How does a business credit card work?

A business credit card allows companies to make purchases on credit and pay the balance later. You'll receive monthly statements and can choose to pay the full amount, a set sum, or the minimum – though only paying the minimum will lead to higher interest charges. Many business credit cards charge an annual fee, so factor this into your decision. Alternatively, business charge cards have no preset credit limit but require the full balance to be cleared each month, making them ideal for businesses with larger, predictable expenses. When choosing a card, always check the terms and conditions. Compare interest rates, fees, rewards, and credit limits to find one that suits your business's needs and spending habits.

Is my credit record checked for a business credit card?

Yes, when you apply for a business credit card, credit card providers will typically assess both your business's credit record and your company’s overall financial health. If your business has limited or no credit history, the card issuer may also check your personal credit score to evaluate your creditworthiness.

What rewards can I earn with a business credit card?

Many business credit cards offer attractive rewards programs designed to help you earn benefits on your business purchases. Common rewards include cashback, where you receive a percentage of your spending back, as well as air miles, travel points, or even shopping vouchers. To make the most of your rewards, it’s important to choose a business credit card that aligns with your company’s spending patterns. For instance, if your business frequently spends on travel, a card that offers travel rewards like air miles or hotel points may be ideal.

Can I check my eligibility before applying for a business credit card?

Yes, many business credit card providers allow you to check your eligibility online before submitting a full application. This process usually involves a soft credit check, which won’t affect your credit score. A soft check gives you an idea of your chances of approval. By checking your eligibility first, you can avoid unnecessary hard credit checks, which could impact your personal credit score and your business’s financial standing.

Can several employees have their own card?

Yes, many business credit card providers offer the option to get multiple employee cards under one account. This allows selected employees to have their own cards, while the business receives a single monthly statement for all charges. In addition, providers often offer spending controls, enabling you to set individual spending limits and easily monitor expenses for each cardholder. This can help streamline expense management and improve oversight of your company's spending.

Do I need a business current account to apply for a business credit card?

No, you do not necessarily need a business current account to apply for a business credit card. However, having a dedicated business bank account can significantly simplify your financial management, allowing you to separate your business finances from personal transactions, making it easier to track business expenses and manage your cash flow. A business current account can help you stay organised, streamline bill payments, and ensure smoother financial operations for your company. Many business credit card providers may even prefer applicants with a business account, as it shows more structured financial management.

Can I get a business credit card for my new company?

Yes, startups and new businesses in the UK can apply for a business credit card. A business credit card can be an essential tool for managing cash flow and covering initial business expenses in the early stages. However, as a new company, you may be required to provide additional information to demonstrate your ability to meet repayment obligations. To assess your eligibility, the provider may conduct a personal credit check (especially if you're a sole trader or have personal liability), request company financial statements, and ask for details about your business assets. This will help the provider determine your credit limit and the terms of your card. Keep in mind that approval may be more challenging for new businesses without an established credit history, but offering a personal guarantee or showing strong personal credit can help increase your chances of approval.

Are there any interest-free business credit cards?

Business credit cards in the UK typically aren’t fully interest-free, but many offer an interest-free period on purchases — usually between 20 and 56 days — as long as you pay the balance in full each month. If you carry a balance beyond the due date, interest will apply, so it's important to clear the full amount to avoid charges. Always check the card’s terms to understand the interest-free period and any fees. Choosing a card with a generous interest-free window can help manage cash flow, especially when spreading the cost of large purchases.

Is it worth having more than one business credit card?

The number of business credit cards you should have depends on your business's needs. If your business has varied expenses, like travel or supplies, multiple cards can help manage these categories and maximise rewards (e.g., cashback or travel points). However, it’s important to manage credit limits carefully to avoid high credit utilisation, which could affect your credit score. Multiple cards can also help with cash flow management by spreading out payment due dates, but make sure you can track and manage each account effectively. Ultimately, choose the number of cards that fits your business spending and financial management capabilities.

How do business credit cards impact business taxes?

Purchases made for business purposes using your credit card, such as office supplies or travel expenses, can typically be claimed as business expenses when filing your taxes. It's important to keep detailed records of all transactions to ensure they are valid tax-deductible expenses. Business credit card statements can be a helpful tool for tracking and categorising these expenses for your self-assessment or corporate tax returns. However, interest paid on outstanding balances is generally not tax-deductible, so it's crucial to manage payments and avoid carrying a balance. It’s generally a good idea to consult with an accountant to ensure you're complying with tax laws and making the most of available deductions.

How long does it take to get approved for a business credit card?

Approval times vary by provider. Some offer instant decisions, and you may even receive a digital card the same day. If additional verification is needed, approval can take a few days, and the physical card typically arrives within 5–10 working days. To speed up the process, have the following information ready: Business name and trading details Company registration number (if applicable) Financial figures (e.g., annual turnover) Personal details for directors or partners

Can I get a business current account with bad credit?

Yes, it’s possible to get a business current account even if you have bad credit, though it may be more challenging. Some banks and financial institutions offer business accounts specifically designed for people with poor credit histories. These will sometimes come with fewer features, but can still help you manage your business finances effectively. To improve your chances of being accepted for an account, you can take steps to enhance your credit history, such as paying bills on time, reducing outstanding debt, and regularly checking your credit report for errors.

How long does it take to open a business bank account?

Opening a business bank account typically takes between one and four weeks, though the process can be faster depending on the bank and your business type. Some banks even offer same-day account opening. Factors that can affect the timeline include your business structure (sole traders usually take less time), your relationship with the bank, and the application method. Some banks offer faster services, and non-residents or high-risk businesses may experience longer processing times. Once your application is submitted, the bank will conduct background checks and may contact you for additional information.

Can I use a personal current account for my business transactions?

While it’s technically possible to use a personal current account for business transactions, it’s generally not recommended. Keeping personal and business finances separate helps you stay organised, track expenses more easily, and simplify tax reporting. If you run a limited company, using a business current account is a legal requirement because your company is considered a separate legal entity. Sole traders aren’t legally required to have a business account, but opening one can provide tailored features, such as accounting tools.

What fees can I expect with a business current account?

The fees for a business current account can vary depending on the bank and the account type. Common charges to look out for include: Monthly maintenance fees: A fixed charge for maintaining your account. Transaction fees: Costs for deposits, withdrawals, and payments. Overdraft charges: Fees for accessing overdraft facilities. International transfer fees: Charges for sending or receiving money abroad. Debit card usage fees: Costs for using your business debit card, especially abroad. Some business accounts may offer free banking for an introductory period, so it’s essential to carefully review the fee structure to find an account that matches your business needs and budget.

Are business bank accounts protected by FSCS?

Yes, business bank accounts are protected by the FSCS up to £85,000, provided the bank is FCA or PRA-authorised. For small businesses or limited companies, protection applies if the bank fails. Sole traders have combined protection with personal accounts under one £85,000 limit. For more complex claims, eligibility may vary depending on your business type. Check with your bank for specific coverage details.

Can I have multiple business current accounts?

Yes, you can have multiple business current accounts. This can be useful for managing different aspects of your finances, such as separating operational expenses from tax savings, or tracking revenue for different projects. If you run multiple businesses, separate accounts for each can simplify accounting and financial reporting.

Do I need to maintain a minimum account balance?

Whether you need to maintain a minimum balance depends on the specific business current account you choose. Some banks may require a minimum balance to avoid fees or to access certain account features, while others may be more flexible. Review the account’s terms and conditions or ask your provider directly if you're unsure.

Are there any limitations on the number of transactions or cash deposits I can make?

Many business current accounts have limits on free transactions or cash deposits each month. Exceeding these limits may incur fees. Some accounts also cap the maximum cash deposit per day or month. To avoid extra charges, review the account terms and choose one that suits your transaction volume.

What happens if I close my business?

If you close your business, notify your bank and close your business current account. The bank will guide you through the process, which will typically involve settling any outstanding payments or fees. Any remaining funds can be transferred to a personal account or another business account.

Am I guaranteed an overdraft with a business account?

No, getting an overdraft with a business current account isn’t guaranteed. Just like with personal accounts, you’ll need to pass a credit check to be approved, and the overdraft limit offered will depend on both your financial circumstances, and the bank’s assessment of your business. If you need an overdraft, it’s a good idea to speak directly with your account provider to explore available options and understand the terms, including any fees and interest rates that could apply.

Is my business eligible to use the Current Account Switch Service?

Your business may be eligible to use the Current Account Switch Service if it meets the following criteria: Fewer than 50 employees Annual turnover of £6.5 million or less Both your current and new banks are part of the switch guarantee scheme If you're unsure whether your business qualifies, contact your new bank for confirmation and guidance on the switching process.

Can I have a business current account if I'm a sole trader?

Yes, sole traders can open a business current account, just like partnerships and limited companies. Having a dedicated account is smart as it separates personal and business finances, simplifying income tracking, expenses, and tax management. Many banks offer accounts tailored to sole traders with features like accounting integrations, invoicing tools, and business support, helping you manage cash flow and prepare tax returns more easily.

Can I use my business current account for personal transactions?

Generally, it’s not advisable to use your business current account for personal transactions. Keeping business and personal finances separate helps maintain clear records, avoid tax complications, and ensures compliance with accounting standards. Mixing personal and business expenses can lead to confusion and potential legal issues, especially when it comes to taxes and audits. Additionally, it's worth noting that many banks prohibit the use of business accounts for personal purposes.

Do I need a business account for a business loan?

Whether you need a business account for a business loan depends on the lender and the type of loan. Some banks may require you to have a business current account with them before they approve your loan application. However, certain loan programs, such as the government-backed Start Up Loan, may allow the loan to be deposited directly into your personal bank account instead. Always check the specific requirements of your lender to understand their policy on business accounts.

Do I need to be the owner of a company to get a loan?

No, you don't need to be the owner of a company to get a loan. Registered company directors can apply for most business loans.

Can my small business get a loan?

Yes, small businesses can get loans, but you may be offered different ones depending on your firm's size and revenue. For instance, only businesses that are less than three years old can get a government Start Up Loan.

Does my business have a credit record?

Yes, your business does have a credit record and it may affect whether or not your loan application will be accepted. You can find the credit score for your business through credit referencing agencies such as Experian.

Could I lose my home if my business defaults?

You could lose your home if your business defaults. It all depends on the type of loan you choose, whether it is secured against your home and if you sign a director guarantee. Always check the terms and conditions carefully before agreeing to any loan.

How long does it take to be approved?

The length of time to be approved for a business loan depends on the provider, the checks they carry out, the information they need to see and how quickly you're able to provide it. It also depends on the type of loan. For example, secured loans can have longer approval times.

Is it possible to pause payments when the loan account is open?

Yes, it may be possible to pause payments on your loan account if you're facing financial difficulty. Some lenders offer a payment holiday, which allows you to temporarily pause your repayments for a set period. To request a payment holiday, contact your loan provider as soon as you experience financial hardship. It's important to communicate early to explore your options and avoid any penalties or missed payments. Always check your loan terms to understand the conditions and eligibility for a payment holiday.

Can I get a business loan if I have bad credit?

Yes, it is possible to get a business loan with bad credit, but it can be more challenging. Lenders typically look at your business’s financial health, cash flow, and overall stability, rather than just your personal credit score. However, you may face higher interest rates or stricter terms if you have bad credit.

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Sole trader business credit cards: everything you need to know

Sole trader business credit cards: everything you need to know

Q: Does using a business credit card affect my personal credit record?

Yes – using a business credit card can affect your personal credit, especially if you're the primary account holder or have personally guaranteed the account. Many issuers check your personal credit when you apply, and your payment history can influence your score if you're liable for the debt. To avoid negative impacts, use your business card responsibly: pay on time, keep your balance low, and avoid maxing out your limit. If you’re worried about managing repayments, contact your card provider early – they may offer flexible options or help restructure your debt.

Written by Dan Moore, Contributing writerEdited by Joe Phelan, Small business expert, 25 April 2025

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A business credit card can help cover essential costs when running your own company. Here's how they work.

A business credit card can be an valuable business asset.

With a business credit card in your back pocket, you can easily separate your business expenses from personal spending. In this guide, we explain how business credit cards work and how they can help you grow your venture.

Earn rewards and save money with a business credit card

Compare business credit cards

What is a business credit card?

A business credit card works much like a personal one, giving you access to a set credit limit that you repay in full or in part each month. The key difference is that it's designed specifically for business expenses, helping to separate personal and professional spending.

Business credit cards often come with tools for expense tracking, higher credit limits, and rewards tailored to business needs, making them especially useful for managing cash flow, building business credit, and streamlining accounting.

Can I get a business credit card as a sole trader?

You can apply for a business credit card if you work for yourself, but that doesn’t guarantee a successful application. As always, the key factor is your credit rating. Although you may want to open a business credit card account to keep your work and personal finances separate, potential lenders need something to go on to decide whether to lend you money. So, they look closely at your personal and work finances. Here’s what you can expect them to scrutinise:

Your credit reports from the three credit reference agencies – Equifax, Experian and TransUnion
Proof of income: A tally of your income versus expenditure
Collateral: Your savings and other assets
Your business credentials: Your unique taxpayer reference

What are the benefits of using a business credit card as a sole trader?

There are several advantages to having a business credit card if you freelance or work as a sole trader. Some are purely practical, helping you run your business, while others have additional benefits, in the form of rewards.

Here are the main benefits of a business credit card:

You can keep your business and personal spending separate, which makes it easier to work out your income tax liability
Using a business credit card responsibly can help establish and improve your company’s credit rating. A strong business credit score can make it easier to secure loans, increase credit limits, and access better financing options in the future
You can earn rewards, such as supplier discounts or air miles, and get free travel insurance or cashback with the right card. Figure out what benefits you would welcome most, and consider the rewards alongside interest rates and fees
Many business credit cards come with a 0% interest introductory offer, enabling you to take more time to repay what you spend. This can be valuable when you're starting out or expanding

Are there any disadvantages to using a business credit card as a sole trader?

Disadvantages are subjective, and will depend on your circumstances, but it’s worth considering the following before applying:

The flip side of opening a business credit card to improve your credit score is that if you fail to manage your finances adequately, you may end up damaging your company’s credit report. This can happen if you overstretch your spending, leaving you unable to repay a decent chunk of what you owe at the end of each month or when your 0% interest deal ends
Business credit cards often come with annual fees, which can slice off a portion of your revenue each year, and may outweigh the benefits on offer
You may find yourself subject to late repayment fees
It’s important to avoid the temptation to use your business credit card to cover personal spending, such as a holiday, because this could cause you financial problems in the future
Staying with the same card may not be a good idea. At some point, your 0% interest rate will end, and it makes sense to shop around before the term is up. Otherwise, you may pay more interest than necessary

What are the alternatives to a business credit card?

Business credit cards aren’t for everyone. You may want to consider other options if you have a poor or non-existent credit history. Here’s a rundown of the main alternatives:

Charge cards: These are payment cards that you use in the same way you would a credit card. The difference is that they don’t come with a predefined spending limit, you just need to ensure you repay what you spend on them at the end of each month
Personal credit cards: Although a business credit card offers certain benefits, such as various perks and a way to keep your work and personal spending separate, using a personal credit card remains an option
Unsecured loans: You borrow a fixed amount and agree to make the full repayment by the end of the loan term. Your debt isn’t tied to an asset, such as your home, but this can mean you face a higher interest rate, and potentially a court case if you fail to repay what you borrow
Secured loans: These are like unsecured loans, but the lender can seize an item, typically your home or car, if you default on your repayments
Invoice finance: A lender, typically your bank, gives you a cash advance that’s balanced against money you’re owed in unpaid invoices. When your invoices are paid, you repay the money you’ve been advanced, with a small charge added for the service
Overdrafts: Usually not the best option because interest rates can be high. However, an overdraft can help you out if you need money quickly and for a short period

Other options are explained in our business loan guide.

FAQs

Is it difficult to get a business credit card as a sole trader?

It’s easy if you have a good personal credit score – if you don’t, it can be more difficult to be accepted. If this looks likely, consider ways to improve your personal credit score before applying.

Can I use a business credit card for personal use?

It’s not unlawful to do so, but it’s not advisable for a few reasons. For a start, using a business credit card for personal use makes it more difficult to separate social from business spending for tax purposes.

Can I pay self-assessment tax with a business credit card?

Yes, but you face a non-refundable fee if you pay with a corporate credit card or corporate debit card.

Can having a business credit card affect my personal credit score?

It could, especially if you are a start-up, because lenders may draw on your personal credit rating to establish your risk level.