Credit cards

Credit Cards for Small Businesses

Credit Cards for Small Businesses in the United Kingdom

Credit Cards for Small Businesses
02 March 2023

Business Credit Cards for Thriving Small Businesses

Business credit cards for small businesses can be beneficial. Whether freelancing, running a side hustle, a startup, or anything similar, business credit cards are significant in managing your finances and investments to grow your business—especially if you are aiming for high growth.  

With careful planning and payment management, business credit cards can help your business thrive and accomplish your short-term and long-term goals. We comprehensively discuss how credit cards tackle the challenges your startup face; we also included a list of our top-picked business credit cards suitable for small businesses in the UK. However, remember that having a credit card calls for on-time payments and only affordable spending.

Challenges the Small Businesses Face 

Small businesses undergo various challenges during their journey to compete in the market. The major one amidst multiple obstacles is the financing that can make and break the startups irrespective of the niché. Yet, it is difficult for them to borrow funds to generate capital, but business credit cards can solve this problem by providing you with flexible repayment options or perks, such as cashback for certain purchases and no—or low—FX fees for international transactions.

It isn’t limited to new or small businesses. Even if you run a successful business but haven’t borrowed any funds, you won’t have any track record. Here, the trust issues of the lenders arise. 

The lenders require a borrower’s credit history to ensure the credibility of paying back the loan. They extract it from the four central banks before approving anyone’s application. It is significant to note that no credit history doesn’t mean the business isn’t worthy enough for funding, but eventually, it symbolizes that the lender can’t evaluate its history to ensure that the funds are in the right hands. 

However, it won’t be wrong to highlight that the lack of problem-solving skills alongside low capital can also destroy companies. The lenders only track the credit history to evaluate if the businesses have the potential to repay. If the respective company can not meet the lender’s capital requirements, the chances of application approval reduce. 

Above all, most entrepreneurs struggle with accounting for their finances. Most business owners aren’t familiar with some metrics that are crucial to track for maintaining the required cash flow. It determines the company’s financial health. The default accounts management has already destroyed several well-established businesses. Therefore, the experts suggest that business owners of new companies and even hi-tech industries track the cash flow to evaluate their chances of receiving capital.

To build trust, you can apply for a business credit card that asks for no credit history—or at least for a low credit score.

How Can You Benefit from Business Credit Cards?

Depending on your industry, services and products you sell—or buy for your business—there is definitely a credit card to meet your demands. Several beneficiary factors may affect your decision as the following.

Enhance Credit Score 

The credit score is the driving sign that determines the company’s health and status in the market. Low credit scores make them less creditworthy for the lenders and vice versa. 

Business credit cards aid in generating the credit score of the businesses to enhance their credibility. So, if your business is struggling with credit growth or credit history, then business credit cards can facilitate you in growing your company by holding your accountability. 

Identify and Track Profit-gaining Points

Credit cards share the load of business owners in identifying positive points. It aids in targeting those points timely to gain maximum revenue. It tracks the company’s cash flow, credit score, and consumer spending for doing this. 

Rewards and Bonuses 

Several business credit cards also offer additional rewards and bonuses to business owners. It is more like an incentive treat for them as their member. For instance, some cards provide traveling benefits, cash back, and other shopping discounts. 

Bookkeeping Facilitation 

Besides borrowing loans and rewards, business credit cards also help account holders to manage their financial accounts single-handedly and conveniently. For example, they offer consumers an annual transaction and spending summary, which enables tracking the records more efficiently.

List of Best Business Credit Cards in the UK for Small Businesses 

Barclaycard Select Cashback

Barclays Select Cashback is a wise option if you travel for business often. The card offers 3% cash back on your business travel purchases and 1% on all other purchases with a 21.9% APR and no annual fees. On top of these perks, the Select Cashback credit card allows you to get an additional 2% cashback on spending with BT and EE. So you can win on all your flights, accommodation and communication costs with Barclay Select Cashback.

Also, You will have free access to FreshBooks, one of the most popular accounting software, which saves you over £200 annually.

Metro Bank Business Credit Card

First, you should have a Metro Bank business account to apply for a Metro Bank Business Credit Card. If you already have one, you’re lucky. If you don’t, no worries, it doesn’t take too much effort to open one. Also, opening a business account allows you to access many business banking benefits Metro Bank offers.

Regardless of their limit, the Metro Bank Business Credit card comes with an APR of 14.9%, no annual fee, and free transactions in Europe. In addition, you will have a 56-day interest-free period if you pay your balance in full and on time.

NatWest Business Credit Card

Similar to Metro Bank, NatWest offers business credit cards to their business banking customers. They have two types: NatWest Business Credit Card and Natwest Business Plus Credit Card. If you run a small business, the former is a better option, but you can opt-in for the latter if you have a relatively high turnover.

NatWest Business Credit Card has no annual fee for the first year, and you can waive each year’s fee by just spending over £6,000 in 12 months. Also, it has a 56-day interest-free credit period on purchases like Metro Bank Business Credit Card and a representative 24.3% APR (variable). In addition to these perks, the card allows you to arrange flexible payments and access ClearSpend—a mobile app for Android and iOS—to manage your spending better.

Lloyds Business Credit Card

You can apply for a Lloyds Business Credit Card if you have a Lloyds business bank account like Metro Bank and NatWest. Lloyds’ card is particularly advantageous if you have up to 20 team members with authority for business spending. If you don’t, but if your business grows rapidly, it’s nice to know that you have the option to have up to 20 cards and to track and manage your teammates’ spending.

Lloyds Business Credit Card has a minimum of £1,000 limit and goes up to £10,000. Also, you can have up to 46 days of interest-free period.

HSBC Commercial Card

​​You can apply for an HSBC Commercial Card if you have a business current account. HSBC is one of the most widespread banks globally, so you have the freedom to spend almost in any country, at any store.

HSBC’s card enables flexible payment options and credit limits depending on how your business develops. In addition, you can enjoy the first year without any fees, but you need to pay a £32 annual fee for owning the card. Unfortunately, Comercial Card doesn’t have a minimum spending quota that allows you to waive the following yearly fees like NatWest—the only bank with this perk on our list. Debite Business Credit Card is an exception, though, which has no annual fees in any condition. We will come to that in a minute.

Co-operation Bank Business Credit Card

As long as the outstanding balance is paid in full by the due date, the Co-operative Bank Business Credit Card offers an interest-free period of 56 days on purchases.

Again, you need to have a business current account to apply for the credit card, and you can have multiple card holders that you can add or remove anytime you want once the card is open.

Unlike some cards on our list, the Co-operative Bank Business Credit Card doesn’t give you a fee-free option in the first year, but it has one of the lowest annual fees on the market, only £24. Still, you have to be careful about other additional fees you must pay, such as international transactions, cash withdrawals, and currency conversions.

Debite Business Credit Card

Probably the most prominent advantage of the Debite Business Credit Card compared to other cards on our list is that you don’t need to have a business current account. Because Debite solely focuses on providing the required finances to small businesses and early-stage and high-growth startups with ease. As a result, the application process only takes 5 minutes, and you will get a result in 24 hours.

Moreover, it does not charge any annual fee or a security deposit and provides the card holders quick-to-access and efficient banking interface. It has the highest possible credit limit, £250,000, and perks, such as 4% cashback and built-in instalments that allow you to spread your payments from 3 to 12 months.

The Verdict

Business credit cards hold significant importance for small businesses through funds and other incentives. These are easy to get, provide financial security, and separate your account from the business expenses. Yet, most cards are expensive as they generally charge a hefty annual fee or other applicable charges. 

Then, is there any credit card only heavy on perks and not on a pocket? To your surprise, yes. Give Debite Business Credit Card a try, and you surely won’t regret trusting us. At most, it offers more security, accountability, and funds to flourish your small business efficiently.

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