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Guide to business credit cards

Everything you need to know before choosing one.

Nobody goes into business for the financial admin (unless, of course, you’re in the business of bookkeeping). But for anyone else, no matter whether you’re trading in software or loungewear, business expenses are a necessary part of business. And if you have staff, managing their spending can be unnecessarily taxing when you have a far bigger picture to paint.

That’s where business credit cards extend a credit lifeline. By providing a line of credit to pay for your business expenses, they free up cash flow and may offer other benefits like additional cardholders and expense reporting systems.

It all helps companies to spend smart, and manage smarter, to make life easier.

What is a business credit card?

The plastic might look the same. But when you look into credit cards, they’re separated into personal and business cards for good reason. While they function the same way, business credit cards offer features to help companies manage cash flow, spread out costs, track expenses and control employee spending.

So, if you have a business you should have a business credit card. And you can use it to pay for any business-related expense from office equipment and software subscriptions to taxis and yes, even lunch.

How do I get a business credit card for my business?

You know the potential of your business, but the banks may not always agree. If you’ve ever tried explaining your crypto café or ‘Zoom fashion’ e-commerce platform when applying for a line of credit, you’ll know the look of scepticism that can derail the approval process.

The fact is, banks don’t make it easy for smaller businesses to access credit – instead holding off until their cash flow is healthier, they’ve been a long-time customer or until there is full planetary alignment (which according to scientists will next happen in May 2492).

Still, you can apply for a business credit card in a couple of ways. If you’re a traditionalist who likes the solidity of bricks and mortar, you can take time out of your work schedule, (try and) find parking close to a bank branch, fill out (actual) paperwork with multiple signatures and then wait for the ‘yes’ stamp. Which for some never comes. In the meanwhile, your cash flow is up the creek (along with all those missing receipts) and your customers are waiting for you to get back to business.

If your company is big enough to have a high turnover, you may be able to apply online or request a call back (at some point) from a human who will put you through a similarly lengthy process. But even if you do get the green light, your shiny new bank business credit card simply won’t be tailored to the individual needs of your business. So that was worth the trouble, wasn’t it?

That’s why Archa created a better way. Archa is a smart business credit card and spend management solution helping businesses access the credit they need, when they need it. You won’t need your car, a pen or planets in any specific configuration. Instead, you’ll be assessed, approved and onboarded in minutes. No paperwork, no personal guarantee. And you can use your Archa card anywhere Mastercard® is accepted, which is pretty much everywhere.

Benefits of using a business credit card

Business credit cards offer features to help separate personal and business expenses, simplify record keeping and keep your spending in check. They also offer a higher credit limit than personal credit cards (making it easier to make large company-related purchases), while some may have rewards programs attached.

Unlike personal credit cards, business credit cards can also be issued to staff, enabling them to pay for business expenses when they need them. Cards can be set up with specific credit limits for individual employees. For instance, Tom and Sarah get a spending limit of $5,000 each, and you get a $10,000 limit (well, it’s your company) for a combined limit of $20,000.

But traditional cards also come with traditional downsides, like restrictive credit limits that don’t flex with your cash flow, interest-free introductory offers (that disappear soon after you’ve been introduced) and a list of hidden fees and penalties for payments you inadvertently delayed while you were busy running your business.

Archa delivers credit that’s better than the banks. That’s why we exist.

Archa business credit cards simplify expense management to make life easier for businesses. With effortless onboarding. Zero personal liability. Instant card issuing for multiple employees. Spend control with limit-setting and real-time purchase notifications. And a virtual card you can virtually use instantly (before your physical cards arrive).

Archa offers flexible payment terms with a transparent monthly subscription fee as opposed to (surprise) traditional credit card interest fees. Giving business owners greater insight into and control of their spending. We think it’s the credit your company deserves.

Digitising your expenses also offers businesses unmatched flexibility. Not only does Archa integrate seamlessly with your cloud accounting software so you can simplify your book balancing. But you remain fully in control with the ability to freeze and unfreeze cards, plus set individual spending limits on the fly directly from the Archa app. What’s more, we never ‘close’ at 4 pm. You can email or speak to our locally-based support team 24/7.

Whether you’ve always been a digital business or COVID forced you online, Archa empowers today’s remote workers to make the decisions they need to help grow your business.

What do you need to apply for a business credit card?

Whether you’re a large operator needing a ‘corporate’ credit card or smaller company wanting a ‘business’ credit card (at Archa, we like to think we’re taking the ‘corporate’ out of credit), have your paperwork and patience handy.

Small to medium sized? Before a bank can decide your business is creditworthy enough for a business credit card, you’ll need to hand over your company and personal financial details. If you’re a young company, your annual revenue may not be worthy of a bank’s time or gamble.

Assuming your annual revenue and personal credit history looks good on paper, there’ll be yet more paper involved with a ream of application forms (and outdated filing systems) that explain the time it takes to reach a decision. All the while, you’re weighing up if new software or office coffee is a more crucial business expense with the funds you have.

Big business with even bigger dreams? You’ll have additional eligibility requirements like having a minimum number of years in trading, or minimum annual turnover. You’ll also need to make an appointment to speak with your provider’s business team.

Application Checklist

  • 6 - 12 months of business bank statements
  • ID (Driver's License or Passport) of business owner
  • ID of team members who'll be managing the cards
  • Proof you're over 18 and an Australian permanent resident
  • ABN registration details
  • GST registration details
  • Additional criteria if you're operated by a trust or a partnership
  • Stress Ball

We don’t think anyone should have to choose between Google Suite and espresso. With Archa, there’s no paperwork, queues or workday interruption to getting the spending power you need to get on with business. In five minutes online, you could be approved and on your way to maintaining your technology and your caffeine intake.

Things to consider before getting a business credit card

It goes without saying (but we will) that if you’re considering a traditional business credit card, you should be aware of the benefits, charges, liability, interest rates (on purchases, balance transfers, cash advances) and fees (annual, account keeping, late payment, cash advance, international transaction, non-bank ATM). And those hidden fees? Well, you won’t know those upfront of course. But they’ll be sure to come out of hiding when you least expect it.

Now don’t forget the potential rewards. If you’re looking forward to redeeming earned ‘points’ for cash back, travel programs or gift cards, make a point of knowing cards with high rewards typically come with higher annual fees and interest rates too.

Whatever you choose, it’s important to consider the needs of your business. If you need to quickly amass technical equipment for staff or fixtures for the office, a card with a lower rate on purchases for the first six months will help keep the cash flowing. If you need multiple cards for remote staff, get one that links all cards to a single account, plus fast issuing and real-time tracking so you don’t waste time on postal delays or wasteful spending.

Who is responsible?

Personal vs Business credit card liability

Someone (not the bank) has to pay the debt on the card, and that could be you or your business. The provider may offer either a personal liability or business liability for the account, which determines who’s responsible for managing (ie paying) the card.

Established businesses operated by a partnership, trust or incorporated company can apply for that business to have liability for the credit card facility. But smaller business credit cards typically require the applicant to pay the bill personally if the company can’t – including if the business fails. Because banks are hesitant to offer credit to companies without a solid track record, entrepreneurs and sole traders have long had to lean on their personal credit (if not on others) to get their start-up capital.

It’s why the system is broken, and why Archa set out to fix it – by turning the business credit card into an asset for smaller business owners, not a liability. Archa doesn’t require a personal guarantee from the business owners, and applying doesn’t affect your personal credit score. Our underwriting process determines your creditworthiness using only your company’s financial data, and we provide credit based on those results. That means you can get your business off the ground and flying right away.

How do you compare business credit cards?

Before you compare cards, consider your company’s spending habits. If you need flexibility in your finances, business credit cards allow you to spend up to your credit limit and carry the balance over to the next month, provided you make the minimum monthly repayment.

Charge cards work differently. While they may appear the same, charge cards will charge you late fees if you don’t pay each monthly balance off in full. There is no carry over facility.

Compare fee structures too. If you want to avoid playing jeopardy with interest fees and late fees (and annual fees and see PDS for more fees), look for subscription-based pricing that gives you the certainty of fixed, transparent monthly costs.

Now, compare credit cards.

Choosing the right credit card can save your company a lot of money and a lot of time. You can go directly to a bank to compare the features, fees and interest rates of cards with their logo on the front. Or, a comparison website to evaluate a range of cards side by side. Remember, these sites only compare a limited number of cards (and usually only from the big banks), plus they’ll want your personal details too.

Naturally, we expect you’ll start there. Then once you have, compare the results to an innovative offering like Archa. Wait, no interest charges? Drawn out sign ups? Or personal guarantees? That’s right – there’s no comparison at all.

So, call us a little biased, but the reason we exist at all is because the traditional model doesn’t work for modern businesses. And because big banks weren’t designed to help small or medium companies. Archa recognises that smaller companies need the backing to grow bigger with solutions that help businesses work smarter, not harder.

Our innovative business credit is just the first cab off the rank. As we continue to evolve business finance into the more personalised, more efficient and more problem-solving solution we know it can be, Archa will offer smaller businesses more ways to ‘bank’ smarter.

The best credit card is one that serves the needs of your business, and smaller companies share similar needs. Like access to the funds they need to run uninterrupted. Credit limits in line with their spending requirements. Simplified financial administration. Spend tracking and control. Additional cards issued quickly. Security against fraud protection. And predictably priced plans.

So, while low rate cards, interest-free periods and frequent flyer points (going anywhere right now?) can be attractive upfront incentives, consider a credit card with long term benefits that offer small businesses bigger potential.

Set aside some admin time. To apply for a business credit card, you’ll need to prove what you earn, spend, own and owe.

Most lenders will need to see your business details (including your ABN and GST registration) and identification (including proof you’re over 18 and an Australian permanent resident). Additional cardholders will also likely need an ID check.

If all that checks out, they may want to see a minimum annual turnover, proof you’ve been in operation for at least 12 months, up to date ATO payments and loan repayments, plus personal tax returns for the previous 18 months. There’ll be additional criteria if you’re operated by a trust or partnership, depending on the lender.

At Archa, we won’t ask for your personal tax details. That’s personal. We use your company's financials to determine the credit we provide to your business.

Guarantees are usually good, right? But tread carefully when it comes to credit. Whoever applies for a business credit card is usually required to personally guarantee any debt on the card. That means being personally responsible for repaying that debt, from their personal funds. Even if the company goes kaput.

Sometimes, the guarantee isn’t a choice but simply rolled into the application process. Applying for a card means you agree to the personal guarantee – which is why your personal credit history is used to determine if you could repay a debt if required. Some lenders who don't require a personal guarantee have other standards to meet – like 50k or so in the bank to qualify, depending on the credit limit you’re applying for. The higher the limit you want, the greater the cash balance requirement. It doesn’t leave many options for new business owners looking for a head start.

Another advantage of business credit cards is their capacity to help build your credibility as a business owner. When you’re just starting out, small and medium businesses need to establish a good credit score and credit rating to facilitate future borrowing power. The right business credit card gives you the tools to keep track of spending, pay bills on time and show your lender you’re responsible with business funds.

Your business credit score is calculated by a number of factors. This includes how long you’ve been operating (newer companies are considered riskier than long standing businesses), any payments you’ve defaulted on, previous bankruptcies by directors and even your previous credit enquiries.

It’s also worth noting most lenders to small businesses in Australia will often check your personal credit score too.

Most business credit card fees are tax-deductible, as they are considered a business expense. On the flip side, they also charge higher fees than personal credit cards, and higher interest rates too.

If you’re wanting to claim fees on a personal credit card, you’ll have to prove which expenses are directly related to business, and deduct only the related percentage of the fee on the card. With charges including processing fees, annual fees, late fees, balance transfer fees and cash advance fees… that’s a lot of numbers to divvy up.

Tax time is another reason to keep personal and business financials separate, as you’ll find it easier to track both.

Sure, you can use a personal credit card for business expenses. The card doesn’t discriminate between work stationery and an after-work beer, but the ATO might. It will be on you to verify all genuine business expenses. And, if you have employees who use personal cards to pay for business expenses, reconciling those expenses will also be on you. We imagine you have better things to do.

As your business grows, managing your personal and business purchases separately makes taxes, administration and well, life, much easier. And protects you and your staff against the personal liability of debts incurred on personal cards.

Now, if your next question is ‘Can I use a business credit card for personal expenses?’, the answer is simply but unsurprisingly no.

We all like a break on our income taxes. But when it comes to interest, personal purchases don’t count.

Interest on personal credit cards isn’t considered a business expense – because tax laws don't allow deductions for debt incurred for personal reasons. That’s why paying each statement period balance in full each month is the best way to handle your personal finances.

But with a business credit card, the interest payments you make are deductible as a business expense. If you use a credit card for both business and personal purchases, you can only deduct interest that accrues on business-related purchases. Enjoy working that out.

‘Charge’ being the operative word here. You might flash and swipe a charge card like a credit card, but they’re not the same thing.

With a charge card, there’s no option to carry over your balance month to month. So if you buy a 146-inch Samsung TV this month for your brand new office (congratulations, btw), you’ll have to pay it off this month too, in full. But it’s ok if you don’t – you’ll just be charged a late fee until you do.

With a business credit card, you have the option to pay the minimum monthly repayment and carry the balance over to the following month, offering greater flexibility with company funds.

Charge cards may also offer other features like the opportunity to earn rewards with business spending. But cards with extra features usually come with higher annual fees, and the extra risk they pose (of customers not clearing a balance to zero each month) will mean higher minimum eligibility requirements too.