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Should I Use an Unsecured Business Credit Card for Business Spending?

Brayden McCarthy

Brayden is Fundera's credit cards expert. He's passionate about helping businesses take advantage of the best credit card offers on the market, from the longest 0% intro APR periods to the richest cash back and travel rewards bonuses.
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Every small business owner is different in that they’re pursuing different goals—but the same in that they’d always love a little bit of extra cash in hand. And while going all-in on a small business loan can be a big step that not every company is willing to make, a business credit card is a smart decision for almost all small businesses that need immediate access to capital.

With that in mind, should you use an unsecured business credit card for your business spending? Likely, the answer is yes. It’s very helpful for business owners in case of cash-flow emergencies, but it’ll also let you incorporate credit card usage into your business regularly to take advantage of benefits and rewards.

It’s important that when you use an unsecured business credit card for your spending, you should pick the right one—you’ll only be able to really see the major advantages if you’re maximizing spending for your business using the card.

Here’s what you need to consider if you want to start using a business credit card:

What Is an Unsecured Business Credit Card?

Let’s start here. You might be unfamiliar with the term “unsecured credit card,” but you’re certainly not unfamiliar with the term “business credit card.” And the vast majority of business credit cards are unsecured.

The difference between a secured vs. an unsecured credit card is that a secured credit card requires a security deposit for a lender to mitigate risk. They’re fantastic tools for business owners who need to rebuild credit. (You can read more about secured business credit cards here.)

Unsecured business credit cards, then, are basically everything else—and what you’re thinking of, likely, when you think of any credit card. You have a limit, you spend up to that limit, and then you pay back your balance. Lather, rinse, repeat.

There are lots of perks to using an unsecured business credit card for your business spending. For one, they’re hugely helpful for providing short-term cash flow that business owners need. And because there’s such a large variety of them, they provide the best options for business owners because you can pick the card that gives you the best rewards for your spending.

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The Benefits to Using an Unsecured Business Credit Card for Business Spending

The Cash-Flow Advantage of Unsecured Business Credit Cards

How many of us have found ourselves short on cash? Perhaps account receivables are behind or sales are slow. Having access to a little more short-term credit comes in handy, especially if it’s crucial to making sure your business operates smoothly.

The biggest perk to a business credit card is convenience. You can quickly access funds, giving you a much needed financial cushion for those just-in-case moments. While small business loans are larger endeavors for certain businesses (lots of paperwork), or not on the table for others who need to build credit history or establish time in business, business credit cards are a fantastic alternative.

Unsecured credit cards are also often easier to qualify for than some loan products because of the sheer range of them. It lets cardholder offer different cards with different terms to business owners across a range of credit histories—or sometimes none at all.

Use Unsecured Business Credit Cards to Keep Personal and Business Finances Separate

Essential financial management becomes easier if you use a business credit card. It’s 100% necessary—and one of the 10 basic rules of accounting—for your personal and business finances to stay separate. Your bookkeeper has to keep them apart for tax purposes, and using a business credit card will make that job simpler.

Not only can you separate your spending and track it on dedicated statements, but many card issuers offer other free services such as online tools to manage record keeping. For example, your bookkeeper can categorize, track, and receive end year-end account summaries to speed along their process. Utilities like these can even simplify the process if you outsource bookkeeping, especially when it comes to monitoring tax payments and navigating audits.

Or, if you’re doing the books yourself, you can save time sorting through receipts.

Business credit cards also give owners the ability to limit how much employees can spend. For example, you set a monthly budget for your assistant to spend only a certain amount each month on office supplies. If she tries to purchase items that aren’t from an office supply store, the transaction will get rejected.

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Earn Rewards to Buffer Your Bottom Line

Many unsecured business credit cards offer rewards programs, just like the ones you know and love on your own personal credit card. With your business spending, you can earn in your preferred categories like cash back, airline miles, preferred pricing, and more.

A business rewards credit card can be a great way for your business to save money. Cash back can be reinvested, or miles you and your employees earn can turn into free flights and hotels for business trips. You get the idea.

The best thing for you to do as a business owner is take a good look at your business’s spending and do a little bit of an audit. What do you spend on most? Is there a category or type of product on which you consistently spend? Or a store in which you do most of your spending? Or are you certain that you’d prefer flat cash back?

Once you have an idea of your priorities and spending habits, you can get an unsecured business credit card to not only bolster your available short-term cash but help you earn the best rewards for your business along the way.

Any Reason You Shouldn’t Use an Unsecured Business Credit Card?

There are always caveats to heed with any type of credit product, of course. Before using an unsecured business credit card for your business spending, make sure you’re aware of these potential pitfalls:

  • Interest rates on business credit cards vary widely. They’re generally higher than on personal credit cards and small business loans. If you tend to carry a balance, you’ll have to be certain that you choose a card with this in mind.
  • Your card issuer reserves the right to change your interest rate. This can depend on how you use or manage your credit card account.
  • You’re still personally responsible for your business credit card. If you accrue business debt, you could be personally liable. This also includes any authorized spending on an employee’s card linked to your account. And, depending on your agreement with the card issuer, late or nonpayment could negatively impact your credit report.

Who Should Use an Unsecured Business Credit Card?

Really, it’s a great choice for so many.

Startups and new businesses that aren’t currently eligible for financing due to a lack of credit history can get access to much-needed cash using an unsecured business credit card for spending. Small businesses needing to supplement their cash flow on the short-term can also use a unsecured credit card to their advantage. And, likewise, business owners who are looking for strategies to maximize savings or ways to grow will really be served, too.

Here’s a comprehensive guide on how to apply for a business credit card online once you think it’s a good call for your business.

Unsecured Business Credit Cards for Your Business Spending

Once you’re ready to go forward with a business credit card and you know the kind of rewards you’d like to earn or benefits you’d like to get out of a card, apply for one of these unsecured business credit card picks for your business spending:

Best Unsecured Credit Card for Building Credit History: Capital One Spark Classic for Business

If you know your business needs to build or rebuild credit history, try the Capital One Spark Classic for Business for your business spending. There’s no annual or foreign transaction fee, and you can still earn rewards—unlimited 1% cash back on every purchase.

Best Unsecured Credit Card for Startups: The Blue Business Plus from American Express

As a startup, sometimes you have to make big purchases but can’t pay them off immediately. The American Express Blue Business Plus Card gives you a 15-month 0% APR introductory period—the longest we’ve ever seen—and no annual fee. (After your 15 interest-free months are up, a variable APR sets in at a rate depending on your creditworthiness. This rate will also vary with the market, so be sure to see the issuer’s terms and conditions for the latest APR information.) With this card, you can build your business credit history and also earn 2x points on your first $50,000 for every dollar you spend in purchases each year.

Best Unsecured Credit Card for Cash-Back Rewards: Chase Ink Business Cash

The Chase Ink Business Cash Card is one of the best cash-back rewards card on the market, which is a stellar choice for an unsecured credit card for business spending. With its tiered rewards categories, you’ll get either 5%, 2%, or 1% cash back based on certain purchases—so if you spend a lot on office supplies, restaurants, or gas, you’ll see dividends here.

Best Unsecured Credit Card for Travel with No Fee: Capital One Spark Miles Select for Business

With no annual or foreign transaction fee, the Capital One Spark Miles Select for Business is a solid pick for the business owner who wants to earn travel rewards with an unsecured credit card for their business spending. You’ll earn a flat 15 miles on every dollar you spend, and get a 20,000 mile signup bonus for spending $3,000 in the first three months with the card.

Should You Use an Unsecured Business Credit Card?

For most small business owners, yes! As with any credit product, as long as you know any potential risks involved, you can really make the most of an unsecured business credit card for your business spending by choosing the right one.

 

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Brayden McCarthy

Brayden is Fundera's credit cards expert. He's passionate about helping businesses take advantage of the best credit card offers on the market, from the longest 0% intro APR periods to the richest cash back and travel rewards bonuses.

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