Compare Business Credit Cards For Limited Companies

How is a limited company credit card different from a personal one?

Credit cards for limited companies differ in their legal structure, tax treatment, and eligibility criteria. The rewards and terms being offered may also be impacted, as you’re more likely to see business-related perks (SaaS integrations or discounts), employee card options, and potentially larger credit limits.

Legal liability

If you’re looking for a legal firewall between yourself and the business, then a limited company credit card could be a good option, but it depends. Debts incurred on the card remain the company’s responsibility, which protects your personal assets, but some credit card providers may ask for a personal guarantee. This depends on the age and size of the company in question.

Assessment criteria

Personal income and your own credit score could be checked for both types of products, but these are more important for personal credit card applications. Limited company cards rely more on business metrics, like trading history, turnover, and the company’s credit score, to assess creditworthiness.

Tax treatment

A personal credit score isn’t the best way to segregate business expenses, as these purchases are mixed in with personal ones. With a limited company card, not only are expenses strictly for business (otherwise you’re breaking the terms), but the card may work directly with major accounting software.

Do sole traders & LLPs qualify?

No, limited company credit cards are only available to limited companies registered with Companies House. Sole traders and partnerships alike are not separate legal entities, and therefore would need the limited card to be underwritten to them personally.

LLPs are in a grey area here. They are separate legal entities, but they’re sometimes treated like partnerships and sole traders by the lenders. If you’re an LLP looking for a limited company card, challenger banks and modern fintechs are more likely to help.

How It Works

Credit cards for limited companies have three key mechanisms that help distinguish them from personal credit products.

• Separate accounts: All transactions appear under your company’s registered name. Statements are issued to the business, and this satisfies HMRC requirements and simplifies your audit trail.
• Credit limits based on business health: Credit limits are determined by your company’s turnover, credit history, and financial stability, not just your personal credit score. This can create higher limits for those with strong financial records.
• Additional employee cards: You can issue additional cards to employees, each with its own spending cap and tracking. It helps streamline expense management, but also issues real-time alerts to prevent fraud.

Why use a limited company credit card?

1. Cash-flow flexibility: Bridge your payment gaps, particularly for those with 30+ day payment terms.
2. Interest-free days: Most cards have 45-56 day periods before interest kicks in. This is essentially free short-term working capital if paid off before interest is applied.
3. Streamlined accounting: Many card providers offer integration with QuickBooks, Xero and other accounting software. This can reduce the time spent on bookkeeping.
4. Rewards and perks: Cashback is only one aspect of credit card perks. Some limited business cards also offer rewards for travel, such as air miles, airport lounge access, and hotel discounts.
5. Improve your business credit score: Limited company cards will help build your business credit history, which improves access to future funding.
6. Protect company directors: To preserve limited liability protection, a limited company credit card is needed.

How to choose the best limited company credit card

Choosing a limited company credit card is a balance between costs (fees and interest rate) and rewards. Rewards don’t just depend on what’s offered, but also on how the card is used (how much you spend, types of purchases, whether the discounts and airport lounge access are used, and so on).

Factors to consider

1. Interest rates and fees: APR often ranges from 18% to 40% for business credit cards, while annual fees vary from £0 to £400+ a year. But don’t neglect the hidden fees, like for FX exchanges and late payments.
2. Rewards and incentives: Cashback is a common benefit, with 1% on general spending being the gold standard (higher rates are often offered for certain types of spending, like fuel, EV charging and office supplies). However, make sure to check the travel-related rewards such as air miles, as these are often the most generous conversions, but are only relevant to those who take at least one work trip per year.
3. Spending controls: Consider the number of employees to issue cards to and the importance of features like category restrictions or spending limits. Receipt capture functionality is also very useful.
4. International transactions: For those who travel abroad, foreign exchange fees become very relevant and will range from 0-3% per transaction.

How to apply for a limited company credit card

A limited business credit card UK application requires more documentation than a personal one, and as a result, can take longer to underwrite.

Eligibility requirements and underwriting checks

• Your company must be registered as a limited entity in the UK. Very recent registrations may be rejected, meaning a minimum trading history of 6-12 months may be required.
• A business bank account is required in the company name, and the business must be actively trading with evidence of revenue.
• Credit checks will be conducted on both the applicant (e.g., Director) and the business. Those with very limited credit history or a poor score may be rejected.

Online application

Many providers allow you to apply online, making the process quick and convenient. Most applications take around 15 minutes, should you have all the documents ready.

When it comes to details, you may be asked for:

• Company House registration number
• Personal and business address
• Business bank account details
• Revenue figures
• A personal guarantee if your company lacks a credit history

You prepare the following documents:

• Proof of business registration
• Recent bank statements, management accounts and/or VAT returns

Approval times can take anywhere from a few hours to several days. While it depends on the provider, SME credit cards often take a little longer than personal cards.

Credit Limits

Initial credit limits often range from £1,000 to £50,000+ for new applicants, with larger, more established businesses potentially accessing over £250,000.

Factors that affect credit limits include:

• Business turnover, with higher revenue firms qualifying for larger limits.
• Credit history, where the more evidence of previous repayments, the better.
• Industry, because some sectors have a higher perceived risk (e.g., construction).
• Cash flow with holes, dips, and volatility will increase perceived risk.

Responsible Use & Common Pitfalls

Setting staff policies & spend controls

The first step is to establish clear spending policies for any employees who have been issued a card. This isn’t just about weekly limits, but also approved merchant categories and receipt submission requirements.

From here on, regularly check the statements for overspending or unauthorised payments.

Avoiding high interest & late-payment fees

It’s essential to avoid late payments – not just because of the fees, but because it will go on your credit history and lead to worse future terms.

Late payment fees and incurring interest beyond the interest-free period can be avoided by clearing your balance in full each month. To never miss a payment, set up a direct debit. This has the added benefit of keeping your credit utilisation ratio down. Here’s a roundup of business credit cards with the longest interest-free periods.

Re-evaluate limits as you grow

Request credit limit reviews annually, or after a period of recent business growth. Higher credit limits provide greater scope for smoothing out cash flow problems and late customer payments, but it also helps decrease your credit utilisation ratio while maintaining the same level of credit.

But, be careful, as higher limits require more discipline and responsibility.

Alternatives to limited-company credit cards

Business charge cards like the American Express Gold Card are very similar to company credit cards in that they yield rewards and can be issued to employees. But significantly, the full balance must be cleared at the end of each month. Typically there are no spending limits, but there is no credit to be accessed beyond the month-end either.

Overdrafts & revolving credit facilities typically have similar interest rates to credit cards, or potentially lower APR, but require strong banking relationships and often personal guarantees. Overdrafts often have similar or lower credit limits to credit cards, while revolving credit facilities may have larger funding amounts, but have more complex terms.

Expense-management platforms & prepaid cards have even less credit available than charge cards. This completely eliminates credit risk, while also offering access to cashback rewards and employee spending cards. Fintechs often provide these with a strong focus on software and integration.

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