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Updated: 7 November 2024
If you’re in charge of managing your company’s finances, you’ve probably come across both corporate and business credit cards. At first glance, they might seem pretty similar—after all, they’re both designed for business spending. But dig a little deeper, and you’ll find some key differences that could make a big impact on how you manage your company’s money.
Let’s explore further and look at what sets these two types of cards apart.
Business credit cards are the go-to for small and medium-sized businesses. If you’re a sole trader, running a startup or in charge of a growing company, this is probably the type of card you’ll be looking at. They’re designed with smaller operations in mind, offering features that suit the day-to-day needs of businesses that don’t have massive teams or complex spending requirements.
Take the Funding Circle Cashback business credit card, for example. It’s built for small and medium-size businesses, perhaps ones just like yours. It offers the flexibility and rewards that smaller companies need, without all the complex bells and whistles that can overcomplicate things.
Alternatively, corporate credit cards are built for the big players. We’re talking about established companies with annual turnovers of £4 million or more. These cards are set up to handle the complex needs of larger businesses with lots of employees and bigger spending requirements. If you’re running a company with multiple departments, hundreds of employees, and significant monthly expenses, a corporate card program might be more your speed.
Here’s something to consider: who’s responsible for costs if something goes wrong?
With most business credit cards, it’s the business owner who’s personally responsible for any debt. That means if the business can’t pay, the owner is ultimately responsible. Think of it like a guarantor for your own company.
This setup has its pros and cons. On one hand, it means you can often get approved for a card even if your business doesn’t have a long credit history (though it will likely need at least 12 months). On the other hand, it means you’re taking on personal risk for your business spending.
Corporate cards work differently. The company itself is usually liable for the debt. This type of setup protects individual employees and executives from being personally responsible for business spending. It’s a more attractive option for larger companies, as it reduces personal risk for executives and makes it easier to delegate spending responsibilities to employees.
Saying that, if an individual is responsible for overspending, they might not be culpable from the lender’s perspective, but there’s still likely to be repercussions from the business itself.
When you apply for a business credit card, the card provider will typically want to look at your personal credit score. They’re essentially trusting you, as an individual, to manage the card responsibly.
This can be both good and bad. If you’ve got a solid personal credit score, it can help you get approved for a card even if your business is relatively new. But if your personal credit isn’t great, it might be harder to get approved, even if your business is doing well.
For corporate cards, it’s all about the company’s financials and credit history. The application process is usually more involved, with stricter criteria to meet. They’ll want to see things like audited financial statements, proof of revenue and a strong business credit score.
This difference in the approval process reflects the different levels of risk and responsibility associated with each type of card. Business cards are betting on you as an individual in most cases, while corporate cards are looking at the financial health of your entire company.
Business credit cards often come with lower spending limits. They’re designed for smaller, everyday business expenses rather than major corporate spending.
At Funding Circle, our Cashback card offers limits of up to £250,000, which is pretty substantial for a business card. A higher limit like this can be really useful for growing businesses that need a bit more financial firepower.
Corporate cards usually offer high limits. They’re built to handle larger transactions and higher volume spending across multiple employees and departments. It’s not uncommon for corporate cards to have limits in the millions for large companies.
The spending limit can make a big difference in how useful the card is for your business. If you’re regularly making large purchases or need to manage spending for a lot of employees, the higher limits on corporate cards might be necessary. But for most small to medium businesses, the limits on business credit cards are more than enough to cover day-to-day expenses and even larger occasional purchases.
Both types of cards offer ways to track your spending, but corporate cards often come with more sophisticated systems.
Corporate cards typically offer advanced expense management systems that can integrate with your company’s accounting software. These systems can automatically categorise expenses, flag unusual spending and generate detailed reports. They’re designed to handle the complex needs of large organisations with multiple departments and hundreds of employees all using company cards.
Business credit cards usually have more straightforward expense tracking tools. They’re simpler to use but might not offer the same level of detail or integration that larger companies need.
That said, many business credit cards, including the Cashback card, still offer pretty robust tracking features. You can track spending on the app or online to have a complete overview when using the Cashback card.
With most business credit cards, you can download statements, categorise expenses and even set spending limits for different employees. For most small to medium businesses, these features are more than enough to keep on top of company spending.
The key difference here is scale. Business cards offer solutions that work well for managing dozens of transactions and a handful of employees. Corporate cards are built to handle thousands of transactions and hundreds of employees.
With most corporate cards, you’re expected to pay the full balance each month. It’s not designed for carrying debt. A feature like this can be great for keeping company finances clean and avoiding interest charges, but it also means you need to have the cash flow to cover all your monthly expenses.
Business credit cards often give you the option to carry a balance from month to month, just like a personal credit card. You might find this helpful for managing cash flow, especially for smaller businesses or those with seasonal income. Just remember that you’ll be charged interest on any balance you carry over.
Some business credit cards, including the Cashback card, also offer interest-free periods. You get up to 42 days interest free on purchases, which can be a great way to smooth out your cash flow without incurring extra costs.
And with FlexiPay from the Funding Circle, there’s no interest at all. Instead, you pay a simple flat fee per transaction.
Who doesn’t love a bit of cashback or some air miles? Both types of cards often come with reward schemes, but there’s a key difference in how they work.
With business credit cards, rewards usually go to the primary cardholder—often the business owner. It’s a nice little perk for all your hard work. The Cashback card, for instance, offers 2% cashback on all spending for the first six months (up to £2,000), then 1% cashback after that.
Corporate card rewards typically go to the company itself. These rewards can be pooled and used for business purposes, like funding travel or reinvesting in the company. Some corporate card programs offer more tailored rewards, like discounts with specific suppliers or enhanced travel perks.
The difference here comes down to who benefits from the rewards. With a business card, it’s usually the business owner who gets to decide how to use the rewards. With a corporate card, the rewards are treated more like a company asset.
If you need to give your whole team cards, a corporate option might be the way to go. These are set up to issue cards to many employees, each with their own spending limits and tracking. Some corporate card programmes can handle hundreds or even thousands of individual cardholders.
Business credit cards usually limit the number of additional cardholders you can have. It’s more about giving cards to a few key team members rather than the whole office.
The number of cards you can issue might not seem like a big deal if you’re just starting out. But as your business grows, being able to give cards to more employees can make managing expenses a lot easier. It’s worth thinking about your future needs when choosing between a business and corporate card.
Applying for a business credit card is usually fairly straightforward. You can often do it online in a matter of minutes. At Funding Circle, we’ve made our application process as simple as possible. You can check if you’re eligible without affecting your credit score, and if you’re approved, you could start using your card right away.
The requirements for business credit cards are generally less strict, making them more accessible for newer or smaller businesses. You’ll typically need to provide some basic information about your business, like your company structure and annual revenue, as well as personal details for the main cardholder.
Corporate cards? That’s a different story. The application process is more complex and time-consuming. You’ll likely need to provide detailed company financials, audited accounts and meet stricter eligibility criteria. It’s not unusual for the application process to take weeks or even months for corporate cards.
This difference in application processes reflects the different levels of risk and complexity involved. Business cards are designed to be accessible to a wide range of businesses, while corporate cards are tailored for larger, more established companies with more complex needs.
Both business and corporate cards come with a range of features and perks, but there are some differences in what’s typically offered.
Business credit cards often focus on perks that are valuable to smaller businesses. These might include:
Corporate cards, on the other hand, tend to offer perks more suited to larger businesses:
Both types of cards might offer things like airport lounge access or travel rewards, but corporate cards often have more premium offerings in this area.
The key difference is in the focus. Business card perks are designed to offer direct value to the business owner and help with everyday business expenses. Corporate card perks are more about providing tools to manage complex company spending and travel needs.
If your business operates internationally or you travel abroad for work, this is an important factor to consider.
Most business credit cards, including the Cashback card, can be used internationally. However, you might incur foreign transaction fees when you use your card abroad. These fees can add up if you’re doing a lot of international spending.
Corporate cards often have more favourable terms for international use. Many offer no foreign transaction fees and better exchange rates. Some even offer multi-currency accounts, allowing you to hold balances in different currencies.
Again, this difference reflects the typical needs of the businesses using each type of card. Smaller businesses might do some international transactions, but for many, it’s not a daily occurrence. Larger corporations are more likely to have significant international operations that require more sophisticated international banking features.
How well your credit card plays with your other business software can make a big difference to your day-to-day operations.
Business credit cards usually offer some level of integration with popular accounting software. For example, you might be able to automatically import your transactions into QuickBooks or Xero. Doing so can save you a lot of time on bookkeeping and make it easier to track your expenses.
Corporate cards often expand on this. They might offer custom integrations with enterprise resource planning (ERP) systems, allowing for real-time tracking of expenses across the entire company. Some corporate card programs even offer their own comprehensive expense management platforms, designed to handle the complex needs of large organisations.
The level of integration you need will depend on the size and complexity of your business. For many small to medium businesses, the integrations offered by business credit cards are more than sufficient. But if you’re managing expenses for hundreds of employees across multiple departments, the advanced integration options of corporate cards might be necessary.
After all that, you might be wondering which type of card is the best fit for your business. As with most things in business, there’s no one-size-fits-all answer. It depends on the size, structure and specific needs of your company.
If you’re running a smaller operation—maybe you’re a sole trader, or you’ve got a team of under 100 people— a business credit card is probably your best bet. It’ll give you the flexibility and features you need without overwhelming you with complex systems you don’t need. The Cashback card, for instance, is designed to give small and medium businesses a simple way to manage expenses while earning rewards on their spending.
For larger corporations with lots of employees and complex expense management needs, a corporate card program might be more suitable. It offers the control and sophisticated tracking that big businesses need to manage spending effectively across multiple departments and hundreds of employees.
But remember that these aren’t hard and fast rules. A fast-growing startup might find that it quickly outgrows a business credit card and needs to switch to a corporate program. Or a larger business might prefer the simplicity of a business credit card for certain types of expenses.
The key is to think about what’s most important for your business:
Answering these questions will help you figure out which type of card is the best fit for your business. After all, you want to make the right choice and avoid common mistakes when choosing a card for your business.
At Funding Circle, we’re here to support businesses at every stage of their journey. Whether you’re just starting out or you’re looking to take your established business to the next level, we’ve got solutions to help you manage your finances and fuel your growth. Our Cashback card is just one of the ways we’re working to make business finance simpler and more rewarding for companies like yours.
There’s also FlexiPay for businesses looking for more flexibility in how and when they make business payments.e With FlexiPay you can pay business costs upfront by card or cash transfer, which is just like making a bank transfer, then choose whether you repay over 1, 3, 6, 9 or 12 months.
Whether you go for a business or corporate card, the goal is the same: to make managing your company’s spending easier and more efficient. And remember, as your business grows and changes, you can always reassess and switch to a different type of card if your needs change.
07/11/24: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.
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