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Business Credit Card vs. Corporate Credit Card: Key Differences

Business Credit Card vs. Corporate Credit Card: Key Differences
Jason Steele

Jason Steele

Updated July 12, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
The words “business” and “corporation” are often used interchangeably, but there’s a significant difference between business credit cards and corporate credit cards. While both offer short-term business financing and business-related perks, they differ when it comes to eligibility, liability, benefits, and features. Here’s what you need to know about corporate cards vs. business cards to help you make the right choice for your small business. 

What Is a Business Credit Card?

A business credit card is a credit card intended for business rather than personal use. Business cards are available to companies of all sizes and revenues and enable business owners and sometimes authorized employees to pay for company expenses, such as office supplies and business travel. Business cards work in a similar way to personal cards in that you have a maximum credit line and can charge expenses to the account up to that amount. As you pay off your balance, your available credit is replenished. Like personal cards, business cards offer benefits, such as cash back rewards and points/miles for spending.What makes business cards different from personal credit cards is that the credit line is typically higher, and any bonuses offered are usually more geared toward business use. Another key difference is that personal card accounts are only reported to the consumer credit bureaus (Experian, Equifax, and TransUnion). Business accounts, on the other hand, may be reported to commercial credit bureaus (Experian or Dun & Bradstreet), as well as the consumer bureaus. Recommended: Comparing Business and Personal Credit Scores 

Pros and Cons of a Business Credit Card

There are several advantages of a business credit card. One of the biggest is that it allows you to separate your personal and business spending, which can dramatically simplify your life come tax time. A small business card can also help you to build business credit. This, in turn, can help you qualify for other types of financing, such as small business loans, with favorable rates and terms in the future. Small business cards also typically come with higher credit limits than personal cards. One downside of a small business card is that it typically requires the business owner to sign a personal guarantee when applying for a credit card. This is a legal agreement stating that you will personally assume responsibility for the debt on the card if your business cannot make payments. Signing this also means that any missed or late payments on the business card will affect your personal credit, not just your business credit.Also, keep in mind that If you plan to put large expenses on a business card and carry a balance, it can be an expensive form of business financing. If that’s the case, you might be better served by getting a small business loan or a business line of credit.Recommended: Choosing Between Business Line of Credit or a Business Credit Card 

What Is a Corporate Credit Card?

A corporate credit card is a type of credit card that is issued to a corporation. This means that the business, not the business owner, is legally responsible for all charges made on the card. Because of this, corporate credit cards are generally only available to businesses with a track record of success, an established business credit history, and high annual revenues — usually over $4 million.Corporate credit cards can be issued to not only the company's owners, but also to individual employees to pay for business-related expenses. In fact, corporate card issuers may require that a minimum number of employees hold corporate cards.

Pros and Cons of a Corporate Credit Card

Corporate credit cards are popular because they offer numerous benefits. Most importantly, there’s no personal liability for the company owner or the employees, since payments are the responsibility of the corporation. Another plus is that employees don’t have to submit their expenses and then wait to get reimbursed.  Owners can also set spending limits for each employee, and even monitor spending in real time. Another key benefit is the financial management tools that they offer, which can help companies better analyze their spending and predict their cash flow. Corporate cards also often offer rewards, like cash back, points, and miles, based on the cumulative spending of both employees and the owners. The business owner can then use these rewards to help the business save money and/or issue them to employees as a perk.On the downside, annual fees for corporate cards tend to be higher than they are for business cards (and there may be an annual fee for each user). They are also less likely to issue personal rewards. In addition, corporate cards can be hard to qualify for. Typically, you need to be formally incorporated as an S-corp, C-corp, or LLC, have high revenue, and solid business credit scores. You may also need to guarantee a certain number of users (which could be as high as 15), as well as a certain level of annual spending (potentially as much as $250,000). 

Main Differences Between Corporate and Business Credit Cards

The main differences between corporate and business credit cards come down to eligibility requirements, liability, and features. Here’s how the two compare.

Should I Get a Business Credit Card or Corporate Credit Card for my Business?

For small businesses that don’t have millions of dollars in revenue, a business credit card is a more realistic option than a corporate credit card. The same is true for new businesses that haven’t yet established any company credit history, and for businesses that haven’t been legally incorporated. But if your company meets the qualifications for a corporate card, then it may be worth considering. A corporate credit card can be ideal if you’d prefer not to bear any personal responsibility for business expenses. It can also be a good choice if you are getting close to your spending limit with a business card and/or you and your employees make a high volume of transactions, since these cards typically come with better, more automated expense tracking and verification tools.

When Should a Business Switch to a Corporate Credit Card?

If your business is beginning to approach $4 million or so in annual revenue and you have solid business credit scores, you may want to consider leveling up to a corporate card. While you could continue to use a business credit card, you could get a higher spending limit with a corporate card. A corporate card will likely also give you more control over employees’ cards, as well as better expense analytics and reporting. It will also enable you to finance your business’s operations without being personally liable for the debt.

When to Use a Personal Credit Card Instead

There are some times when it can make sense to use a personal credit card instead of a small business or corporate card. This may be the case if you:
  • are a freelancer
  • are just starting a business, 
  • own a very small business
  • have a side gig
  • don’t have a lot of charging volume
In these cases, it may be fine to use your personal card as your “business card.” Personal credit cards typically come with more consumer protections, lower fees, and longer 0% APR introductory rates than business cards. However, if you have employees, are planning to grow your business, or may need access to a higher business line of credit or small business loan in the future, you will likely be better off with a business credit card — and perhaps, in time, a corporate credit card.

The Takeaway

If you own a medium- to large-size business with solid business credit scores and millions in annual revenue, you may want to consider getting a corporate credit card. These cards shield you from personal liability and generally offer higher lines of credit and more robust accounting tools than business cards. If you own a small business, however, you will likely be better off with a business card. The best small business credit cards offer some of the same business-related benefits you get with corporate cards, yet are easier to qualify for and tend to charge lower fees. If you're a freelancer, or simply have a side hustle, on the other hand, you may even be fine just sticking with your personal credit card for your business expenses.If you’re curious about what type of credit card your company might qualify for, Lantern by SoFi can help. With our easy online comparison tool, you can research the lowest interest rates and fees, and find the best rewards for your business.  
Photo credit: iStock/FG Trade
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.LCCC0422006

Frequently Asked Questions

Who is liable for a corporate credit card?
Do corporate or business credit cards have better rewards?
Which business card is the best for a small business?
Does a corporate credit card affect personal credit card scores?

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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