Corporate Credit Cards vs Business Credit Cards Explained

At first glance, these credit cards might seem the same. They both provide flexible payment access and are used by businesses to pay for expenses like transportation and accommodation. However, there are many major differences between these two cards. Before we understand the difference between these two cards, let us take a look at each of these cards individually.

Understanding a Corporate Card:

A corporate credit card or corporate card is a credit card that can only be obtained by companies with higher annual revenue, usually companies with revenue above SGD 5.38 million. They are available only to C-Corp, S-Corp, and some LLCs. This card is not only accessible by the owner of the company but also to a limited number of sanctioned employees.

What is a Business Credit Card?

Business credit cards, on the other hand, can be owned by all types of businesses, including freelancers and gig workers. Unlike a corporate card, a business credit card is solely used by the business owner. To be eligible for this card, you don’t need a strong credit score. It also offers a revolving line of credit, which pays for unanticipated expenses or large purchases and helps cover bills without the need for cash.

Difference between Business card and a Corporate card

Corporate cards:

Users share responsibility for the debt; no single person stands accountable.
Both company owners and sanctioned employees can run a credit score check on the card
All card users are held responsible for unauthorized spending
A limit can be set on both payouts and spending categories
They offer robust administrative capabilities, which include automated expense tracking and real-time spending alerts.

Business credit cards:

The owner of the business has to offer a personal guarantee.
Only the business owner can run a credit score check on the card.
Since the business owner is the sole owner of the card, they are held responsible for the debt.
Business credit cards do have payout limits, but there is no way to restrict payouts for a spending category.
Business cards do come with a feature to track expenses and a reporting tool, but these features are more basic compared to the features made available by a corporate card.

Despite the differences between these two cards, they do have some similarities. Here are some similarities between them:

Both the corporate card and business card offer perks and rewards like cash back, travel benefits, and more.
They both assist in tracking the company’s expenditures
They also help the company keep personal expenses and business expenses separate.
The purpose of these cards is to pay for minor business expenses without paying out of pocket and later being reimbursed for the same.

Which is better for your business?

When deciding between business and corporate credit cards, new or small businesses might initially opt for business credit cards since they have fewer requirements. However, transitioning to corporate credit cards requires meeting stricter eligibility criteria, including being a C-Corp, S-Corp, or eligible LLC, having annual revenue of at least SGD 5.8 million, and maintaining a minimum of 15 employee cardholders.

Additionally, a minimum expected spending quota may be required. Once you meet these criteria, it is important to consider factors such as the number of employees, high transaction volumes, and spending limits. A corporate card can help manage expenses for multiple users by offering features like spending limits and categories. They also enhance accuracy and reduce management time and costs through electronic expense filing. If your business regularly maxes out its business credit card limit, it may be time to scale up to a corporate card.

In conclusion, both corporate and business credit cards are valuable for managing business expenses, but the choice depends on your business’s size and needs. Business credit cards are perfect for small businesses and freelancers due to their lower requirements and simpler management. Corporate credit cards suit larger companies with higher revenues and more complex expense management needs, offering robust administrative capabilities and enhanced control over spending. Assess your business’s size, revenue, and spending patterns to determine which option best supports your financial operations and growth. The right choice will guide your business toward growth.