Small business, big benefits: Why every entrepreneur needs a business credit card

Business credit cards provide entrepreneurs like yourself with a convenient financing solution.

In a 2023 PYMNTS survey, Main Street small-to-medium-size businesses (SMBs) reported using business credit cards to help them face monthly contingencies. For these SMBs, business credit cards proved especially crucial for managing cash flow. 

Credit cards for businesses aren’t solely for the purpose of gaining access to funds. They’re often used to enable the simplified tracking of business expenses and transactions, and they help build up your business credit. Many business credit cards come with business-specific perks, for example, travel rewards and cashback deals. 

Here’s a simple guide to the benefits – and risks – of business credit cards.

Why entrepreneurs use business credit cards for expense management 

When used effectively, a business credit card can enhance your financial management process and even facilitate growth for your business. 

Take a look at the top three benefits of business credit cards for entrepreneurs:

• Simplified business & personal expenses: Entrepreneurs setting out on their first business ventures can sometimes mix up personal and business finances. A business credit card provides you with a separate account for handling business transactions, making it easier to track business-related expenses and accounting data. With a business credit card, you can easily track your expenditures, monitor cash flow, and generate detailed expense reports.

• Business rewards: Business credit cards often come with rewards programs tailored to business needs, such as cashback on office supplies, travel rewards, or discounts on business-related expenses. These perks can reduce your operational costs and provide you with incentives to use your business credit card for all business expenses. For entrepreneurs who travel frequently, these rewards can also cut back on travel and lodging costs. 

• Enhanced business credit: Using a business credit card can help you establish and build your company’s credit history and improve its overall credit score. A high business credit score is often crucial for securing financing or obtaining favourable terms on loans in the future. While you may not need the funds yet, boosting your credit score with a business credit card ensures you have the evidence to prove your business as a reliable borrower. 

Understanding the risks of a business credit card

Overall, business credit cards are invaluable tools for entrepreneurs, offering convenience, financial flexibility, and valuable perks to support business success.

Yet, these cards still come with risks.

Understanding the risks of a business credit card is essential for making smart financial business decisions. Before you apply for a business credit card, consider the following X factors:

• Misuse or overspending: Misuse or overspending on a business credit card can lead to the accumulation of high-interest debt, jeopardising the financial stability of your business. 

• Personal liability: Oftentimes, entrepreneurs without an established credit history must take personal liability if their business fails to repay its credit card debt. 

• Cash flow problems: Relying too heavily on a business credit card can create cash flow problems and a lack of accurate visibility of your business’s financial health. 

• Repayment challenges: Utilising a credit card requires regular monitoring of credit card statements. Failure to make your repayments can result in late fees and damage to your business credit score. 

Funding Options by Tide can help you find a UK business credit card 

Are you considering applying for a business credit card in the UK?

At Funding Options by Tide, we can help you connect with more than 120 UK lenders, including a variety of business credit card providers. Through our brokerage platform, you can discover the business credit card options that best suit your business financing needs.

Get started with Funding Options by Tide.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business and personal credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.