Business Credit Card vs. Corporate Credit Card – What is the Difference?

For any new business or growing startup, the hustle of operations and strategy often overshadows an important reality – cash flow management can make or break your growth trajectory. Whether you are a one-person venture or a team of 20 and growing, having a strong line of credit for your business is the key to sustainable growth. 

Using your personal savings for business expenses can be a hassle. To scale, you need to separate your personal finances from your professional spending. The first step in this transition often involves choosing between a Business Credit Card and a Corporate Credit Card.

While they might sound interchangeable, there is a fundamental difference between the two. The choice between a corporate card and a business credit card for a new business can be the deciding factor that directly impacts how you scale and incur liability. 

If you want to know the difference between a Business Credit Card and a Corporate Credit Card, and which is better for you, read our comprehensive guide that covers all the nuances.

What is a Business Credit Card?

A business credit card is a dedicated credit line designed to help entrepreneurs manage short-term capital and day-to-day operational expenses. For a new business in India, it acts as a specialized tool for company-related spends, such as SaaS subscriptions, office utilities, or ad spends on Meta and Google.

Unlike a personal card, business credit cards are built to help you separate your private finances from your professional ones. This ensures accurate bookkeeping, simplified tax filings, and GST-compliant accounting. Business cards for new businesses improve cash flow by providing an interest-free window to manage expenses while waiting for client payments.

Business cards are accessible even if the company doesn’t have a multi-year audited financial history. These cards are typically “personally guaranteed.” Traditional banks issue the card based on the founder’s personal CIBIL score and hold them personally liable for the debt.

How do Business Credit Cards Work?

Business credit cards function similarly to personal credit cards but with a few critical distinctions regarding liability and reporting. 

• They require a personal guarantee by the founder. So, if the business fails to pay the bill, the bank can hold the individual business owner personally liable.
• When applying for a business credit card for a new business, the bank primarily looks at the founder’s CIBIL score. The personal finances of the founder act as the collateral.
• Business credit cards offer basic expense tracking. At the end of the month, you receive a statement that helps you categorize your GST-compliant invoices and simplify your tax filings.
• These cards offer revolving credit. It means you can choose to pay the minimum amount due and carry the balance forward. However, this can often mean high interest rates in most instances.

What is a Corporate Credit Card?

A Corporate Credit Card is a financial tool specifically designed for high-growth startups. They are often used for scaling operations and allow founders to issue individual cards to employees with granular spending controls. These cards allow you to set specific limits for travel, marketing, or procurement.

Instead of relying on a founder’s personal credit history, these cards are underwritten based on the company’s financial health, such as revenue, bank balance, or venture funding. This means that, unlike a standard business card, a corporate card is issued in the company’s name, and the legal responsibility for the debt lies with the organization rather than the individual founder.

Corporate credit cards also act as a sophisticated expense management system. It provides real-time visibility into company-wide spending and can be integrated directly with accounting software.

How do Corporate Cards Work?

A corporate card is built for scale, designed to mitigate risks. They work in the following ways – 

• The liability for corporate cards usually rests solely with the company. If an employee overspends or the company faces a liquidity crunch, the founder’s personal assets are generally protected.
• Banks issue these cards based on the company’s health. They consider Profit & Loss statements, Balance Sheets, and cash flow, and not the founder’s personal credit.
• Corporate cards often come with sophisticated software that integrates directly with ERPs and allows finance teams to set individual spending limits for different departments or employees.
• They do not have revolving credit. Most corporate card programs operate on a “Pay-in-Full” basis. The entire balance must be cleared at the end of the billing cycle.

Corporate Card vs Business Credit Card – Key Differences

Here are the primary areas where a Business Credit Card differs from a Corporate Card.

1. Liability – With a business card, the liability stays with the founder, and their CIBIL score suffers if the business hits a rough patch. With corporate cards, the liability and responsibility of debt stay with the company.
2. Expense Management – Business cards provide manual PDF statements monthly. Corporate cards offer automated dashboards that can be synced with accounting tools for easy reconciliation.
3. Credit Limits – A business credit card for a new business is often capped by the founder’s personal income. Corporate cards offer higher and more dynamic limits that scale with your business’s needs.
4. Control and Monitoring – Business cards offer limited add-on cards. Corporate cards offer add-ons with granular controls where you can set daily limits and block specific merchant categories.
5. Eligibility – Business cards require a good CIBIL score. Corporate cards require audited financials and high annual revenue.
6. Rewards – Business cards focus on personal perks like dining. Corporate cards offer discounts on software and other business needs. 

Difference Between Business Credit Card and Corporate Card – Brief Overview

Here are the key differences between a Business Credit Card and a Corporate Card, explained briefly in the table below.

How to Choose the Right Card for Your Business?

Choosing between a corporate card and a business credit card depends on the current status of your business and how you want to scale it. Focus on these four simple factors to make your decision –

• Personal Risk – If you are comfortable putting your personal assets at risk, then business cards will work for you. A corporate card is better if you want your personal and business finances to be separate.
• Your Monthly Spend – Business cards often have smaller limits based on your personal salary. If your startup needs to spend a lot on Google Ads, AWS, or inventory, a corporate card provides much higher credit limits to help you scale.
• Team Management – If you have a small team, a business card works fine. But if you have a big team, a corporate card allows you to provide individual cards to employees with set spending limits, so reimbursements do not become an issue.
• Saving Time – Corporate cards sync automatically with accounting tools and help avoid manual paperwork, making GST filings much faster. Filing with business cards may take longer.

RazorpayX Corporate Card – The Ultimate Card for New Businesses

In the traditional Indian banking system, new startups often struggle to secure a line of credit that scales as per their needs. This can challenge your growth. However, this is where the RazorpayX Corporate Card changes the game. Here is why it is perfect for Indian Startups –

• No Personal Guarantee – RazorpayX offers corporate cards, in partnership with YES Bank and RBL Bank, that don’t put your personal assets at risk. 
• High Credit Limits – By looking at your startup’s potential and current cash flows rather than just the balance sheets, you get the capital you need to scale ads and inventory.
• Seamless Integration – It is part of the RazorpayX “Neo-banking” ecosystem, meaning your payouts, payroll, and card expenses are all in one dashboard.
• Budget Optimization – Whether it’s AWS, Ads, or SaaS tools, the rewards and discounts are tailored for the modern Indian business needs.

To grow your business, choosing between a Business Credit Card and a Corporate Credit Card is an important decision. Consider the benefits and risks involved to choose the one that can actually help your business save money and maximize savings!

Apply for RazorpayX Corporate Cards Here!