May 11, 2022

Small Business Vs. Corporate Cards: What's The Difference

Startups and small businesses are not only the big businesses of tomorrow—they're the backbone of the economy today.

As companies begin to scale, organizations positioned for high-growth opportunities may turn to credit cards to access additional funds for future expansion. Small business credit cards and corporate cards are two more popular choices for additional financial support every month. 

Both corporate and small business cards enable employees to make authorized business expenses, from the office coffee pot to a sales trip to New York. While these options empower employees to make purchases on the company's behalf, it is up to an organization's financial leaders to decide which avenue fits its long-term needs and goals.

Key Differences Between Small Business and Corporate Cards

Corporate credit cards and small business cards share similar functions but can vary greatly where it matters the most.

Company Credit Checks

Companies are likely to undergo a credit check when applying for a corporate credit card. Still, it will not be reported to "the big three" business credit companies - D&B, Experian, and Equifax - under the business owner's name. Because of this, it will also not affect an owner's personal credit.

Instead, card issuers will look at business revenues, investor history, number of employees, etc., when reviewing a card application. Some issuers will require a minimum revenue to move forward in the process.

However, small business card issuers will examine an owner's creditworthiness, leading to a hard inquiry on a personal credit report. Because small business cards act similarly to individual credit cards, there is a chance the card issuer will report the credit use of the card to a credit bureau.

Small business credit cards typically have fewer minimum requirements, making them easier for a business just starting.

Credit Card Liability

Small business and corporate credit cards also vary in who is liable for payments at the end of the day. The primary cardholder is generally responsible for a small business card and will likely sign a personal guarantee. If a company begins to fall behind on payments, it is left to the cardholder to carry any consequences.

As for corporate credit cards, a personal guarantee is not a requirement. When saddling up at the end of the month, it is the responsibility to pay the balance rather than individual cardholders.

The most significant difference between a corporate credit card and a small business credit card lies in its accessibility. Historically, corporate credit cards are only issued to larger enterprises that meet a specific revenue and employee threshold.

However, small businesses can now seamlessly sign up for solutions like TripActions Liquid™, which allows them to launch quickly and distribute corporate smart cards to their employees with confidence.

The Benefits Of Corporate Cards

When small businesses and startups begin expanding, financial leaders shouldn't worry about losing control over company expenses or insight into employee spending. Modern corporate cards like TripActions Liquid can equip teams with built-in policy controls and automated expense management.

Building A Better Business Credit Score

Nearly half of small businesses are unaware their company has a credit score. That score can be pivotal for many budding businesses looking to access a small business loan, financing or secure more favorable terms on credit cards.

A business credit card is one of the quickest ways to build a credit history for a small business. It helps keep personal and business purchases separate while providing the flexibility, control, and convenience needed to manage its finances.

With corporate cards, finance leaders can set spending limits down to a very granular level, which helps small business owners establish corporate credit they can comfortably pay back on time each month.

Maintaining Spend Controls

Many modern corporate cards can now flag out-of-policy expenses in real-time, providing immediate clarity for employees and eliminating questionable spending. Embedded policies are rule-based but flexible – built according to expense category, role, or other criteria.

Corporate credit cards attached to an expense management solution like TripActions Liquid also help companies better understand expenses when transactions across multiple corporate cards can be corralled under one roof.

Having transaction and vendor details in one place helps with audits, simplifies account reconciliation, and leaves less room for accounting errors.

Corporate Card Rewards

Like a personal credit card, the most popular corporate credit cards also offer benefits and rewards to their cardholders. Because businesses spend more than one person, these credit benefits can be much more lucrative.

Some cards may offer travel perks, redeemable points, cash rewards, and even exclusive discounts with partners. These rewards flow back into the company and can be dispersed per teams policies and financial leaders' oversight but provide ample incentive for healthy employee spending.

The #1 Corporate Card

Whether arming a sales team with corporate cards or helping a small business owner manage recurring vendors, TripActions Liquid gives employees a simple way to pay while finance teams stay in control. With smart virtual and physical cards, policies are built in to ensure responsible spending, real-time transaction visibility, and automated expense reporting for all business spending.

Thanks to Liquid's custom policy builder, admins can create spend controls and approval workflows that are auto-enforced at the point of sale, preventing policy violations. So leaders can distribute cards with confidence.

Automated reimbursements and reconciliation also mean employees are freed from time-consuming paperwork, and finance teams save hours from month-end reconciliation.

If the goal is to expand to a corporate level, small businesses should arm themselves with the financial freedom of a corporate card.


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