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Business credit cards, explained.
A business credit card and short-term company borrowing both cover spending the bank balance cannot. They work very differently. This guide explains revolving credit, the interest-free window, when a card suits a company and when it does not — and the distinction that runs through both: the company is the borrower, never the director.
How a business credit card works
Revolving credit on a monthly cycle, with a settlement date.
A business credit card gives a company a revolving credit limit it can spend against. Each month the card issuer sets a statement, and the company chooses how much of the balance to repay — at least a stated minimum, up to the full amount. Spending frees up again as it is repaid, which is what makes the credit revolving rather than a one-off advance.
The card is most useful for spread-out spending: supplier payments, fuel, software subscriptions, travel and the small, frequent costs of trading. It is less suited to a single large drawdown, because cards carry a cash-advance penalty if you try to turn the limit into cash, and the limit itself is often modest for a smaller company.
The interest-free window
The single feature that decides whether a card is cheap or expensive.
Most business credit cards give an interest-free period between a purchase and the statement due date — often up to around 45 to 56 days, depending on when in the cycle you spend. If the full statement balance is cleared by the due date, no interest is charged on those purchases. Used this way, the card is a short, free deferral of payment.
The moment a balance is carried past the due date, the interest-free window closes and the card's APR applies to the outstanding balance. Business card APRs are typically higher than a term loan, so a card that is cheap when cleared monthly becomes an expensive way to borrow when a balance rolls.
This is the crux of the comparison with short-term borrowing. A card is at its best as a payment tool you clear in full. It is at its worst as a way to fund a sustained shortfall, because the cost compounds month after month with no fixed end date.
A card against short-term company borrowing
Different shapes, different jobs. The table sets them side by side.
| Business credit card | Short company bridge | |
|---|---|---|
| Shape | Revolving limit, monthly cycle | Fixed sum, fixed short term |
| Cost if used well | Free, if cleared inside the interest-free window | A known charge over a known period |
| Cost if carried | APR applies, compounding with no fixed end | Not applicable — the term is fixed |
| Best for | Spread-out spending, repaid in full each month | A single known amount you can repay by a set date |
| Getting cash | Penalised as a cash advance | Funds paid to the business bank account |
| Borrower | The company | The company |
In short: a card and a bridge are not competitors so much as tools for different jobs. Many companies use a card for day-to-day spending and reach for a short bridge or a revolving facility only when they need a defined sum that the card cannot sensibly carry.
The company is the borrower
Whose name is on the credit — and why it matters.
A business credit card is issued to the company. The company is the account holder and owes the balance. The director or an employee may hold a card in their name to make payments, but the credit agreement is the company's. This is the same principle that runs through every Credicorp product: the borrower is the body corporate, not the person who signs.
There is one common qualification. For a smaller company, a card issuer may ask a director to give a personal guarantee standing behind the company's balance. A guarantee turns the company's debt into a personal exposure for the director if the company cannot pay. It is worth reading the small print for exactly this. Our guide to personal guarantees explains how a guarantee works and what to look for, and Credicorp's own position — it does not take one — is set out in the article on why we don't take personal guarantees.
Because the borrower is a company rather than an individual, card lending of this kind sits in the same broad territory as Credicorp's products: business credit to a body corporate, outside the FCA consumer-credit regime. See lending and regulation for what that means in practice.
When a card suits — and when it does not
A card suits when
- Spending is spread across many small payments rather than one large one.
- You can clear the full statement balance each month, keeping the borrowing free.
- You value the convenience of one statement and a single monthly settlement.
A card is the wrong tool when
- You need cash in the business bank account, not card spending power.
- The amount is larger than the card limit, or larger than you can clear monthly.
- The need is a defined sum over a defined short period — that is the shape a bridge or a revolving facility is built for.
Where a company needs a known sum it can repay by a known date, Credicorp's Business Bridging Loan (£50 to £500 over 14 to 84 days, 0.25% per day on principal, one-time £5 fee, 100% cost cap) or its revolving Credicorp Flex facility may fit where a card does not. To compare the real cost of a short-term product against a card APR on a like-for-like basis, use the flat-fee to APR converter and read our guide to flat fees versus APR.
Where to go next
- Business overdrafts and the alternatives — where cards sit in the wider picture
- Flat fees versus APR — why a card APR and a flat fee are hard to compare directly
- Personal guarantees explained — what a director guarantee on a card means
- The three Credicorp products — Loan, Flex and Slice in detail
- Glossary — plain-English definitions of the terms used here