Understanding business credit card limits

Business credit cards typically come with a business credit card limit. This limit determines how much you can spend with your card, similar to a personal credit card. Business credit card limits can vary and often range from $10,000 to over $100,000, depending on your qualifications. Some lenders also offer business credit cards with no preset spending limits to cater to more flexible spending.

There are several factors that go into determining your business credit card limit. By understanding how it works, you can better prepare for how your company could use a business credit card to improve cash flow, earn rewards or finance certain expenses.

What you’ll learn:

• A business credit card limit determines how much you can charge to your business credit card.
• Business credit card limits vary, and some products offer no preset spending limit.
• Depending on your needs and financial circumstances, you may be able to ask for an increase to your business credit card limit.
• Prospective cardholders should consider how they plan to use their business credit card when exploring options and their potential credit limits.

A business credit card limit is the maximum amount the card issuer allows the cardholder to charge to their account. So, if your business credit card limit is set to $25,000, that’s how much you can charge to the credit account through one or more transactions.

Similar to personal credit cards, business credit card limits can vary based on your qualifications. Some factors that may influence your limit include:

• Your business’s financial health (including current debts)
• Your business’s revenue
• Your personal credit (especially for newer businesses)

Some lenders may allow you to increase your business credit card limit. They may offer it automatically, or you may be able to request the increase.

There are a few reasons why you might consider a higher limit for your business credit card. For example, you’re facing seasonal cash flow restrictions, you want to earn rewards for a large purchase you have to make, or it’s the best financing option for your business at the time compared to a loan or crowdfunding.

If you aren’t able to increase your business credit card limit or want a card with different benefits or no preset spending limits, you may consider opening up a new credit account instead. Getting a new business credit card may allow you to tap into new perks like cash back or travel rewards and better accommodate your business’s needs as it grows and takes on larger expenses. Depending on the card issuer, it could also open you up to payment solutions that help you manage business expenses.

However, consider whether you can responsibly use multiple business credit cards. Plus, are you willing to take on multiple fees, such as annual maintenance fees? Consider the potential pros and cons before deciding which option is right for you.

The process to increase your business credit card limit can vary, but here’s a high-level look at how it could work:

1. Review your current credit limit and usage. Before requesting an increase, evaluate your current credit limit and monthly usage to help determine how much of an increase you want to ask for.
2. Contact the credit card issuer. Call the customer service number on the back of your card to ask for the increase. Keep in mind that approval may be based on your company’s financial performance and growth.
3. Provide the necessary financial information. Be ready to submit updated business financial statements, proof of assets, tax returns or sales and revenue projections to support the request.
4. Discuss the terms. Let the issuer know how much of a credit limit increase you’re looking for and why it would benefit your business. Make sure you understand any associated terms, such as interest rates or fees, too.

Your credit card issuer may also automatically increase your credit limit after several months of positive payment history. That said, you can always apply for an increase to make managing business expenses easier. Just keep in mind that a request for an increase does not guarantee a higher limit.

A higher credit limit on your business credit card could help your company better cover operational expenses—and allow you to earn some great rewards. If an increased limit could help support your business’s financial goals, consider contacting your credit card issuer to request an increase. Just be prepared to provide some information about your company and the reasoning behind the increase request.

Capital One offers options for companies looking for higher credit limits and for those in search of a fixed credit line—all with benefits like one-time cash bonuses, low introductory APRs, unlimited cash back or bonus miles. Compare Capital One business credit cards today.