credit Cards
Smart Money

Your Guide To Business Credit Cards

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When COVID hit early last year, many of us found ourselves facing new challenges. For some, that may have meant dealing with the struggle of making ends meet while working reduced hours. For others, it may have meant looking for a new job after being let go, or perhaps re-training to find a way into a new, more promising career.

Despite the economic and financial uncertainty caused by the pandemic – or perhaps, because of it – some chose to look beyond those options, to start a new business. Starting a new business – or simply a side hustle – provided these entrepreneurial types with the potential to bring in some cash, while also giving them something to focus on now they had less of a commute, were working fewer hours, or had more social hours to play with during lockdown.

As a result, small business blossomed. According to CommBank, the number of new CBA Business Transaction Accounts surged 36% over the past six months, with much of that growth driven by Millennials. CommBank figures show Millennials (born between 1981 and 1996) accounted for 57% of all new business accounts over that six month period, up from 43% in 2015. Gen Z (those born from 1997) opened a further 10% of new accounts. (1)

Seemingly, starting a side hustle has been almost as popular as starting a new small business, with CommBank numbers indicating a proportional increase of 40% of those running with a new side hustle within this Millennial age group.

Funding Small Business Ventures

Just because a business is small, doesn’t necessarily mean its costs are. Depending on the business in question, there can be all kinds of set-up costs to cover at the outset, with the day-to-day running costs coming quickly – and repeatedly – from there on out. New business owners may have to make an investment in equipment, in premises, in products, in labour.

Add that to the fact that it can take months, or even years, to see any kind of profit on a new business, and you can see why many new business owners turn to credit when first starting out.

Small business grants from the government may be an option, but those funds only go so far. As do savings. Business loans and lines of credit can offer alternative ways to fund new businesses as they venture forth, and can also work for more established businesses looking to expand. But what about credit cards?

When used correctly, a business credit card can provide all kinds of benefits to business owners, whether they are big or small, new or established.

Let’s say you’re a business owner with ongoing costs to cover. With the right business credit card, you could manage your cash flow more effectively, while keeping your personal and business spending separate.

Beyond the basics, you could benefit from certain business-focused tools, allowing you to effortlessly export data come tax time, or perhaps track, monitor and limit additional cardholder spending on cards provided to trusted employees.

Want more? With a business rewards card, you could boost your rewards earn as you earn points on your day-to-day business spend. Meanwhile, there are perks a-plenty on higher end business cards, giving you and your additional cardholders access to extras such as airport lounges and hotel upgrades when you travel on business.

Business Credit Card or Corporate Credit Card?

Before we delve any deeper into the world of business credit cards, let’s take time out to discuss the difference between a business credit card and a corporate credit card.

Business credit cards are typically designed to be used by small to medium sized business, generally with up to 100 employees. The tools on offer are skewed towards the needs of these smaller businesses, with rewards earned in categories that smaller business owners are more likely to purchase in.

Meanwhile, corporate credit cards are designed to be used by larger companies and corporations with a much higher annual revenue, often with hundreds, or even thousands, of employees. These cards offer integration into corporate accounting software, and often come with a designated customer service representative and other perks more suited to corporate use.

Business Credit Card Eligibility

Okay, so a corporate credit card may not be for you – but is a business credit card? Let’s look at eligibility requirements first. Just like personal credit cards, business credit cards come with certain eligibility requirements, as set out by the card provider.

For the most part, you will need an ABN to apply. That means, depending on the card, you may be eligible to apply even if you’re a sole trader, a freelancer, an owner of a micro business, or you just do some work on the side of your main form of employment.

In terms of income requirements, most cards require you to be able to prove some sort of income from your business for you to qualify. In other words, the provider needs to know you will be able to pay back what you spend on the card. Other cards come with much higher income requirements. American Express, for example, requires an annual business revenue of $75,000 or more to be eligible for its business cards.

To give you an idea of what other factors providers may look at when you apply for a business card, here are the eligibility requirements of American Express beyond that income criteria. Applicants must:

  • Be over 18 years of age,
  • Be an Australian citizen or a permanent resident,
  • Have a good credit history and no payment defaults,
  • Have a valid ABN registered for GST.

Meanwhile, NAB has the following requirements regarding eligibility for its business cards. Applicants must:

  • Be a sole trader, a business partnership with no more than two individual partners, a company with five or less directors, or a trustee of an eligible trust. Joint borrowers who are not partnerships, or partnerships where one or more partner is a company are not eligible to apply.
  • Be at least 18 years old and hold an Australian citizenship or permanent residency.
  • Be registered for GST, and have a turnover of at least $75,000 per year.
  • Have been in operation for at least 12 months, and have a valid ABN.
  • Have a business and residential address in Australia.
  • Intend to use the card where the purpose is wholly or predominately for business purposes.
  • Have all ATO payments and loan repayments up to date.

Reasons To Choose A Business Credit Card

Okay, down to the nitty gritty. Why would you choose a business credit card over a personal credit card?

#1. Separate Your Spending

When you run a small business or side hustle, it can be all too easy to cover your business spending with your personal accounts, whether that means paying with your personal credit card, your personal debit card, or any cash you happen to have lying around. When you do that though, keeping track of each business transaction becomes troublesome.

Tracking down receipts and sorting out which spending relates to your business is both tedious and time consuming. Which could leave you to put it off until tax time, when it becomes an even larger, more tedious and time-consuming task.

The solution? Using your business credit card for all purchases relating to your business, you can keep your business spending completely separate from your personal spending. This not only makes tracking your business spend easier, it can also allow you to export all relevant data to categorise your spending while utilising accounting software, reducing the burden at EOY.

#2. Benefit From A Higher Credit Limit

When you apply for a credit card for personal use, you are assigned a credit limit based on factors relating to your creditworthiness as an individual. Using that personal credit card for business use, you may find the credit limit you are assigned is not high enough to cover your business costs.

On the other hand, when you apply for a business credit card, your ability to repay as a business owner, alongside the creditworthiness of your business will also be taken into account. You may find you are assigned a higher credit limit on your business card, especially when you apply within a jointly liable partnership.

#3. Simplify Employee Spending

Relying on petty cash is just not practical any more. But, business credit cards can offer a solution. With a business card, you can add a number of additional cardholders to the account, providing trusted employees with access to credit when they need it.

Let’s say your employees spend a lot of time on the road. By giving them each a credit card, you can allow them to fill up with petrol when needed, or to buy supplies when out and about. If your employees have to woo clients or suppliers, a business card could cover the cost of dining out, or any other business related activities.

Within the office, employees could use their card to pay for items or services the business requires when shopping online, or perhaps, to book travel.

No need to manage an expense reimbursement process, and it’s easy to track each cardholder’s individual spend. Most business cards allow cardholders to be assigned individual credit limits, while also giving the primary accountholder access to real-time tools that can turn card privileges on and off when required.

#4. Manage Your Cash Flow

One of the most appealing aspects of having a credit card is that it allows you to buy what you want now and pay it back later. When running a business, the ability to manage cash flow in this way can be vital. When you don’t have the funds to buy something essential to the business right now, but you know the cash is coming, your business card can take up the slack in the meantime.

Many business credit cards also offer interest free periods on purchases, just like personal credit cards. Making use of this interest free period, you can buy what your business needs now, to then pay it all back at the statement due date, while avoiding any interest accruing. As long as you’re smart, this essentially allows you access to credit at no cost (aside from annual fees).

#5. Utilise Business Tools

Business credit cards are designed to appeal to business owners, making life easier for them as they run their business day to day. As such, business credit cards often provide tools directly suited to business owners.

We’ve mentioned a few of these already – think easy data exporting to accounting software, and itemised statements and real-time tracking for additional cardholders – but you may find further business tools on offer. Your business card may offer access to certain business lounges when travelling, or to business services at certain hotel brands, for example.

#6. Earn Rewards

What appeals to many business owners is the fact that with a business credit card, it’s possible to earn rewards on business spending. Whether that’s covering rent on business premises, paying for flights and accommodation on business travel, or simply stocking the office fridge, you can earn points on every dollar you spend.

Depending on the card, you may find the earn rate on your business card is higher than the earn rate offered on the card provider’s comparable personal card. You may also benefit from higher points caps as a business cardholder, allowing you – and your additional cardholders – to stack up more points month to month.

#7. Get Bigger Intro Bonuses

Aside from a higher earn rate, you may also find business credit cards have bigger bonus points offers than personal credit cards of the same tier. While you will still need to meet the minimum spend requirement to take advantage of the offer, that larger chunk of points creates more value, helping you boost your points balance.

#8. Enjoy Extras Suited To Your Business

Perks! While some business credit cards focus on keeping costs down, others go all out on extras. With the right card and the right extras, you and your business could take advantage of some seriously rewarding extras. Want to go all out? The American Express Platinum Business Card is the perfect example of a feature-packed card built for business.

As a charge card, it has no pre-set spending limit, allowing accountholders to make large purchases when needed (subject to Amex terms). In terms of rewards earning, it offers an earn rate of 2.25 Membership Rewards Points per $1, uncapped, with 1 point per $1 on government spending. New members can also currently earn a whopping 250,000 bonus points, after reaching a $8,000 spend in the first three months.

Now, to those extras. First up, cardholders can make use of the American Express Platinum Concierge to assist with an array of travel and business related bookings. A dedicated Account Manager is also on hand to help with cardholder enquiries relating to business expenses, covering everything from questions about working capital to financing requirements, and everything in between.

While travelling, cardholders can enjoy access to more than 1,200 airport lounges, plus savings of up to 20% on First and Business Class Fares when booking with Platinum Travel Service. With complimentary Accor Plus membership, cardholders receive a free night’s accommodation each year and up to 50% off their dining bill, while Fine Hotels + Resorts privileges provide extras such as early check-in and late check-out, daily breakfast, and room upgrades.

Complimentary domestic and international travel insurance is also available, including Travel Accident Cover, Business Trip Completion Cover, Travel Cancellation and Travel Inconvenience Cover, and Baggage Insurance.

And cost? With the American Express Platinum Business Card in your wallet, you will pay out $1,750 in annual fees each year. But, you can add up to 99 additional cardholders at no extra cost – each of whom would be earning uncapped points on their spend.

What To Look For In A Business Credit Card

It’s safe to say that while the American Express Platinum Business Card certainly has its appeal, it’s not going to suit every business owner. The key to choosing a business credit card – just as it is for choosing a personal credit card – is to find the card that matches your needs, your spending and repayment habits, and your budget.

Here are some questions to ask as you compare business cards.

Do you need a charge card or credit card?

Most business cards are credit cards, however, there are some that function as charge cards, most notably within the American Express range. While they look the same, and in many ways act the same, charge cards are slightly different in that they don’t allow you to carry a balance (the balance must be paid off in full at the end of each month). Charge cards may also have no set spending limit.

Who do you want to be liable for the card?

Unlike personal credit cards, which place sole liability on the primary cardholder, business cards may offer a choice of liability structures. Joint and several liability can allow business owners to share liability, while with business liability, the business is held liable.

How do you plan on using the card?

Useability is an important aspect of a business credit card. It is essentially a business tool, which means it needs to be fit for purpose. In terms of using the card day to day, you would need to consider whether the card can be used to cover the costs of the business.

As an example, you may want to think about the card’s credit limits and the number of additional cardholders on offer. If you opt for an American Express card, you’d want to consider Amex acceptance, as well as the cost of that acceptance, where surcharges for accepting Amex may be higher than that of Visa or Mastercard.

How closely do you need to monitor additional cardholder spending?

Most business credit cards offer itemised statements for each additional cardholder, making it easy to track and monitor cardholder spending. However, you may look for additional tools, such as the ability to switch card features on and off for each cardholder, allowing or not allowing the ability to use the card online, to withdraw cash, to spend overseas and more.

What business tools do you need?

Again, this is about making sure the card is fit for purpose. If you use a certain accounting software, for example, you’ll want to choose a business card that allows you to automatically export data to that software, while perhaps providing extras such as spend categorisation.

Do you want to earn rewards?

If you want to earn rewards, look for a card that best rewards your business spend. Consider where you spend most – flights, expenses on the road, office equipment – and find a card that provides good points to earn on that type of spending. Also consider factors such as points capping, and what rewards program you want to earn on.

Q. Can you earn rewards on tax payments?

A. Some business cards allow you to earn points on government spending, including payments made to the ATO. However, you may find that this type of spending offers a lower earn rate than everyday spending, and there may be caps in place that affect the number of points you can take home. Fees may also come into play, but these may be tax deductible.

Can you pick up an awesome intro offer?

Bonus points can create serious value within a card, but there are some important factors to keep in mind before you let those bonus zeros carry you away. Read the small print to find out how much you will need to spend to get your hands on the bonus points offer, and make sure you can afford to pay back that spend before it starts accruing interest.

You may also find that you need to be new to the card provider – as in, not a current or previous cardholder – to be eligible for the points bonus.

Other intro offers worth watching out for include reduced annual fees, purchase offers and, occasionally, balance transfer offers.

What perks do you need?

It’s easy to get swept up in the promise of extras, but not every business needs them. As such, it’s not worth paying for them. Extras should create value, making the card more useful to your business. However, extras – and rewards – come at a cost, so you need to make sure the extras on offer provide more value in dollar terms than you pay out in annual fees.

How much will it cost?

You may find business cards tend to come with higher annual fees than their personal card counterparts. As we mentioned, it’s important to make sure that what you get out is more than you put in in terms of value. However, you may also find that the costs associated with keeping a business credit card can be tax deductible.

And interest? Business credit cards charge interest on balances carried over. While there are low rate options on the market, it’s best to avoid paying interest whenever possible by clearing your balance at the end of the month. It’s worth noting that not all business cards offer interest free periods on purchases, so this is something to look out for as you compare options.

Business Credit Card Top Picks

Ready to get into the comparison process? Here are some highlights within each category of business card.

  • No Interest

New to the market, CommBank Neo Business provides small business customers with up to $3,000 of credit, with no interest payments, no late payments and no foreign currency fees, for a fixed monthly fee. As a nice touch, customers will be refunded their monthly fee if they have no purchases in a month and the card balance is zero.

  • Basic / Low Cost

For cardholders who tend to clear their balance each month, the ANZ Business 55 Interest Free Days Card offers both an interest free period and handy features, such as monthly spend caps and transaction limits for each cardholder, and complimentary insurance covers. It has a $150 annual fee.

Cardholders who carry a balance may want to check out the ANZ Business Low Rate Card for its low rate and slightly lower annual fee, and with much of the same features.

  • Rewards

Earning points on the NAB Rewards program, the NAB Rewards Business Signature Card is currently offering 100,000 bonus points after a $4,000 spend. The card offers uncapped points earning at 1.25 NAB Reward Points per $1, with double points at major department and hardware stores, and triple points at Webjet and on overseas spending. The annual card fee is $175 (with an annual fee of $175 for each additional cardholder).

Earning Qantas Points, the American Express Qantas Business Rewards Card has 150,000 bonus Qantas Points and a $450 Qantas flight voucher on offer after a $3,000 spend, with 2 Qantas Points per $1 on Qantas products and services, and 1.25 Qantas Points per $1 on mostly everything else. For an annual fee of $450, you will receive two domestic Qantas Club lounge passes per year, and up to 99 additional cardholders at no extra cost. You can check this article for more options in earning Qantas points.

Earning Velocity Points, the American Express Velocity Business Charge Card is offering 100,000 bonus Velocity Points on a $3,000 spend, with an earn rate of up to 1 point per $1, or 2 points per $1 on Virgin Australia spending. For an annual fee of $249 (plus $99 per year for each additional cardholder), the card offers a number of perks, including two complimentary passes to domestic Virgin Australia lounges each year.

Earning American Express Membership Rewards, the American Express Business Explorer Credit Card has 100,000 bonus Membership Rewards points on a spend of $3,000, and up to 2 points per $1 on everyday spending, uncapped. Two complimentary entries per year to the American Express Lounge are offered alongside a number of other perks, for an annual fee of $149. Up to 99 employee cards can be added at no extra cost.

  • Perks

See the previous section on the American Express Platinum Business Card for its range of perks!

Note: All credit card info correct at time of writing.

What You Need to Apply

Ready to apply? Most card providers will have clear instructions regarding what you will need to apply, as well as any eligibility requirements. If you’re unsure, feel free to reach out to our team to answer any questions you may have. Otherwise, you can start gathering required info and documentation, such as your ABN and business income – and then apply.

Photo source: Getty Images
Founder - Roland B Bleyer

Roland Bleyer

Founder of Roland has extensive knowledge about credit cards in Australia. Known as a credit card expert, he has been featured on tv and in various publications. Some popular offers on our site right now include the ANZ Low Rate. This special offer has no annual fee first year, a low purchase rate and long 0% balance transfer. Have a look also at the huge 0% for 30 months balance transfer from Citi with no balance transfer fees.

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