Credit Cards for Limited Companies: What Businesses Need to Know

Limited company credit cards are an increasingly popular tool for small businesses to manage their working capital. Credit card financing has grown in recent years, from 11% of small businesses using one in 2021 to 20% in Q3 2023. 

Whether you're looking to improve cash flow, simplify expense management, or earn rewards on purchases, the right limited company credit card can offer a host of benefits. It’s also important to note the difference between limited company credit cards and personal credit cards.

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What is a limited company credit card?

As the name suggests, a limited company credit card is designed specifically for businesses registered as limited companies, businesses that are legally distinct from their owners. Unlike personal credit cards, these cards allow businesses to manage expenses separately, keeping financial records where they belong, in your business, which also enables clean and simple tax filing.

How It Works

• Separate Accounts: Transactions appear under your company’s name, helping you track spending without mixing personal and business finances.
• Credit Limits Based on Business Health: Limits are determined by your company’s turnover, credit history, and financial stability, not just your personal credit score​​.
• Additional Employee Cards: You can issue cards to employees, each with its own spending cap, enabling streamlined expense management​​.

Why use a limited company credit card?

While nearly half of SME owners use personal credit cards to fund their businesses, a business credit card can provide a greater level of control, safety and business-focused benefits – all while keeping your personal credit safe.

1. Enhanced cash flow management

Business credit cards provide short-term access to finance when you’re running low on cash, enabling you to pay for expenses even if working capital is temporarily tight. For example, you can purchase inventory while awaiting payments from customers​​, or cover gaps in your cash flow to keep operations going.

2. Streamlined accounting 

With a single monthly statement, you can monitor all company-related spending in one place, rather than balancing multiple cards and accounts. This not only saves time but also helps you identify cost-saving opportunities where you’re spending too much.

3. Rewards and perks

A key concern for many businesses is that business credit cards often offer cashback, discounts, or travel rewards. These benefits can make frequent expenses more affordable​ while also providing access to other benefits that might not usually be available, like higher-class travel or reduced prices with certain retailers.

4. Improving your business credit score

Regular, on-time repayments on a credit card can help you build business credit, making it easier to secure loans or credit lines in the future​ for more complex products.

How to choose the best limited company credit card

Choosing the right credit card involves checking your business’s specific needs and comparing available options to find the choice that matches them.

Factors to consider

1. Interest rates and fees: Look for cards with low annual fees or those offering an introductory interest-free period on purchases. These features can save money, especially for businesses with fluctuating cash flow​​, such as hospitality or travel.
2. Rewards and incentives: Some cards return a percentage of your spending, which is particularly useful for high-volume businesses, while others might offer air miles or discounts on accommodation can be handy for companies with frequent travel plans.
3. Spending controls: Consider cards that allow you to set individual spending limits for employees and track their transactions in real time to keep a handle on your outgoings.
4. International transactions: If your company operates globally, choose cards with minimal or no foreign transaction fees to save on international spending​.

Top limited company credit cards in the UK

Each of these cards caters to different business needs, so it’s essential to check whether the card’s benefits match your company’s spending patterns.

How to apply for a limited company credit card

Applying for a business credit card is fairly straightforward, but ensuring your company meets the requirements can improve your approval odds.

Eligibility requirements

• UK Business Registration: Your company must be registered as a limited entity in the UK.
• Business Bank Account: Most credit card providers require an active business account with them or another UK bank.
• Credit Check: Providers evaluate your business’s credit history, turnover, and financial stability during the application process​​.

The application process

1. Online Applications: Many providers allow you to apply online, making the process quick and convenient.
2. Supporting documents: Be prepared to provide proof of business registration, financial statements, and potentially a personal guarantee if your company lacks a credit history.
3. Approval time: Approval can take from a few hours to several days, depending on the provider.

How credit card limits are determined

The credit limit on a business card represents the maximum amount your company can borrow at any given time. Your credit limit is essentially a measure of how much a lender trusts your ability to repay the sum borrowed in a timely manner – so the more you can do to reduce your repayment risk, the more you can borrow.

Factors that affect credit limits include:

• Business turnover: Higher revenue often results in higher limits.
• Credit history: A strong track record of on-time repayments signals reliability to lenders​.
• Industry and cash flow: Companies with predictable cash flow are often seen as less risky​.

Can credit card companies adjust limits without notice?

Yes. Providers can lower or increase limits based on their internal risk assessments, market conditions, or your spending behaviour. Sudden reductions can be mitigated by maintaining good credit practices​​.

Why do credit card companies lower limits?

Common reasons include:

• Declines in revenue.
• Missed or late payments.
• Economic downturns.

How to request a limit increase?

If you need a higher limit, demonstrate a history of timely repayments and provide updated financial statements. Many providers allow online or phone requests​, especially once you’ve repaid a portion of your borrowing.

Alternatives to limited company credit cards

While businesses often use credit cards to manage cash flow and gain rewards, they are best employed in specific scenarios, such as covering temporary working capital gaps. When it comes to long term loans or large investments, the interest rates and terms on credit cards can leave businesses with high repayments and limited flexibility. 

For major investments without the need to wait for a traditional lender, an iwoca Flexi-Loan can be approved in less than 24hrs. And with our flexible borrowing conditions, businesses can use iwoca credit in a similar way to a business credit card. 

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• Choose how much you need: Borrow between £1,000 and £1,000,000, making these loans suitable for everything from short-term needs challenges to larger investments in expansion or marketing.
• Flexible repayments and terms: While you can set terms from one day to five years, we make it easy to overpay or repay your loan early, so you can control how much interest you pay. 
• Fast funding: Funds can be deposited into your account as quickly as the same day, providing the speed you need to keep up with your business.
• Transparent pricing: iwoca offers clear, upfront pricing with no hidden fees, so businesses know their costs from the outset.
• Only pay for what you use: Draw down from your credit limit as needed and only pay interest on what you use. 

Business credit card FAQs

Can a private limited company get a credit card?

Yes, provided it meets the provider’s eligibility criteria, including a UK registration and minimum turnover requirements​.

How often do providers review credit limits?

Reviews typically occur periodically – the initial 'review' period is often around three to six months – but the frequency varies by provider. Keep spending consistent and maintain a good repayment history to improve your chances of favourable adjustments​.

Are there alternatives to business credit cards?

There are a range of alternatives to limited company credit cards, including short-term loans, business overdrafts and invoice finance. The right one will depend on your circumstances, but many will offer lower interest rates than credit cards, though they may be less flexible.