Approval for any credit card depends on your status. The representative APRs shown represent the interest rate offered to most successful applicants. Depending on your personal circumstances, the APR you're offered may be higher, or you may not be offered credit at all. Fees and rates are subject to change without notice. It's always wise to check the terms of any deal before you borrow. Most of the data in Finder's comparison tables is provided by Moneyfacts.
As a small business owner, you may need a credit card that can help you manage your cash flow, or one that has a low interest rate in case you need to carry forward a balance. You might also be looking to get rewards on your business spending. Here’s how to pick a credit card or charge card for your startup that offers one or more of these benefits.
Can a new limited company get a credit card?
Both limited companies and sole traders may be eligible to apply for a business credit card, but the requirements may vary depending on how long you have been in business. By establishing a limited company, you can create a legal distinction between your personal finances and your business finances. This can be beneficial in developing a positive business credit rating, which lenders use to determine your eligibility for borrowing.
If your company is new, your business credit history may be limited, leading to a potentially poor credit rating. This can make it difficult for lenders to evaluate your creditworthiness, making it more challenging for you to obtain approval for a business credit card. If you are approved, you may encounter higher interest rates than advertised, and your initial credit limit could be lower than expected. If your business is new, some lenders may also choose to look at your personal credit score to help them establish whether they are happy to let you borrow. If your credit score is good, they may be more willing to offer you a business credit card.
You may also be required to sign a personal guarantee before you can qualify for the card. This means you will be personally responsible for any debt you accumulate on your business credit card.
As your business credit score builds over time, you may be able to apply for a more competitive card that offers better rates and a higher credit limit.
What is the best business credit card for startups?
This will depend on the type of business you run and what you want to use your card for. If you think you might carry a balance on the card from time to time, you’ll want to look for a card that offers a competitive interest rate.
Alternatively, if you know you can clear your balance in full each month, but you’re likely to use the card often, you may want to seek out a business credit card that offers great rewards.
Overall, you’ll need to work out which features are the most important to you and look for the most suitable card. Here’s a list of features you may want to consider while comparing products:
Annual fee. This is the annual cost of your card, no matter how much you use it. You’ll have to include it in your budget, so it’s a core factor to look at. For example, Barclaycard Premium Plus Business Credit Card charges a fee of £150 per annum.
Interest rate on purchases. If you’re sure you’ll pay your credit card bill in full every month, this is a secondary concern. But if you can’t, the interest rate is important because it tells you how much borrowing money with the card will cost your startup. Typically the interest rate will be above 20% annually.
Management features. Can the card be managed online or from your smartphone? Is the app good? Can you connect it to your accounting software? This is of utmost importance if you own a startup because it can save you a considerable amount of time.
Rewards. These are for startups that plan to spend quite a lot on the credit card. With the Capital on Tap card you can earn 1% cashback per £1 spent. You also have the optional upgrade to the Business Rewards plan for £99 per annum.
Additional cards. If you’re planning to give cards to other people in your team to use, don’t forget to check how much it’s going to cost you to have additional cardholders.
Foreign transaction fees. If you travel often for business purposes, you’ll want a credit card with no foreign transaction fees. Most business cards charge a fee of 3% of every transaction made abroad, which can easily amount to a small fortune in fees if you’re not careful. The Capital on Tap Credit Card is a popular choice for startups that frequently spend in other currencies, as it doesn’t charge a fee for making purchases overseas.
Is a rewards credit card a good idea for my startup?
Good rewards business credit cards almost invariably charge an annual fee, so it’s all about how much you envisage using the card. Ideally, you want the highest possible earn-rate for the lowest possible annual fee. Math is your friend. Calculate how much you think you can earn in cashback or rewards and, if it outweighs the annual fee, it’s probably worth it.
You also want to choose the right rewards. For example, if you don’t travel by plane very often, you won’t know what to do with Avios points, so there is little benefit to having a card that rewards your business spending with the collection of Avios points. Compare all business credit cards on this page to see what is available on the market.
Designed with small businesses in mind, Capital on Tap offers uncapped 1% cashback with no annual or monthly fees, presenting a cost-effective means to enhance your business's cash flow, provided that you settle the balance entirely each month. It also stands out for offering you the chance to boost your credit limit with your own funds, while still getting cashback on the full purchase price.
Credit limits up to £250,000
Software integrations and business discounts
Up to 42 days to spread the cost of purchases
Unlimited additional cards at no additional cost
There are no currency conversion charges when you use your card overseas. You&rsquo
ll just be charged the Visa conversion rate
Low credit scores may be eligible
Opt to upgrade to access more rewards (£
99 p.a.)
Top up your credit balance with your own funds to use alongside your credit limit and earn cashback on the full amount you spend
Although there are no fees for cash withdrawals, you will be charged interest from the moment you get your cash. Interest is charged daily and calculated monthly for the amount of time you borrow the funds, which means it can become expensive.
The free transfers out from your Capital on Tap account must be to your linked business account (this will be the account that your direct debit for repayments is taken from).
Transfers to your business bank account always incur interest from the day of the transaction (your usual "up to 42 days" interest-free won't apply to this part of your balance, in the same way as cash withdrawals).
Availability
Available to new customers
Residency
Business and account holder is UK-based
Foreign usage charge (EU)
0%
Cash advance fee
0%
Representative example: When you spend £1,200 at a purchase rate of 36.19% (variable) p.a., your representative rate is 36.19% APR (variable).
How long should I wait to apply for a business credit card?
This will depend on the lender and your individual circumstances. If you have a good personal credit rating and you have opened a business bank account, you may be able to apply for a business credit card as soon as you start trading. This is more likely to be the case if you apply for a credit card with the same provider as your business bank account.
However, some lenders may require that you have been trading for at least 6 to 12 months before they will consider your application.
How can I build business credit fast?
If you get accepted for a business credit card, one of the best ways to build business credit is to make your monthly repayments on time and stick within your credit limit. Doing so can improve your business credit score after a few months and will give you a record of responsible borrowing for credit reference agencies to report on.
Paying bills and invoices on time can also help you build credit, as can asking your suppliers to share payment data with the credit reference agencies.
If you can’t get accepted for a business credit card, you can consider other business finance options. Secured forms of finance (such as invoice finance) tend to be easier to get accepted for if you have bad credit or a limited credit history because the risk is lower for lenders.
Do new businesses have a credit score?
If you’ve set up a limited company, you will have both a business credit score and a personal one. However, as your business is new, it won’t have much of a credit history which means you’ll need to take the time to build up your business credit score.
In the early days of trading, lenders may use your personal credit score to give them an idea of how reliable you are as a borrower. They may also want to see your estimated turnover, along with copies of bank statements and business plans before agreeing to let you borrow.
Note that if you are a sole trader rather than a limited company, there will be no legal separation between your business and personal finances, which means lenders will use your personal credit score to determine your creditworthiness.
Should I be using my personal credit card?
If you’re a sole trader or you own a small limited company and are the only person who needs a credit limit, you may prefer to use your personal credit card for business expenses.
However, doing so can make it harder to keep your business and personal finances separate, so it can still make sense to apply for a separate business card (although not all lenders will accept sole traders for their business cards).
If your business is a limited company, it is even more important to apply for a business credit card, not least because it will help you build up a business credit score. You’re also likely to get a higher credit limit and additional cards that you can give your employees to use for their expenses.
Who is more likely to recommend their card issuer to friends/family: business or consumer credit card users?
Response
% of customers that would recommend
Consumer credit card users
89.50%
Business credit card users
92.75%
Source: Finder survey by OnePoll of 1,150 Brits
Bottom line
Getting accepted for a business credit card when your business is just starting out as a limited company can be challenging, but it’s certainly not impossible. You’re much more likely to be accepted if your personal credit score is good and you already have a business bank account. By shopping around and checking eligibility criteria carefully before you apply, you should find a credit card that is suitable for you and your business.
Overview of business credit cards for startups
Lowest representative APR
16%
Longest 0% purchases offer
6 months
Longest 0% money transfer offer
12 months
Lowest cash advance
13.9%
Highest credit limit
£250,000
Highest cashback earn-rate
1%
Highest introductory bonus offer
80,000 points
Other frequently asked questions
This depends on a number of factors. It’s a good idea to check the eligibility criteria first, then use an eligibility checker to determine your chances of being accepted for the card you’re considering. Eligibility checkers only run a “soft” search on your credit report that won’t impact your credit score. However, bear in mind they are harder to come by compared to eligibility checkers for personal credit cards.
Getting a business credit card with a low credit score can be harder, and you may be offered a higher interest rate and a lower credit limit. You still have some options, though. Read more about applying for a business credit card with bad credit.
It’s not necessarily illegal, but it’s also not a great idea. Part of the reason you need a business credit card is to keep track of your business spending. Using your card for personal spending will just make things more complicated when it comes to doing your taxes. See our guide to Business credit cards vs personal credit cards for more information – and remember, if you are an employee who’s been assigned a company credit card, you definitely can’t use it for personal expenses. It could get you into a lot of trouble.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio
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