How to find the best credit card for your business
By Elaine Pofeldt
Your Business Credit
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
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? --
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
"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 line, Used 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