A small business credit card provides startups or small business owners with revolving credit up to a set limit. This means that, by and large, credit cards for businesses function much like any other type of unsecured credit card.
For example, let’s say you apply for a small business credit card and get approved. The bank or lending institution will send your card in the mail, and you can start using it as soon as it arrives. You will need to make a minimum payment each month, and the lender will charge you interest on any balance remaining on your card. Therefore, when it comes to their basic functions, business and personal credit cards work the same.
That said, personal and business cards are not exactly the same. If they were, there would be no reason for the distinction. In truth, business cards often have different application requirements that can vary from one banking institution to another. You may need proof of business revenue to qualify for certain cards. In any case, the primary difference between personal and business cards is their credit limits and rewards. Generally, business cards come with a higher limit than personal cards.
For instance, let’s say that you apply for two cards at the same time — one personal and the other business. You have a credit score of 650 and an average monthly income of $5,000 before taxes. Your personal card may come with a limit of around $2,000, while a credit card for your business could come with a starting credit amount of two or three times higher.