Corporate credit cards and business credit cards both allow companies, and their employees, to quickly get access to funds, and they also often come with further benefits like rewards, perks, and tools for managing expenses.
However, not all businesses will qualify for a corporate card, and each type of business credit card has its own eligibility requirements. Knowing the differences between business credit cards and corporate credit cards can help business owners like you pick the right one for your business’ needs.
Understanding corporate credit cards
A corporate credit card is a financial tool designed primarily for larger businesses. A corporate credit card is different from a regular business credit card because they typically have minimum requirements for monthly spending and a minimum number of employees issued cards. If your business takes out a corporate credit card, the company, not the employees, is generally 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
Corporate credit cards provide a convenient way for employees within a large company to make business-related purchases without having to use their personal funds and wait to be reimbursed.
High spending limits
Corporate credit cards tend to have higher spend limits than business or personal credit cards because they are intended for bigger businesses with more extensive financial needs.
Centralised expense management
Corporate credit cards often have customisable spending limits, and enhanced reporting capabilities. However, these are not exclusive to corporate cards as, for example, the Capital on Tap Business Credit Card offers these features.
Personal liability
Unlike with some business credit cards, a personal guarantee is not generally needed to qualify for a corporate credit card. This means the business owner is not personally liable for all debt accrued on a corporate credit card.
Exploring business credit cards
A business credit card is a payment card that a company or business owner can use to make purchases and manage expenses related to their business operations. Business credit cards work similarly to personal credit cards, but they are only to 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 can be a lifesaver for keeping the cash flowing. Instead of using up your cash, you can make purchases and cover expenses with your card. It's like having a financial safety net that lets you keep your cash handy for other important stuff.
Rewards programs
Many business credit cards offer rewards and benefits such as cashback, points, or exclusive discounts. These rewards can add up over time, providing additional benefits for companies. This way, you can effortlessly earn rewards with your business spending.
Earn 1% cashback on everyday business spending like bills, operating costs and general expenses when you use your Capital on Tap Business Credit Card. Redeem points against your balance, for cash, or for gift cards. Upgrade to Business Rewards to earn bonus points and redeem for Avios.
Expense management
Business credit cards provide a convenient way for small business owners to track their expenses which can simplify bookkeeping and reduce the time spent on accounting tasks. For example, with a Capital on Tap Business Credit Card you can auto sync your transactions with your accounting software, create users with personalised account access, and attach uploads of your receipts to your transactions to get a handle on your expenses.
Employee spending control
Supplementary business credit cards can be issued to employees with pre-set spending limits, allowing for better control over company spending and reducing the risk of overspending.
Build business credit
If used responsibly, business credit cards can improve a business’ credit score. A business credit score is not just a number; it's a critical indicator of your business’ financial stability and trustworthiness to pay back money. A healthy score can make all the difference when it comes to securing financing and getting favourable terms from lenders.
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 a crucial decision. Let's break down some essential points 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 considerations and expectations associated with your chosen card.
Business credit card: Business credit cards are usually issued in the business owner’s name. But, who is liable for the debt (the business or the owner) is dependent on who the contract is with. Generally speaking, 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. A personal guarantee is a type of agreement between a lender and a business owner or director. It means that if the business is unable to make the required payments, the individual who signed the personal guarantee becomes responsible for repaying the finances owed.
Taking out a business credit card without a personal guarantee may seem appealing because it means you won't be responsible for any debts incurred. However, it can be challenging to find card providers who offer such cards without a personal guarantee as most lenders typically require one as a condition for issuing a business credit card.
Corporate credit card: Corporate credit cards are typically owned by the company, with the liability falling on the company itself. Therefore, if your business cannot pay its corporate credit card debts, you are not usually personally responsible for paying them. However, some corporate credit cards may require collateral from the business which would allow them to collect sums owed from property owned by the business in the event of the business becoming insolvent.
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: Business credit cards are used by many business owners to manage their business and employee expenses. 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, with the Capital on Tap Business Credit Card and expense management platform, you can delegate your financial management with our people management tool; which allows you to effortlessly customise access for your bookkeeper, accountant, and team members, tailoring permissions to fit your unique business needs. You can also streamline your business spending by connecting your Capital on Tap account to your preferred accounting software for simplified reporting.
Corporate credit card: Corporate credit cards often offer more sophisticated expense management capabilities than many business credit cards, including detailed reporting and integration with accounting software.
Rewards and benefits
Both corporate and business credit cards allow business owners and employees to earn rewards on everyday business spending.
Business credit card: Many business credit cards offer rewards programs, such as cashback, points, travel rewards, or exclusive discounts.
Corporate credit card: Like business credit credit cards, corporate credit cards usually also offer rewards like cashback or points. Corporate credit cards often offer additional rewards such as travel insurance or 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.
Eligibility and approval process
Many business credit cards and corporate credit cards provide rewards schemes and cashback perks on business spending, simplified bookkeeping with separated personal and business expenses, and additional employee cards. However, determining which type of credit card your business will qualify for can be confusing.
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 their risk appetites or because the industry presents 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. It's a legal entity authorised by law to act as a person that is governed and owned by directors and shareholders and which is required to pay Corporation Tax in the UK. 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 essential to assess your business's specific requirements, size, and financial responsibilities. Despite offering sophisticated expense tracking and enhanced benefits, corporate credit cards usually require businesses to meet stricter t requirements to be eligible. Therefore, business credit cards are often the more accessible and convenient option for new or small businesses.
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.
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.
