When to add another business credit card to your portfolio

If you’re just launching a business, you’ll want to start off with a single business credit card. To get your first business credit card, you’ll need to define your business. These business structure definitions can include something like an LLC or S-Corp, but they can also include sole proprietors, freelancers and contractors. Either way, you’ll usually have to submit the business name along with the business structure.

When comparing business cards, and focus on options that match your needs and credit rating. When you apply, you will be entering information about your business, but also about your personal credit information. In fact, almost all business credit cards require a personal guarantee, which means you’ll be responsible for the payments even if all the debt was a result of your business expenses.

Once you’ve established a history of using that business credit card responsibly, you can start exploring other business credit card options. Identify card features you don’t already have and look for options that can boost your portfolio.

For example, if your first business credit card offers cash back rewards, and you expect you’ll be traveling in the future, look for a business travel credit card that offers points or miles on travel-related expenses. Want to be rewarded for taking clients out on the town? Look for a card that offers high rewards on dining and entertainment. Also be on the lookout for statement credit-earning opportunities related to services or products that you use regularly — from cloud storage to Global Entry or TSA PreCheck credits.

Alternatives to business credit cards

The best business credit cards typically require good to excellent credit. That could leave a lot of small business owners without access to much-needed capital. Business credit cards are also only a good fit for short-term expenses that you can pay off each month to avoid interest charges. While having at least one business credit card on hand is a solid option, here are a few alternatives to consider:

Business lines of credit

A business line of credit is a revolving pool of funds, similar to a business credit card. Most lines of credit don’t earn rewards or have features offered with credit cards. But credit limits can soar up to $2 million and above for well-qualified borrowers. And many business lines of credit have lower eligibility requirements compared to business credit cards. So even business owners with bad credit can qualify.

Small-business loans

Small-business owners who won’t be able to pay off their debt quickly should consider a low-interest business loan. The average credit card interest rate is 20.72 percent, according to Bankrate analysis. Carrying a balance for too long with rates that high can make it hard for you to pay off your debt. Fortunately, there are small business loan options, including SBA loans, which offer affordable rates to business owners who qualify, including people with poor credit.

The bottom line

Business credit cards can help safeguard you against coming up short on funds in case of emergency or help manage operating costs without having to seek alternative forms of capital. They also offer the kind of benefits that are especially useful for small-business owners.

To find the best business credit cards to add to your portfolio, keep in mind the types of cards you already have and what can help you reach your latest business goals.

Only apply for cards that you’re sure you can qualify for, and be sure to time your applications instead of applying for multiple cards at once. It’s best to wait three to six months in between applications