10 Best Start up Business Credit Cards August 2024

If you’re diving into the exciting world of startups, having the right financial tools is crucial. Among these tools, a credit card stands out as essential—not just any card, but one that is customized for the unique needs of a startup.

Welcome to our comprehensive guide on the best credit cards for startups in the UK.

In this detailed article, we’re set to explore an array of options. Whether you’re looking for cash-back rewards, travel perks for your frequent business trips, or tools to manage your cash flow more effectively, we did a deep research to cover these topics and provide you an updated information.

Whether you’re running a tech startup in the busy streets of London, a creative agency in the vibrant city of Manchester, or a manufacturing unit in the industrious town of Birmingham, your financial needs will vary. Yet, there’s a card out there designed just for you.

What is a business credit card?

Business credit cards, sometimes known as ‘company’ credit cards, are accessible to businesses of all sizes. They operate similarly to personal credit cards, but instead of being issued in an individual’s name, they hold the company’s name.

Just like personal cards, business credit cards can be used for a wide range of purchases. This can include buying office supplies, paying invoices, and covering travel and entertainment expenses for clients. They also help to keep the expenses separate for both personal and business.

A business credit card provides access to credit up to a predetermined limit. As with personal credit cards, you need to make at least the minimum payment each month. This minimum payment is the smallest amount you must pay to avoid late fees and is calculated based on your outstanding balance and the annual interest rate (APR).

Similar to personal credit cards, any remaining balance on a business credit card will charge interest if it isn’t paid off in full each billing cycle. The interest rates on business credit cards can be higher than those on personal cards, and some come with an annual fee. However, the credit limits on business credit cards are generally higher.

Businesses can issue additional cards to employees for business expenses, but it’s wise to set clear guidelines on the type and amount of allowable expenses. Ultimately, the company, not the individual employee, is responsible for paying off any debt accumulated.

What are the best business credit cards?

Business credit cards can be a game-changer for startups, offering a crucial boost in capital and a way to build credit as you scale your business.

With ample choices available, we conducted a thorough review (July 2024) to select the top business credit cards available currently on the market.

Our evaluation considered interest rates, annual fees, and rewards schemes to find the best options for start-ups. We focused on cards that cater to new businesses, specifically those with low or no minimum turnover requirements.

If you’re launching a new venture in 2024, check out these top 5 business credit cards designed with startups in mind:

But it’s not just about accessing funds. The best business credit cards for startups also come equipped with valuable tools for managing your expenses and accounting needs. Dive in to discover how these top picks can help streamline your startup’s financial journey and set you up for success.

What are the Pros and Cons of business credit cards?

Pros

Here are some of the advantages of using business credit cards for startups:

In the case of business credit cards managing cash flow becomes much easier, especially when you need to cover purchases while waiting for customer payments. It helps in keeping the financial wheels turning smoothly.

Separating business and personal expenses is another major benefit. This adon benefits ensures the business finances becomes more organized.

Speaking of accounting become much more time-efficient. Instead of tracking individual receipts, you can rely on credit card statements. Moreover, many business credit cards offer apps that link payments directly to accounting software, making the whole process much easier.

If you have employees, they can get their cards for business expenses. This saves them the hassle of claiming expenses later and allows you to track spending in real time, keeping a close eye on where the money is going.

Business credit cards can also be a cost-effective source of finance. You often get up to 56 days of interest-free credit if you pay off the balance in full by the due date.

Building a credit history is another critical aspect. For startups, having a good credit history can open doors to additional financing options or better terms on future loans.

Lastly, the potential rewards are a big draw. You might earn cashback on purchases or benefit from points-based reward schemes that can be redeemed for future purchases. Business credit cards usually offer more generous sign-up bonuses and rewards than personal credit cards, making them even more beneficial.

Cons

High interest and fees can be a real burden. If you can’t pay off your balance each month on time then those interest rates pile up faster. Moreover, business credit cards often come with various charges including annual fees, late payment fees, cash advance fees, and many more.

The potential for debt is another big issue. The convenience and flexibility of a business credit card can be the reason for overspending. Businesses could be trapped in a debt cycle if cannot manage it carefully.

Personal liability is a serious concern. Many business credit cards require a personal guarantee, meaning if your business can’t repay the debt, you, as the cardholder, are personally on the hook. This could put your assets at risk.

The impact on your credit score. Using a business credit card can help build your business credit score only if you pay your debt on time otherwise it can hurt both your business and personal credit scores.

Complex reward structures can be a headache. Rewards might seem exciting, but they often come with strings attached. You need to understand your card’s rewards program inside and out—some require specific spending categories to earn points, and there can be restrictions on when and how you can redeem those rewards.

Methods to Choose a Perfect Business Credit Card Based on the Needs

Start-up businesses are generally in their early development stages and often experience low sales volumes. Consequently, we excluded business credit cards with high minimum turnover requirements from our review. We focused on cards with no specific minimum turnover or a low annual turnover requirement, such as £10,000.

To Select the best business credit cards, we considered the following criteria:

• Interest rate on purchases: Measured by representative APR (variable)
• Annual fees: Any charges associated with the card
• Benefits: Including cashback or points-based reward schemes
• Account restrictions: Whether the credit card is limited to businesses holding current accounts with the provider (most banks offering business credit cards require a business account with the bank, including those in our list)
• Additional cardholder fees: Costs for adding extra cardholders and any limits on the number of cardholders
• Foreign exchange fees: Charges applied to overseas purchases.

How to get a business credit card for a startup?

So, you’re set to apply for a business credit card, but how exactly do you apply it? Let’s dive into the details and break it and understand step by step.

Build Business Credit History

If your business is younger than three years, you’ll probably need to lean on your Personal credit to get a business credit card. Even if your business is older but lacks credit history, your credit score will still be the key.

It’s crucial to work on your credit history and boost your score. One way to do this is by using a secured credit card, which requires a security deposit that sets your credit limit.

Once you secure a business credit card with your personal credit, you’ll start building your business’s credit score. As long as you handle your credit responsibly, your business will eventually qualify for its own credit card. For more check out how to increase credit score.

Gather and Submit Required Documents

It’s time to apply after choosing an offer that suits your business. Typically, you’ll need to provide several documents for the lender’s underwriters to review. These usually include:

• Identification for all owners with over a 25% stake.
• Incorporation documents to prove how long your business has been operating.
• Recent financial data, such as P&L reports. Some lenders may also request bank statements.
• Documents for personal assets. You might need to make a personal guarantee, using your home, car, boat, or other property as collateral.

Wait for Approval

Approval times can vary. Sometimes, you’ll get an instant decision in seconds. Other times, if more information or further review is needed, it could take anywhere from a few days to a few weeks.

Following these steps will put you on the path to securing a business credit card, and setting your business up for better financial management and growth.

What is the average credit limit for a business credit card?

The average business credit card limit in the United States hovers around $56,100. However, your specific limit could vary greatly from this national benchmark. This discrepancy arises because numerous factors influence the calculation of your business’s credit limit. Here are some pivotal elements that play a role:

First, your credit score matters immensely. Those boasting top-tier credit scores are typically rewarded with higher credit limits. Then there’s your company’s profitability. Credit card issuers want assurance that you can repay what you borrow. Hence, you will likely secure a substantial credit limit if your business is highly profitable.

Next, consider the offer you choose. Some lenders are known for providing more generous credit limits than others. However, a higher limit isn’t always the best option if other features of the card don’t align with your needs. Thus, it’s crucial not to base your decision solely on the credit limit.

Lastly, the underwriting style of the lender can make a significant difference. Traditional underwriters evaluate a mix of factors, including your credit score, revenue, and profitability, to determine your limit.

Conversely, sales-based underwriters focus on your sales figures. This approach can sometimes result in credit limits up to 30 times higher than those derived from traditional underwriting methods.

Conclusion

Finding the best startup business credit cards can be a game-changer for your new venture. These cards come with exciting rewards, and higher credit limits, offering the financial flexibility important for your success.

Efficient expense management is another perk. Choose wisely, and you’ll boost your business operations while building a strong credit foundation for future growth.

If you like our article, share it with your friends and colleagues.

Ella

Hello! I’m Ella Patel, a blogger based in India with a strong specialization in the finance sector. My journey into the world of finance and writing is a blend of academic achievements and professional experiences, which I am excited to share with you