Tap Business Charge Cards for Credit

By Marc Carbajo

Business charge cards are an alternate option for small businesses seeking access to additional credit. The balance on a business charge card account must be paid in full when the statement is received. It cannot be rolled over from one billing cycle to the next like a credit card.

The interest component is what differentiates a charge card from a credit card. Interest is paid on a credit card balance which can be carried to the next billing cycle. Because you can't carry a balance, business charge cards do not have a periodic or annual percentage rate.

Charge Cards Offer Credit, Personal Protection

Business charge cards afford small businesses short-term credit without having to pay costly interest fees. Since charge cards do not enable revolving debt like a credit card, they help enforce strict debt management instead of potentially letting it spiral out of control as might be the case with a traditional credit card account.

Capital is vital to growing a business, or sustaining it during tough times. Before a small business owner considers using personal credit to finance business operations, they should consider business charge cards. When applying or using charge cards, business owners should make sure that payment history is applied only to a business credit file, and not the owner’s personal credit.

Picking the Right Business Charge Card

Many banks and lenders offer business charge cards. Small business owners who would like to start shopping around for a new charge card account should look for several things in particular. First and foremost, charge card accounts to avoid are ones that report charges and payments to personal credit files and incur personal liability for purchases.

Stay away from these types of charge cards whenever possible because they do nothing to build up a business credit score, and they can endanger personal assets. The alternative is to select those that may require a personal guarantee, but payment history is only applied to a business credit file and not a personal credit file.

Small businesses should look for charge card accounts that:

• Link only to a business credit profile
• Feature favorable payment terms
• Fit the specific needs of their business

A charge card whose approval is based solely on the creditworthiness of the business may be the best option for most companies. If a small business has already built up a solid credit profile, getting access to a charge card credit should be viable. Once approved, make sure payment history reports solely on business credit files.

It is encouraged to choose card accounts that report to credit bureaus. Just as a business that is looking to build up a credit score wants vendors, suppliers, and leasing companies to report payment experience, they should also seek a charge card account that does so. Consistent, timely payments made to a charge card account helps build a strong credit profile.


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