Small business lending may be improving, but it's far from easy to get money when your business needs to spend. The right credit card may help.

In fact, credit cards were the most popular spending method reported by participants in a 2009 Small Business Administration business credit card survey, with 59 percent of small businesses choosing plastic. But, 79 percent of respondents said the terms of their credit card got worse over the past 12 months.

That means not every credit card will be right for your business. Here's a primer on choosing one that works for you.

The Big Picture
Plastic isn't a magic pill for business cash flow needs, but it can come in handy. Credit cards can give your business flexibility, and fast--something that's essential in these economic times. Cards can offer other benefits, too.

One of the main reasons to get a business card is that it will help you separate your business expenses from your personal ones. When it's time to file business tax returns, you'll have an easy reference point for potentially deductible business expenses.

Many credit cards offer statements that categorize your purchases, which will again help you at tax time, but also when you review your business budget.

"A good credit card with appropriate features can be a time-saving, administrative advantage for their business management," says Nate Wenner, a certified financial planner and certified public accountant with Wipfli Hewins Investment Advisors in Edina, Minn. "As a financial advisor to scores of business owners, I've appreciate anything that helps them to simplify and improve their business finances."

Credit card spending will also offer your business some protections. Cash and check spending, if something goes wrong, won't leave you with as many protections as a credit card. Plus, credit cards will eliminate the need to carry cash for your business and make online purchases easy.

A downside: consumer protections from the Credit Card Accountability Responsibility & Disclosure Act, or CARD Act, won't be required for business credit card accounts. On the upside, businesses can deduct credit card interest paid on business credit cards, which is not permitted for interest on personal cards.

Fees and Interest Rates
One of the most important considerations is how much a credit card will cost you. There are two main fees (not counting late charges and the like, which, hopefully, you won't have): annual fees and interest rates.

Annual fees are a once-a-year charge you'll have to pay for the honor of carrying a credit card. Very few card issuers offer no-fee cards for businesses, and they're usually offered only to businesses with the best credit histories. Fees vary, and many come along with benefits, such as rewards programs. (More on that later.)

Then there are interest rates, which have been on the rise for consumers and business accounts alike. According to CreditCards.com, the average business credit card had an interest rate of 11.31 percent (as of the week of Feb. 3, 2010). That can get pretty expensive if you carry a balance for a long period, especially if you plan to use the card for start-up business costs.

Rewards Programs
Cards that offer rewards programs usually charge an annual fee and no rewards program is perfect for every business; you'll have to decide what's important to you.

"This can be a nice perk for some businesses, but you need to quantify how important/valuable this is for your own business,' Wenner says. "For some, the tradeoffs of higher fees or lack of other benefits might not make this attractive."

Some of the rewards programs you might find:

  • Cash back: These offer cash back based on a percentage of your spending levels.
  • Miles cards: These allow you to accumulate points or miles for airline travel, which can be a great benefit if you're a frequent flier.
  • Product discounts: Other cards allow you to earn points that can be traded in for merchandise. Unless a card offers products that are very specific to your business needs, you may find these go to waste.

Pay close attention to expiration dates and other limits on redeeming points or miles on these kinds of cards.

Shopping Around
Lending requirements are still stricter than they used to be, but if you have good personal credit, you should be able to wrangle a card for your business.

The first place to start is the bank where you keep your personal accounts. Your bank knows your credit history and that may translate positively for your business.

Still, it's essential to shop around. Check Bankrate.com, CreditCards.com and Credit.com to compare cards and features.

If your business qualifies for a card, and you make timely payments over time, it may help you with other lending down the line.

"Obtaining credit is tight for many businesses and individuals, so a positive record could mean the difference between having the flexibility to cover unexpected costs, or not," Wenner says.