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How to find the best credit card for your business

By Elaine Pofeldt

Your Business Credit
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Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.

Ask Elaine a question or read her prior answers in the 'Your Business Credit' archive.

Question for the CreditCards.com expert Dear Your Business Credit,
I am looking for a small business credit card for my business. Can I get the best deal at the bank where I keep my business checking account? Or should I just shop around on my own? -- Deal Hunter

Answer for the CreditCards.com expert Dear Deal Hunter,
Your bank may offer some great options, but not necessarily the best ones on the market. It'll be easier to evaluate them if you shop around a little first.

Rohit Arora, CEO of online loan broker Biz2Credit in New York City, recommends doing some online research to figure out which deals are best, and then asking if your bank offers any cards with similar terms. To save time, you may want to try CreditCards.com's credit card finder tool.

Banks will tend to devote their marketing efforts to the cards that are most profitable for them, Arora says. However, their standard card may not be the best one for you. If you ask, you might be able to get a card with a higher credit limit, lower fees, a reward program or a lower annual percentage rate (or no APR for a certain period of time). "That's where there is the leeway," he says. 

Just don't expect your banker to offer you a card without a personal guarantee -- a perennial request among business owners who don't want to put their personal credit at risk when they borrow for a business, says Gregory B. Meyer, a 30-year banking industry veteran and community relations manager at Meriwest Credit Union in San Jose, Calif. His credit union is an approved Small Business Administration lender.

"Sure, Microsoft or Ford Motor Co. would not have to qualify based on their personal credit rating," Meyer says in an email. But they are giant corporations, he notes. Sole proprietors or owners of small 'S' corporations with gross annual revenue of less than $1 million are judged on their personal credit scores when they apply for business credit cards, he says.

Be realistic when shopping around. Consolidation in the banking industry has limited the number of small business card issuers -- and with fewer issuers, it's gotten harder to find deals, Meyer says. CreditCards.com's weekly rate report shows that the average annual percentage rate for business cards stands at 13.13 percent, the same figure as a year earlier. But APRs run as high as 24 percent for business cards.

In this climate, there's a limit to what your banker can do to get you a great deal, even if you're a big depositor or have excellent credit. Many small banks and credit unions offer branded cards under programs that are actually run by big banks such as Chase and Citi, Meyer says. A small bank that doesn't like an issuer's overall card program can negotiate a better one, but it can't do so on a case-by-case basis, according to Meyer.

"Once in a while I could get a late fee waived, but as far as personal guarantees, interest rates or credit lines, I had no say in that," he says. "Rates and lines of credit are determined through a matrix that combines the credit rating of the business owner with their ability to pay from the business's income."

Of course, every dollar counts when you're running a small business, so simply getting your bank to offer you a better card -- if it has more than one option -- is well worth your time.  

See related: How business cards can impact your bottom lineUsed wisely, small business cards can keep business afloat 

Elaine Pofeldt is a journalist who specializes in entrepreneurship and careers, contributing to publications such as Fortune, Money, Working Mother and many others. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals.

Elaine answers a question about small business and credit from a CreditCards.com reader each week. Send your question to Your Business Credit.

Published: January 21, 2013


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Credit Card Rate Report

Updated: 08-21-2014

National Average 15.03%
Low Interest 10.37%
Balance Transfer 12.64%
Business 12.80%
Student 13.27%
Cash Back 14.91%
Reward 15.00%
Airline 15.46%
Bad Credit 22.73%
Instant Approval 28.00%

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