Startups are NOT a typical small business, and a funded startup's credit card needs are very different from a traditional SMB. As finance and accounting advisors to hundreds of startups that have raised billions in venture capital funding, we know what to startups should look for in a credit card - and it's not the same as a "traditional" SMB's card.
We recommend funded startups use Brex - because of the startup-centric rewards, generous spending limits, and the lack of a personal guarantee. Brex is now offering companies that sign up through Kruze 100,000 reward points - basically a $1,000 value! Check out Brex now.
Founded in: 2017
Total Funding: $282.1m
Ideal for: Funded founders
Founded in: 1983
Capital Base: $60b assets
Ideal for: SVB Clients
Founded in: 1850
Capital Base: $175.9b assets
Ideal for: Traveling SMB owners
Most early-stage companies be using one of the founder's credit cards. This may make sense at first, but pretty quickly the types of companies that we work with - ones that raise seed or venture capital funding - outgrow the credit limit (and other features) of someone's personal card.
First, if you are a venture backed (or soon to be VC backed) company, look for cards specifically made for businesses with funding. Most small business cards are going to have features designed to give rewards and benefits to the individual holding the card, not to the company. Secondly, the credit limit AND the spending are going to be tied to the individual, not the company. This becomes a serious problem when an early-stage, funded company starts putting big ticket items on plastic like server bills, travel or online advertising. You don't want AWS shutting down because you reached your personal spending limit. And the personal guarantee is not a smart idea - if the company fails, you as the individual will be held responsible for all of the debt.
It's natural that a small business founder who owns 100% of their business would expect to get personal travel rewards. But venture backed companies should be focused on choosing a credit card that have rewards that help the startup reduce burn. At the moment, we really like Brex's rewards - you earn 7x on ride sharing (the average company in our dataset spent approximately $5,500 per year on ridesharing!), 4x on travel and 2x on software like Salesforce.
We've seen companies using a personal card that have to pay off their balance every few days to keep their Google Cloud servers running! This is a waste of time, and it's stressful. Choose a plastic provider that “gets” startups enough to base your spending limit on the amount of capital in your bank account. Right now Brex, and soon Stripe's new offering, will do this.
Founders - don't take on personal liability for your company's debt. Sure, traditional SMB owners have to do this. But you raised venture funding to not have to worry about losing your house if the company goes under (and other reasons too, of course!) Avoid personal liability by going with Brex or the SVB Innovators Card, or maybe the new Stripe card when it comes out. American Express has also announced a new "Corporate Card for Startups" - it's not out yet. You can see our comparison of the Amex vs Brex card here, and we'll update this once we get some reviews from our CEOs.
Look for a provider with cleanly presented statements, modern online UX and a search feature. Really importantly, the best credit cards sync with QuickBooks for simple bookkeeping. You also want a card that scales with your finance operations, such as providing for departments or the ability to tie back spend on particular cards to particular accounts.
If you start a traditional small business, you probably don't hire anywhere nearly as quickly as a funded startup will. When your team grows fast, it becomes very challenging to manage spend if everyone is using their own debit cards and submitting expense reports. But you want the team to spend, because advertising, new equipment, office supplies, etc. are necessary for growth.
You want a provider with an online interface where you can easily adjust spending limits and control your team’s spending. We recommend Brex.
When it comes to credit cards for your startup, there's a lot to consider. As startup finance experts, we at Kruze consulting may have gone a little overboard in our analysis.
Check out this comparison chart reviewing Brex, amex, and SVB -- the three best credit cards for startup founders!
|Built for Funded Startups||Yes||Yes||No||No|
|Rewards / Cash Back||Startup Focused||Startup Focused||Personal Travel Rewards||Personal Travel Rewards|
|QuickBooks Online Sync||Yes||Yes||Yes||Yes|
|Annual Fee||$0||$0||$125 per card||$95 per card|
|Ability to Carry Balance||No||No||Yes||Yes|
|Control Team Spending||Yes||No||No||No|
|Sign up||Sign up||Sign up||Sign up|
Cash back or Rewards
Traditional small business owners are usually trying to get travel points with their credit card. Venture funded founders have bigger stuff to worry about, and the right credit card will provide rewards that help the startup cut its burn rate. Brex and SVB's Innovators Card pool all of the company's points, and these can be used to pay off the card balance (basically, a cash back reward) or to cover other standard startup expenses.
Run of the mill SMB credit cards companies will typically do a credit check on the founder applying for the card, which means you'll get a very low credit limit. A fast-growing, funded startup needs a higher spending limit - don't risk your AWS getting turned off or your trade show exhibit getting rejected because you hit a low limit. Go with a provider that “gets” startups enough to base the limit on your funding!
If you are the founder of a funded business, you should NOT be taking on personal liability for the company's credit card balance. When a startup is going under, or can't raise the next round, the founder is already likely liable for the company's payroll liability. Don't add on the additional personal liability of the company's credit card as well. Avoid personal liability by going with Brex or the SVB Innovators Card.
The best startup credit cards make accounting easy. Look for a provider with cleanly presented statements, modern online UX and a search feature. The best online statements update frequently, so you can understand the balance everyday - and once companies get bigger, they usually want to do their books on a weekly basis, so this becomes even more important. Finally, a good card syncs with QuickBooks, Expensify so you don't have to deal with manual data entry.
Headcount grows quickly at funded companies - and they will want to spend money. The best startup credit cards let you limit how much individuals or teams can purchase. You want a provider with an online interface where you can easily adjust spending limits and control your team's spending. We recommend Brex for this feature.
APR Doesn't Matter
Startups that have raised legit seed and venture funding just pay the bill every month. You don't want to hold a balance, so this doesn't matter. If card provider tries to sell you on the importance of APR, they aren't understand what a startup founder is trying to accomplish. If you are a traditional SMB, then this might be your main source of financing. But for a funded company, the credit card APR doesn't matter - pay your credit card bill every month, like responsible founder.
We only work with funded, early-stage companies, so we know what your accounting systems and credit cards need to be capable of to support rapid growth. Many founders struggle with tools designed for consumers or massive enterprises - finding just right product or service for an early-stage company can be hard.
Thankfully, we've taken our experience working with hundreds of funded companies and summarized it for you here.
And if your startup needs professional finance and accounting help, reach out to us!
Brex is by far the best card for a funded startup. Brex has an amazing rewards program for funded companies - you company earns points for all of the company’s spending, and these points are big for typical startup expenses like ridesharing (7x points), travel (4x points) and more. Plus, Brex gets funded businesses enough to base the spending limit on a company’s funding, and doesn’t require the founder to take on a personal guarantee.
SVB is one of the top banking providers to funded technology companies, and they have recently launched a “Brex killer” card. The SVB Innovators card is a strong card for startups, especially for companies that already have their bank account with SVB. Integrations with QuickBooks and Expensify make bookkeeping easier, and good early-stage centric rewards (get money back on your Amazon purchases). Plus, founders take on no personal liability.
Marriott Bonvoy Business American Express Card is designed for small businesses, and is used by a measurable number of our funded CEOs for their startups. It offers very strong rewards for spending at Marriott hotels - 6x reward points. Plus, it gets the founder elite status at Marriott hotels, which could be very important for the founder of a B2B company who is always on the road closing sales. Founders likely use this card because they like to stay at Marriotts, and want to get the travel rewards for their family to use on vacation. It is possible to sync the Amex Bonvoy with QuickBooks and Expensify, so bookkeeping is easier and faster. Founders who choose the Amex Bonvoy are going to be taking on personal liability for the card, and are going to encounter a frustratingly low credit limit for a high-growth, funded company (because the limit is based on the founder’s credit score).
The Chase Sapphire is really a personal credit card, and we are always surprised by the number of startups that use it. Chase Sapphire’s popularity is probably because many founders simply start using their own personal card for their business, and because they want to earn travel points for themselves. It does have some pretty generous rewards for the founder, with the Sapphire Preferred giving 2x points on travel and restaurants, and 1 point for each $1 spent on other categories. However, it’s not really business tool, and a Chase Sapphire card is going to rely on the founder for the credit limit (so it will be too low for fast growing, funded companies). And the founder takes on the personal guarantee. (We are only including the Chase Preferred in this list because we see so many founders use it for business purposes - Chase does have a better business card, the Chase Ink.)
Unlike the Chase Sapphire, which is really a consumer card, the Chase Ink line of credit cards is for businesses. Chase offers several versions, including a Chase Ink Business Limited, a Chase Ink Business Cash and Chase Ink Business Preferred. With the Chase Ink cards, early-stage company founders get cash back OR points, depending on the card they pick. The Chase Ink Business Unlimited and Chase Ink Business Cash cards have no annual fee, but there is a low, $95 per year annual fee with the Chase Ink Business Preferred. You also get $500 cash back on the first 2 Chase Ink cards, and the 3rd gives you bonus miles, after you hit the minimum spending amount in the first 3 months.