All You Need to Know About Business Credit Cards

Updated on: 10 Jan 2024 // 5 min read // Credit Cards
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Credit cards have become an integral part of our lives and grown in massive popularity because of the utility it provides to the cardholders. Over the years, Credit Cards have proven to be a convenient and beneficial tool for individuals and businesses alike.

However, Credit Cards for business houses use are distinct in many ways from Credit Cards meant for individual users. The primary difference between a Corporate Credit Card and a regular Credit Card is that, while a regular Credit Card can be used by any individual, the business Credit Cards are specifically intended for commercial units & business organisations only.

To that end, Business Credit Cards don’t skimp on the benefits provided by regular Credit Cards as they offer better rewards and incentives while helping a company build up and improve its Credit Score as well. Most of these benefits, rewards, and incentives are designed keeping business purposes in mind. If you’re a small business-owner, Business Credit Cards can help your business or company save thousands of rupees annually.

Let us first take a quick look at how to go about procuring a Business Credit Card and also find out exclusive the features and benefits of these cards for business owners. 

Types of Business Credit Cards

Before you dive into the nitty-gritty of using and acquiring business cards, it is important to understand whether you’re eligible to apply for a business card. Also, you must ascertain whether the card will only be used for business purposes or you have multiple needs.

There are two types of Business Cards to choose from depending on which category you find yourself in. They are:

  1. Small Business Credit Cards
  2. Corporate Credit Cards

Small Business Credit Cards are designed keeping in mind small & medium business owners as well as start-up entrepreneurs. On the other hand, Corporate Credit Cards are meant specifically for large Multi-National Companies and well-established businesses. 

Besides the demographics, another distinction between the two is in terms of the liability. In case of the Small Business Cards, the owner of the business is personally liable which means that in the event there’s default on the card, the bank or the card-issuing company will hold the owner liable and ask him for settlement. In the case of Corporate Credit Cards, however, the liability can fall upon either the individual (employee), the corporation or can be jointly shared.

Documentation required for acquiring a Business Credit Cards

Before you can get hold of a Business Credit Card, you will be required to complete an application and submit documents for verification. In case the issuing bank finds any sort of discrepancies or anomalies in the documents, then the application will be rejected outright. In that light, it also needs to be mentioned that all banks have their own set of criteria when it comes to collecting documents for verification and authentication purposes.

Here is a list of common documents which are usually required for applying Business Credit Cards in India:

  • Age Proof- Date of Birth Certificate, Certificate of Board Examination, or Admit Card of Board Exams. 
  • Residential or Address Proof
  • Income Proof- In most cases, Income Tax Returns or Profit & Loss (P&L) Account and Balance Sheet
  • Trade license – Memorandum of Association (MOA) in the event there are multiple owners.
  • The most important factor is that the business should showcase a decent track record that it’s functioning satisfactorily.

Key Features and benefits of Business Credit Cards

We have listed out some of the many benefits Business Credit Cards offer vis-a-vis Personal Credit Cards.

They are as below:

Higher Credit Limit

As compared to regular Credit Cards, Business Cards often command higher credit limits as businesses tend to not only make more money but also spend more money than usual consumers. Having a higher credit limit surely helps as an increased spending capacity translates to more line of credit for your business purchases. Moreover, in case you find yourself cash-strapped and there’s an urgent purchase which needs to be made, Business Credit Cards offer you the flexibility to do that at your own convenience.

Tracking Expenses

Keeping track of your records is a vital component of running any business. In that regard, Business Credit Cards can help you track all your business expenses at one easily accessible location thus making it easier for you to trace every rupee you might have used in the course of running your business. With the help of an organized record of all your expenses, you’ll be able to verify your transactions whenever you want thus leaving no room for any potential errors. Having a complete record of all your transactions not only makes the business more accountable but can also help in budgeting and tax preparation purposes as well.

Rewards & Incentives

Business Credit Cards usually come with additional perks and exciting rewards exclusively aimed at business owners. As a business owner, you can take advantage of specialised rewards which are not offered on regular, individual Credit Cards as the benefits of these cards are more aligned to business purposes. From sophisticated expense management tools to special Airport Lounge access to a multitude of offers on Flight Tickets and Hotel Bookings – Business Cards simply offer better rewards. For instance, there are certain Types of SBI Credit Cards which enable you to access a special Visa Intellilink spend management tool through which you will be able to easily analyse your company’s expense pattern.

Secure Transactions

Business Credit Card eliminates the risk of potential theft while carrying large wads of cash by providing enhanced security measures and state-of-the-art protection protocols on all transactions.

Building a better Credit Score

If you’re a small business owner looking to build credibility around your business, a Credit Card can help you build a credit score for your business. Thereon, having a good credit score can surely help you take out a Business Loan later on at competitive interest rates. Just be careful that you still need to pay your bills on time and not use up more than your available credit as it can otherwise prove counter-productive thus hurting your business’ Credit Score in the process.

The Bottom Line

While holding a Business Credit Card is undoubtedly beneficial for every businessman, you should thoroughly analyse all available Business Credit Card options at your disposal before narrowing down on the one you like. Going about selecting a Business Credit Card which works for your business is pretty straightforward if you know what to look out for. While comparing Credit Cards, make sure to find out all the relevant processing fees and charges associated with the Card. Also, look out for a Credit Card with a higher credit limit facility and a card which offers a lower interest rate. Furthermore, while shortlisting between the multitude of Business Credit Cards available, you should ideally look out to opt for a card which offers the maximum benefits in the form of rewards and perks. Once you find a card which ticks all the right boxes, surely the Business Credit Card will prove to be extremely beneficial for your business down the line.

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