A business credit card of a specific vendor eliminates the need for the business owner to be held personally liable for the debts incurred by the card. Should the business default on its payments, the creditor is restricted to pursuing the business assets for recovery, not the personal assets of the business owner. This feature can be especially attractive to business owners seeking to protect their individual finances from business liabilities.
The absence of a personal guarantee offers significant benefits, including reduced personal financial risk and simplified business financing. This arrangement can also provide a clear separation between business and personal finances, which can be beneficial for tax and accounting purposes. Historically, requiring a personal guarantee was standard practice for business credit cards, particularly for newer or smaller businesses. However, some institutions now offer alternatives to attract a wider range of business clients.
