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Corporate credit cards and business credit cards both provide companies and their employees quick access to funds, along with benefits like rewards and expense management tools. Understanding the differences can help you choose the right card for your business needs.
Plus, our COO Alex Miles, who has over 12 years of business experience, shares some of his top tips.
Understanding corporate credit cards
A corporate credit card is designed primarily for larger businesses. A corporate credit card works differently to a regular business credit card because they typically have minimum requirements for monthly spending and a certain number of employee cards. Plus, the company, not the employees, are responsible for paying the credit card bill.
Benefits of corporate credit cards
For large corporations, corporate credit cards are a valuable tool for managing cash flow and employee expenses.
- Convenience: Employees can make business purchases without using personal funds and waiting to be reimbursed.
- High spend limits: Corporate cards typically have higher spend limits than business or personal credit cards.
- Centralised expense management: They usually come with customisable spending limits and enhanced reporting capabilities. However, these features aren’t exclusive to corporate cards.
- Personal liability: A personal guarantee is not generally needed for a corporate card, which means the business owner is not personally liable.
Exploring business credit cards
A business credit card is a payment card for company-related purchases and expense management. Business credit cards work similarly to personal credit cards, but can only be used for business-related expenses. Business credit cards like Capital on Tap’s help companies keep track of their expenses, manage cash flow, and earn rewards or cashback on their purchases.
Benefits of business credit cards
Business credit cards can make the lives of small business owners easier:
- Improved cash flow: Business credit cards allow you to make purchases and cover expenses without using your cash.
- Rewards programmes: Get access to rewards and benefits such as cashback, points, or discounts. With the Capital on Tap Business Credit Card you can earn 1% cashback on your everyday spending like bills, operating costs, and more. Upgrade to Business Rewards to redeem points for Avios.
- Expense management: With Capital on Tap you can auto sync transactions with your accounting software, add users with personalised account access, and attach receipts to your transactions.
- Employee cards: Issue cards for your employees with personalised limits and spend controls.
- Build business credit: If used responsibly, business credit cards can help improve the business’s credit score.
"For small businesses, use business credit cards to manage cash flow efficiently and take advantage of rewards programmes that can offer significant savings," suggests Alex Miles.
Comparison: Business credit card or corporate credit card?
When it comes to managing your business’ finances, choosing between a corporate credit card and a business credit card can be hard. Let's break down some essential points on how corporate credit cards and business credit cards work to help you make an informed choice:
Ownership and liability
Who is responsible for the credit card debt will not only depend on whether you take out a corporate or business credit card, but also the specific terms and conditions of your chosen card.
Business credit card: Usually issued in the business owner’s name. But, who is liable for the debt (the business or the owner) dependson who the contract is with. Typically, it is the company that is liable for business credit card debt. However, the business owner will become liable if they sign a personal guarantee.
Corporate credit card: Typically owned by the company, which is liable for the debt. If the business cannot pay its corporate credit card debts, the business owner is not personally responsible for paying them. However, some corporate credit cards may require collateral from the business.
Expense management and reporting
Both business and corporate credit cards provide a convenient way for businesses to track expenses, simplify bookkeeping and reduce the time spent on accounting tasks.
Business credit card: Whilst some business credit cards have expense tracking features such as transaction categorisation and personalised spend limits, many only have basic features when compared to corporate cards.
However, the Capital on Tap Business Credit Card and expense management platform, provides customisable spend limits, personalised user access, and enhanced reporting capabilities.
Corporate credit card: Often offer more sophisticated expense management capabilities than some business credit cards, including detailed reporting and integration with accounting software.
"Evaluate your business needs to determine if advanced expense management tools and higher spending limits offered by corporate cards are necessary, or if a business card with those features, like Capital on Tap, would work" advises Alex Miles. "Start by listing your expense management requirements and comparing them against the features offered by potential credit cards."
Rewards and benefits
Both corporate and business credit cards allow business owners and employees to earn rewards on everyday business spending.
Business credit card: Rewards include cashback, points, travel rewards, and discounts.
Corporate credit card: Similar rewards, with additional perks like travel insurance and concierge services.
Many corporate card lenders will also allow supplementary cardholders to redeem the rewards they’ve accrued. This means that your business can allow its employees to enjoy the perks, improving employee morale.
"Choose a card with rewards that align with your business’s spending patterns to maximise benefits. For instance, if your business involves a lot of travel, opt for cards that offer travel rewards and insurance," suggests Alex Miles. "To identify the best rewards programme, analyse your monthly spending categories and match them with the card’s reward structure."
Eligibility and approval process
Business credit card: Whilst the requirements to qualify for a business credit card will vary depending on the card provider, there are 4 common business types that will generally be eligible for a business credit card:
- Limited Company
- Limited Liability Partnership
- Partnership
- Sole trader
Even if your business is one of these 4 structures, some credit card companies will not offer their product to businesses in certain industries. This may be to manage risk or because the industry has more complex legal obligations, such as online pharmacies or charitable organisations.
Business ownership also impacts credit card qualification as you can generally only apply for a business credit card if you own the business, or are a majority shareholder in the business. If you do not have ownership you may not qualify for a business credit card.
For some business credit cards, it is a requirement to provide a personal guarantee. This means that you, as the director, will be financially responsible for any unpaid bills or abandoned balances on the business credit account.
You may qualify for a Capital on Tap Business Credit Card if:
- Your business is a Limited company or LLP and is active on Companies House
- You are an active director of the company or a majority shareholder of 25%+ ownership
- Your business has a minimum monthly turnover of £2,000
- There are no unsatisfied CCJs against you or your business in the last 12 months
Corporate credit card: Corporate credit cards are only available to incorporated businesses like LLPs and Limited Companies, which is a business that is legally distinct from its owners. A corporation has rights and liabilities that are separate from the individuals who form the corporation. An example of a corporation is Apple Inc., which is owned by shareholders and has a board of directors that manages the business operations.
To qualify, a corporation is also likely to need a good credit score.
Comparison: Business credit card or corporate credit card?
When deciding between a business credit card and a corporate credit card, it's crucial to evaluate your business's specific needs, size, and financial responsibilities.
While corporate credit cards offer sophisticated expense tracking and enhanced benefits, they typically have stricter eligibility requirements. This makes business credit cards the more accessible and convenient option for new or small businesses.
"Start by evaluating your monthly expenses, number of employees, and overall financial needs," advises Alex Miles, COO at Capital on Tap. "If your business has fewer employees and lower spending, a business credit card might be the best fit. For larger businesses with higher expenses and more complex needs, consider a corporate credit card."
If you're uncertain about which option is right for your business, consulting with a financial advisor or accountant can provide valuable guidance. Ultimately, the choice should align with your business's goals and financial capabilities.
Frequently asked questions
What is a corporate credit card?
This type of credit card is specifically designed for larger businesses, offering perks such as rewards and higher credit limits. Since the card is held by the business rather than an individual, banks consider your business's credit score. This means it won't impact your personal credit score.
How to apply for a corporate credit card?
- Ensure eligibility: Confirm that your business meets the minimum eligibility criteria for a corporate credit card.
- Prepare documents: Gather necessary financial documents, including profit and loss statements, balance sheets, and business registration details.
- Select a card provider: Research and choose a corporate credit card that offers the features and benefits your business needs.
- Contact the provider: Reach out to the credit card provider to understand the specific application process.
- Complete application: Fill out the application form and submit it along with the required documents.
- Wait for a decision: The provider will review your application and notify you of their decision.
What is the main difference between a corporate credit card and a business credit card?
The primary difference lies in their target users and features. Corporate credit cards are designed for larger businesses with higher spending needs and typically offer advanced expense management tools. Business credit cards are more accessible for small businesses and sole traders, providing essential benefits like cash flow management and rewards programmes.
Do business credit cards always require a personal guarantee?
Not always, but many business credit cards do require a personal guarantee, which makes the business owner personally liable for the debt. However, some providers offer business credit cards without a personal guarantee, though they may have stricter eligibility requirements.
Are rewards programmes better on corporate credit cards or business credit cards?
Both corporate and business credit cards offer rewards programmes, such as cashback, points, and travel benefits. The best programme for you depends on your business's spending patterns and needs. Corporate credit cards may offer additional perks like travel insurance, while business credit cards often have rewards tailored to smaller business expenses.
What should I consider when choosing between a corporate credit card and a business credit card?
Consider your business size, spending needs, and eligibility. Corporate credit cards are better for larger companies with high spending and the need for advanced expense management tools. Business credit cards are more suitable for small to medium sized businesses looking for easier access and benefits.
This does not constitute financial advice. If you want to understand credit financing options in detail, you should speak to your financial advisor or accountant.
