Business Credit Cards vs Corporate Credit Cards

When it comes to making business purchases; business credit cards and corporate credit cards play a vital role. But what is the difference between each one and which is ideal for your business?

In today’s post we are going to talk about everything you need to know about business credit cards vs. corporate credit cards. You’ll learn the similarities, the differences, the qualifications, and which one requires a personal guarantee and which one doesn’t.

Let’s get started.

Both business credit cards and corporate credit cards are similar because they are both a revolving source of funds you can use anywhere Visa®, MasterCard®, Discover, and American Express are accepted.

You get access to a pre-set credit limit that you can borrow against at any time. When you pay down the principal the credit becomes available to use over and over.  Also, you can maintain a revolving balance on both business credit cards and corporate credit cards.

All that is required is to pay a minimum monthly payment and you don’t have to pay the balance in full like a charge card.

What is a Business Credit Card?

A business credit card is a credit card that is designed to be used for business use rather than for an individual’s personal use. You can get a business credit card issued to your company whether it’s a startup or existing business.  Approvals are based on the owner’s personal credit and in the majority of cases requires a personal guarantee.

What is a Corporate Credit Card?

A corporate credit card is a special type of credit card issued to a corporation with millions in annual revenues ($4 million+). Approvals are based on the company’s financial track record rather than an individual owner’s personal credit. With a corporate credit card, the liability for nonpayment falls on the business entity rather than an individual.

Do I Need to Supply a Personal Guarantee?

Now let’s talk about the PG, also known as personal guarantee or personal guarantor. First of all, a personal guarantee is a written promise from a business owner, you are basically co-signing on behalf of the business. So, if your business fails to pay, then you are responsible to make good on that payment to the bank, creditor, or lender. So, when you supply a personal guarantee . . . let’s first talk about what it’s not. The misunderstanding that many business owners think is when they supply a personal guarantee, it automatically reports to personal credit reports.

The personal guarantee is an individual’s legal promise to repay, but as far as credit reporting, it’s a different story. It’s important to know many of the business credit cards in the market place do report to personal credit reports when you are the guarantor.

However, with our business credit card funding program you can acquire business credit cards that only report to the business credit reporting agencies not personal credit. Through our program we obtain 4-5 business credit cards for your business. Although a personal guarantor is required, as far as credit reporting goes; none of the activity reports to personal credit.

Remember, a personal guarantee has nothing to do with credit reporting. Each bank card issuer has different terms, conditions and credit reporting policies. But, like I said, the majority of business credit cards do report to personal credit, the cards issued under our business credit card funding program do not.

Do Business Credit Cards Require a Personal Guarantee?

The majority of all business credit cards in the marketplace requires a personal guarantee. However, with a strong business credit file there are exceptions with a few card issuers which we’ll cover in a second.

With corporate credit cards there is no personal guarantee because the cards are 100% issued to a corporation. These types of cards make the corporation 100% liable with no recourse to individual owners.

You’re probably wondering what does it take for a business to meet the no personal guarantor requirements if it doesn’t have millions of revenues to qualify for a corporate credit card? At the end of the day, it’s all about risk for the bank. As a small business there are three main factors that play an essential role in risk assessment; the business credit report, the age of the company and annual revenues.

Put yourself in the bank’s position, it’s all about minimizing risk. The reason why they have you supply a personal guarantee is because of risk. They want to make sure that they are going to recoup their money if the business fails. So, if you are a startup, you are always going to supply a personal guarantee, because you are start-up business, you have the most risk.

If you are an existing business generating less than $1 million a year in revenue, you are classified as a small business, so banks are going to require a personal guarantee.

Here’s the exception. With a well-established business credit report, time in business and growing revenues; you can showcase to a bank or a lender that you have a great financial report card as a business. This shows you have responsibly paid, have lots of credit issued to your business, and you pay on time.

How Do I Get Business Credit Cards with No Personal Guarantee?

There are various co branded fleet and fuel cards that offer a credit card for a business with no personal guarantor. To qualify for these particular types of cards we list in our business credit building system requires to follow our 10-10-10 rule.

The 10-10-10 rule can be broken down into three main areas. First, a minimum of 10 references reporting on your business credit reports for the business. Secondly, at least two $10,000 credit limits reporting on your business credit reports, the more the better. Third, at least 10 months of positive payment history.

When we talk about co-branded cards, let’s look at an example. COMDATA is an issuer of fleet fuel cards. It is a cobranded credit card with the MasterCard® logo. This means you can use the card not just at gas stations or fuel stations, you can use this anywhere MasterCard® is accepted.

The card issuer for COMDATA is Regions Bank and that information is disclosed on the back of the card. It’s important to understand when it comes to credit cards, there are payment networks – Visa, MasterCard, Discover, and American Express – and two of the payment networks are also banks; Discover and American Express.

So, you can have an American Express payment network card that’s issued by American Express the bank. Also, you can have a credit card that has an American Express logo on it (payment network) but it’s not issued by American Express. It’s actually issued by another bank where a bank has selected American Express as their payment network.

Let’s talk about store card issuers . . . if you look at a store credit card, you may have a credit card with a store logo on it. By looking at the back of the card you can determine which bank issues the card.

If the store card you have does not have a payment network such as Visa on the card, then the card can only be used at the store location. If it does have a payment network then it’s considered a co-branded card.

Do Corporate Credit Cards Require a Personal Guarantee?

Corporate credit cards do not require a personal guarantor at all.

Business Credit Card Requirements

Now, let’s talk about what it takes to qualify for business credit cards that report only to business credit reports not personal credit. First, the minimum scores required are 680+ FICO® scores. Secondly, your business must be structured as a separate legal entity with an assigned employer identification number (EIN).

Keep in mind this is a stated income program so you don’t have to provide financials, tax returns, or P&L statements. This is why it’s such a popular program for startups and existing small businesses.

Remember, although you are required to supply a personal guarantee; the bank card issuers under this program report only to the business credit reporting agencies. Upon funding completion, you may end up with several business credit cards with large amounts of revolving credit available for your business.

Who Should Get a Business Credit Card?

So, who is a business credit card best for? It’s best for start-ups or existing small businesses with an aim to separate business and personal expenses and build business credit. If you’re a business owner using a personal credit card for business purchases, the number one thing you need to do is get a business credit card.

If you want to protect your personal credit while building your company’s business credit; using a business credit reporting card is crucial. The residual benefit is having a business credit identity that stands on its own.

The first thing you need to do if you want to see how much you can you get in business credit funding is to order your personal credit report for a pre-qualification review.

To order your credit report go to creditreportengine.com. It costs you $1 and it allows you to obtain a copy of your credit report and scores. Once you do that, log in and download your report in PDF format.

Once you obtain your report go to businessfundingreview.com to start the pre-qualification process. We will contact you in 24/48 hours to go over the results and funding projections.

Typically, clients with good credit scores & reports get $50k to $70k in combined credit limits under our program. Clients with exceptional credit history can achieve up to a maximum of $150k in business credit card limits.

So, imagine having $70k in business credit limits now reporting on your business credit report in less than 30 days. Whether a startup or existing business, this would be a powerful start to building a strong business credit report.

What’s also important about this process is it establishes a new relationship with multiple banks for your business. Each card issued is a new relationship with a bank. With each relationship, guess what happens; each bank will compete for your business with new offers of financial products and services.

For example, when you request a credit limit increase, or apply for another credit card from a bank that you have an existing relationship with; that existing relationship, payment history and account is taken into consideration.

Remember, diversity is important when it comes to building a creditworthy company. This diversity also applies to your access to funding – you want a combination of business credit cards, vendor credit, supplier credit, etc. That way when you are doing a specific purchase or you need funding for a specific need you have options.

Who Should Get a Corporate Credit Card?

Let’s talk about corporate credit cards. Corporate credit cards are a distinct group within the credit card universe for businesses. They are issued by only a few major banks (Citi, Chase, Bank of America, Capital One and American Express) and generally established by businesses using an existing banking relationship.

These types of cards require no personal guarantee because the businesses itself is reviewed and solely responsible for the card. Corporate credit cards are for existing businesses with $1 million or more in gross annual revenues. With corporate credit cards, the application process is done on the phone or in person at the bank.

When you apply for a corporate credit card it’s a different experience, it’s like applying for a loan because you are providing financials, business tax returns, P&L statements, etc. They are looking at the business; they are not looking at an individual or business owner.

There is no personal guarantee, so there is no recourse, this has 100% corporate liability. So, when you get issued a corporate credit card, if the business defaults, there is no recourse on you the owner, a 100% liability is on the company.

But remember, the purpose of a bank requiring a personal guarantor is to minimize risk. When a business is generating several millions of dollars in revenue, the bank already knows you are an established business, you have strong revenues and there is less likelihood that your business is going to default on its credit card. You may want to consider a bank line of credit which is based on revenues as well.

Now, one quick thing, there is a bonus corporate credit card that I want to share with you at the end of this post. Did you know as a start-up there is a way for you to get a corporate credit card? You can get a corporate credit card with no personal guarantee, no personal credit check whatsoever. More about the card shortly.

What are the Requirements for a Corporate Credit Card?

Let’s talk about corporate credit cards; who offers them and what are the requirements? First, there is American Express; it’s not only a payment network but they are also a bank. Their corporate credit cards have no PG and the minimum requirement is $4 million in revenue for the business.

American Express offers several corporate credit cards – seven to be exact. To apply you can complete an online application but expect to submit additional documentation for the business.

Remember, major companies doing millions of dollars in revenue get corporate credit cards, they are not getting business credit cards, they are dealing with corporate credit cards with no PG.

Let’s talk about Chase, another bank that issues no PG corporate credit cards. They have quite a few corporate cards but Chase focuses more on spending rather than the revenue of the business.

For example, with the corporate flex card, if the business spends less than $250k in credit card purchases, then this is the ideal card. The One card is for a business that spends $25ok to $10 million.

Let’s talk about Citi. Citi requires $4 million in revenue for the business and does not require a personal guarantor. They have a whole variety of corporate credit cards as well. They have a corporate card, central travel cards, one card, meeting card and even a virtual card.

Wells Fargo has one corporate credit card and Capital One has the One card. Now the Capital One corporate credit card requires you to spend at least $1 million a year in credit card spending. But these are all no PG cards as well. So, you can see a pattern here when it comes to corporate credit cards, you have to be doing substantial revenues as a business to get the no PG.

How to Get a Corporate Credit Card as a Start-up

As you know corporate credit cards are designed for companies generating millions of dollars in revenue. Major card issuers such as American Express require $4 million or more in annual revenues from a business that wants to apply for one of its corporate credit cards.

However, there is a company called Brex that offers a corporate credit card for start-ups using the employer identification number during underwriting not a social security number. There is no personal guarantor required and applying won’t affect your credit score.

Brex reports your payment information to Experian Commercial and Dun & Bradstreet to help build your business credit reports. Now, the catch is, the card is specifically designed for start-up companies that have $50k+ funds in the business bank account.

What they look at is the business bank account activity using their proprietary underwriting process. This doesn’t mean the business is required to deposit large sums of money but they do underwrite based on the amount of funds in the business bank account.

The Brex corporate card is not a revolving credit line it’s a charge card. With a credit card, you can carry a revolving balance; with the Brex card you have to pay your balance in full every single month.

To apply for the Brex corporate card go to Brex.com and link your business bank account information. Brex will conduct a review using your bank account data. They look at data such as your company’s average daily balance, spending patterns and deposit activity.

Remember, if you are a start-up or existing business and have strong personal credit, you can get several business credit cards that only report to the business credit reporting agencies. This strategy puts you on the fast track to building up your business credit report.

Ready to build your business credit? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free business credit building audio seminar ($497 value) =>

To Your Success in Business and in Life!

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About the author

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, Business.com, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.