It seems nearly impossible for a business to function without some form of credit. Credit options are readily available to any type of business, but there are two distinctive types: business credit and corporate credit. The obvious difference is the corporation status of the company, but the differences do not end there.

Types of Credit

Corporate credit is available through credit cards, lines of credit, bank loans or trade credits. Credit cards, lines of credit and bank loans are available through financial institutions. Trade credit is when established (incorporated) businesses create lines of credit for other established businesses. Business credit is typically only in the form of credit cards. Credit cards for either corporations or businesses bear individual names as well as the business name, but only the latter has credit attached to the individual.

Responsibility

For a corporation, the credit does not require a personal guarantee by an individual. The credit belongs to the corporation, which is a stand-alone entity according to the law. The liability for repayment lies with the company, not any one individual. For a new business or business that is unincorporated, the card requires a guarantee by an individual, usually the business owner. That guarantor accepts responsibility for late payments or default; the business credit can affect the personal credit report of the individual responsible for the credit.

Features

Business credit cards offer cash rewards, frequent flier miles, introductory annual percentage rates, 0 percent balance transfers, and no or low annual fees. Customization of the features on a corporate credit account include more complex features, such as the ability to track, review, approve and reimburse employee expenses through custom-designed software.
Benefits

During a slower time, corporate credit can help a company pay bills and handle payroll. It can also allow a company to upgrade equipment or begin a project without a ready investor. Business credit can carry the same benefits, but on a smaller scale as it is usually only available through credit cards. Other benefits of either type of company credit include low ongoing interest rates, free account summaries, expense reports, additional employee cards and generous credit limits.

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