But before jumping in, take a careful look at your business to make sure it is a good fit, say experts.

Business owners with excellent credit can often qualify for initial credit lines as high as $100,000, as well as 0 APR promotional offers on balance transfers and purchases. However, experts caution against getting too deeply in debt on business cards because the risks may be higher than the benefits.

“The CARD Act doesn’t apply to business credit cards, so all the protections we now take for granted vanish when you get into business credit cards,” says Bruce McClay, Media Director with ClearPoint Credit Counseling Solutions. “Prior to the Act, card issuers were able to change terms with little or no notice. That’s still the case for business credit cards. So there are a lot of cautions to take into account.”

If you’re considering a 0 percent APR offer on balance transfers or purchases, the most important thing to keep in mind is that interest rates on business credit cards can be raised retroactively on existing balances (which isn’t allowed on personal credit cards).

Miss a payment by a couple of days, or make a payment that is returned unpaid, and that 0 percent APR balance transfer could jump to a whopping 29.99 percent default rate.

Worse, if you pay late or go over the credit limit on another account or loan you have with the card issuing bank and its subsidiaries, you could also be hit with a 29.99 percent default APR.

Some card issuers also reserve the right to apply the default APR indefinitely to all the outstanding balances and future charges to that credit card account. (The defaults terms and how strictly they are applied vary from card issuer to card issuer. Before applying, call the card issuer to make sure you understand the details of the default rates and when they are triggered.)

A convenient — but risky — funding source
Because business credit cards offer such a convenient resource for a short-term loan, plenty of small business owners still use them as a financing source. However, this often gets them into trouble.

According to Jean Kruse, a counselor with the nonprofit business coaching association Score in Cedar Rapids, Iowa, it’s not unusual to see small business owners end up over their heads in credit card debt because they used credit cards for financing their start-up.

“Business credit cards are very convenient, and many people just pay the minimum due each month,” says Kruse. “But if you are charging $5,000 a month on a high interest card and paying just the minimum, you just keep getting further and further into debt. It’s only a matter of time before that kind of debt load starts dragging down your business.”

Another downside, according to Kruse, is that people treat business cards as a line of credit and don’t have a clear plan for how quickly they will pay off the loan. With regular small business loans, the monthly payment required is designed to have loans paid off within a five-year period or so. However, with credit cards, the required payment is very low, so many people just keeping carrying high-interest debt forward.

That said, business credits cards can still be a useful tool for small businesses — if they’re used judiciously.

“Where business credit cards really work is when you can pay off the balance in a reasonable amount of time,” says Kruse. “But have a plan in place. If you can’t pay off the balance in full each month or within a couple of months, don’t do it. You don’t want to build up a huge amount of credit card debt you can’t pay.”

When to take advantage of a promotional offer on a business card
For a cash-strapped small business owner, getting an easy, interest-free loan may seem like the answer to your prayers. But before jumping on a promotional offer such as a 0 APR balance transfer, ask yourself the following questions:

• Do you have a business with an established, predictable cash flow?
• Will you or whoever manages your account be able to make all payments on that credit card and any other loan accounts you may have with that bank on time, all the time? (When answering this question, consider holidays, vacations and other unusual times when it’s easy to make a slip-up.)
• Will you be able to pay off the balance in full before the 0 APR offer expires?
• If, for unexpected reasons, the 0 APR balance jumps to a default APR, do you have another recourse for paying off the balance?

If you can answer yes to all of these questions, promotional offers on business credit cards can be a smart addition to your financing mix.

However, because of their high interest rates and volatile terms, business credit cards should be avoided if you are just starting a business and don’t yet know how much money you will have coming in to pay off the balance.

Business credit cards should also be avoided if your business is not yet producing enough income to meet your expenses. In that case, chances are that turning to a business credit card to fill the gap will create more problems than it solves.

When credit card information is stolen, the maximum out-of-pocket cost to consumers is typically $50 — as long as the loss is reported within a reasonable amount of time. Business credit cards enjoy the same protections, but small business bank accounts do not. Banks generally have no legal obligation to cover online banking fraud and illegal commercial wire transfers.

As a result, small businesses often suffer heavy losses when their online information is compromised. According to a survey by Javelin Strategy & Research, the estimated cost of small business computer fraud in the U.S. totaled $8 billion in 2010. The small businesses affected were forced to absorb $2.61 billion of that loss; the rest was covered by financial institutions, credit card issuers, merchant partners or insurance firms.

“The consequences of cyberfraud can be devastating for small businesses,” says Kevin Haley, Director of Security Technology and Response at the security firm Symantec. “Many small businesses just don’t have the resources to survive from having their bank account emptied. It can put them out of business sometimes.”

Cybercrooks preying on small businesses
Experts say that cybercriminals are increasingly targeting small businesses with 100 employees or less. According to the Verizon 2011 Data Breach Investigations report, compiled in collaboration with the U.S. Secret Service, many cybercriminals have also begun to shift their focus from large-scale, complicated break-ins to smaller, more vulnerable targets that can be breached using repeatable, automated attacks.

In 2010, the number of data breaches jumped from 141 in 2009 to 761 in 2010, and a full 63 percent of the attacks were aimed at companies with 100 employees or less.

According to the Verizon report, data breaches also increasingly originate from outside hacking attacks. More than nine out of ten data breaches in 2010 originated from outsiders, while breaches perpetrated by employees accounted for only 16 percent of attacks.

Hacking and malware continue to be the most common avenues through which cybercriminals gain access to sensitive credit card or banking information. In a typical cyber break-in, malware is installed on victims’ computers through phishing emails with links or attachments containing banking Trojans, such as the Zeus Trojan.

The malware tracks keystrokes or installs fake forms to collect sensitive banking information and login credentials. Cybercriminals then use this information to make illegal bank transfers to other accounts, which are typically controlled by low-level criminals hired to transport the money back to the fraudsters.

Many small businesses have weak security
Small businesses are attractive targets. They have more money in the bank than consumers, and it’s harder for banks’ fraud prevention software to spot fraudulent activity on small business accounts where large transfers of $50,000 can be a regular occurrence.

Small businesses are also desirable hacker targets because many can’t afford to keep dedicated security experts on staff and generally rely on antivirus software and other antimalware programs for protection.

Many small business owners erroneously believe that as long as they have installed antivirus and malware protection, they are adequately guarded against cyber threats. According to a recent survey by the National Retail Federation and First Data Corporation, 64 percent of small business vendors were under the assumption that their business wasn’t vulnerable to credit or debit card data theft.

Unfortunately, antivirus software is always one step behind the newest sophisticated virus and malware strain. Hackers constantly update and tweak viruses and Trojans to escape detection by security protection software. In addition, traditional antivirus software just isn’t enough any longer.

“The criminals have gotten so good, you need more locks on your door than just one,” says Haley. “Good security software these days involves a lot more than antivirus protection. A firewall, intrusion prevention and similar extended protections are essential.”

Cyber fraud protection doesn’t have to be expensive
Cyber fraud is becoming increasingly widespread because the playing field has leveled. These days, ready-to-go malware kits are easily available on the black market, making it possible for anyone with basic computer skills to set up a botnet and orchestrate sophisticated cyber attacks.

Ironically, despite the proliferation of cybercriminals, industry experts say that the vast majority of attacks on small businesses could be prevented, without expensive security upgrades.

“This year, we witnessed highly automated and prolific external attacks, low and slow attacks, intricate internal fraud rings, countrywide device-tampering schemes, cunning social engineering plots and more,” said Peter Tippett, Verizon’s vice president of security and industry solutions in a press release accompanying the 2011 report on data breaches. “And yet, at the end of day, we found once again that the vast majority of breaches can be avoided without extremely difficult, expensive security measures.” In the report, Tippett estimates that 97 percent of the 2010 security breaches could have been averted relatively inexpensively.

Symantec’s Kevin Haley recommends the following practices as a basic, first line of defense against online banking fraud:

• Use state-of-the-art security software. Good security software involves a lot more than antivirus protection. Look for security software that includes a Unified Threat Management (UTM) solution. UTM is a new standard for network security, which integrates multiple, simultaneous security functions like firewalling, network intrusion prevention, antivirus, worm and anti-spam protection, content filter and much more. In addition, look into adding two-factor authentication for employees with access to online banking and other sensitive business information.
• Educate your employees. A chain is only as strong as its weakest link. Phishing emails are often cleverly disguised to pose as familiar emails, such as email notifications of a UPS package delivery. Make sure your employees know how to spot the difference and which precautions to take when in doubt. Similarly, social networking sites are a common source of malware ruses; be sure that your employees are educated on the risks. For maximum security, consider restricting employees’ Web access.
• Limit the information available on your company website. Names, email addresses and phone numbers of employees can be used by attackers for phishing attacks involving social engineering. Employees are much more likely to fall for a ruse if it has their personal information on it.
• Use a separate computer for online banking. As an added precaution, use a dedicated computer for online banking, which is not used by employees for routine business operations, social networking or Web browsing.
• Know your bank’s security policies. Educate yourself about your bank’s security policies, including which security features they offer, as well as what your protections are in case your online bank account is compromised.

Between 1997 and 2011, the number of women-owned businesses increased at a rate of 1.5 times the national average. But there is still a long way to go before the playing field is even, say analysts.

The report, titled “The American Express Open State of Women-Owned Businesses,” was put together by Womenable, a research and policy-development group focusing on improving the environment for women-owned businesses.

Based on previous growth trends from the U.S. Census Bureau, the report estimates that there are now over 8.1 million women-owned businesses in the United States. As of 2011, women-owned businesses are generating $1.3 trillion in revenue and employing more than 7.6 million people.

The growth of women-owned businesses is outpacing that of new businesses started by male entrepreneurs. Between 1997 and 2011, the overall number of U.S. businesses increased by 34 percent, while women-owned firms expanded by 50 percent — 1.5 times the national average.

However, despite the accelerated growth rate of women-owned businesses, most businesses owned and operated by women remain fairly small. In fact, companies owned by female entrepreneurs employ only 6 percent of the country’s workforce and generate just under 4 percent of business revenues. To put it into context, that’s about the same share of business revenues generated in 1997.

In addition, according to the American Express Open report, the growth in sales and in the number of employees in women-owned businesses lagged behind the national average. Sales in businesses owned by women grew only 8 percent between 1997 and 2011. And while employment increased 53 percent in women-owned businesses in the same period, it still wasn’t enough to keep up with the national average.

“This mix of progress and paralysis bears a deeper look,” says study author Julie Weeks of Womenable. “Reviewing the totality of small business and large corporate growth trends over the past decade leads one to the conclusion that, in the battle of David/Diana versus Goliath, Goliath is winning.”

Still, according to Weeks, the discrepancy between women-owned and male-owned businesses is most predominant for companies that reach the million-dollar and 100-employee threshold. This is the point where women business owners most clearly fall behind.

“Women tend to hold their own up to this level,” notes Weeks. “We need to understand more about what’s going on along that journey that’s causing women to falter at this stage.”

The study also found that funding sources for women entrepreneurs are relatively scarce; many women get turned down for loans and have to turn to friends or business credit cards for funding. But according to Weeks, women also don’t have access to the same degree of networking and mentoring resources.

“Lack of funding is certainly one of the reasons women fall behind, but it’s a combination of factors,” says Weeks. “Particularly at the higher levels of business accomplishment, it’s like entering a high altitude zone. There are fewer peers, fewer mentors and role models. The informal network that a lot of business owners rely on may be less available to women.”

Weeks points to several organizations offering high-level mentoring for women business owners as examples of what may be needed to level the playing field. For women with businesses not yet at the million dollar level, the Make Mine a Million program provides coaching and mentoring for women business owners who want to grow. Count Me In is a nonprofit organization dedicated to facilitating women’s economic independence and is sponsored in part by American Express Open, FedEx and Dell.

For women who have achieved at least $1 million in sales and want to network with peers to master further growth, Weeks suggests checking out the Women’s President Association. Originally founded in Canada, the association now has peer networking groups all over the U.S., U.K. and Peru.

Facilitating the growth of women-owned businesses isn’t just about fostering more equal opportunities for women. By some estimates, programs helping to accelerate women’s business success could generate at least four million new jobs and $700 billion in increased economic activity within just a few years.

Many entrepreneurs, particularly those who haven’t been in business for that long, have little idea of what a business credit score is — or how to establish one. But it’s important that you know it because it can make a big difference to your business’s long-term future.

Just like individuals using credit, businesses develop a credit report and rating over time. Like FICO scores, business credit scores are used by lenders to determine the creditworthiness of a business. It is also used by other businesses to make decisions about the clients they do businesses with and on what terms.

Like individual credit reports, business credit reports include general information about the business, such as the company’s background, financial information, credit risk factors, banking and trade history, collection history (if any), past liens, judgments and/or bankruptcies. But business credit scores also differ from personal credit scores in crucial ways.

The number of business credit reporting agencies is on the rise, and they all use somewhat different formulas for assigning business credit scores. The most commonly used business credit reporting agency remains Dun & Bradstreet, which uses the Paydex formula to assign businesses a credit score.

Personal credit scores are based on a variety of factors — including a company’s payment history, credit utilization ratio and length of credit history. But the Paydex score is determined far more simply. The main determining factor for the Paydex score is when a business makes payments to its creditors.

The Paydex business scoring system runs from 0 to 100. A score of 80 is considered the “golden” number; it indicates that the business makes payments exactly on time. Scores of 90 to 100 indicate that the business tends to make payments even before the due date, while scores lower than 80 reflect late payments — the later the payment, the lower the score.

Experian business credit scores also range from 0 to 100, but they differ from Paydex in that they are based on numerous factors contained in the business credit report — including the company’s overall size, trade experiences, outstanding balances, payment habits, credit utilization ratio, credit history over time and public records.

It is important to remember that, unlike personal credit scores, business credit scores are not always established automatically. If you’re looking to apply for a small business loan, it’s recommended that you establish a business credit score at least four to six months before applying.

Business credit activity is tracked, in part, by your employer identification number (EIN), so you may want to consider forming a corporation or an LLC. You can get an EIN if you run a sole proprietorship. However, forming a corporation or an LLC affords you liability protection, and lenders are less likely to look at your personal credit history.

Register the business EIN with major business credit bureaus like Dun & Bradstreet, Experian Business, Equifax Business and Business Credit USA. And make sure that you comply with the business credit market requirements.

Finally, to build business credit, find a supplier that will not only issue credit to your business, but will also report your payment record to the business credit ratings agencies. According to Experian, only about 10,000 out of 500,000 suppliers extending credit actually report payment history to ratings agencies. For suppliers who do not report payment history, encourage them to do so. Or, try to obtain a line of credit with another supplier that does.

In the survey, 58 percent of business owners reported using business credit cards, and 45 percent reported using personal credit cards for business expenses. A full 95 percent of those applying for business credit cards in 2010 were approved on their first attempt, compared to 41 percent of those applying for other types of credit.

In short, business credit cards continue to play an important role in business funding for many small business owners. However, when using credit cards for business funding, it’s important to make sure that the cards work for you and your business and not against you. Here are five best practices for using business credit cards to your advantage.

1. Protect yourself against retroactive interest rate increases.
The Credit CARD Act of 2009 put in place protections against retroactive interest rate hikes on existing balances for personal credit cards. Card issuers can only raise rates retroactively if a cardholder is more than 60 days behind with payments. Unfortunately, like the other provisions in the law, this rule does not apply to business credit cards. This means that, in theory, the APR on a $25,000 credit card balance could go from 11.99 percent to 21.99 percent with little notice.

How to protect yourself: For credit cards that you plan to carry a balance on, there are two ways to avoid retroactive interest rate increases. One option is to use a personal credit card, which falls under the protections of the Credit CARD Act. However, this option is not ideal because any credit card balance for your business would pull down your personal credit score. Alternatively, take out a business credit card with Bank of America, which has pledged to apply the rules of the Credit CARD Act to its business credit cards as well. So far, the bank appears to be following through on that promise.

2. Take full advantage of rewards and cash-back bonus programs.
Business credit cards feature some of the most attractive sign-up bonuses and rewards programs in the industry. Some cards, such as the Simply Cash Business Card from American Express, offer 5 percent cash back on certain office-related purchases, while others, such as the Capital One Venture for Business, give the equivalent of 2 percent cash back on all business purchases.

How to benefit: Supercharge rewards earnings on business purchases by taking out additional cards for employees, and set a spending limit on the cards to protect against abuse. Keep a dedicated credit card account for rewards earnings, and pay it off in full each month to avoid paying high interest rate charges. Then use a separate, low interest credit card for carrying balances.

3. Keep an eye on your credit score.
Keep your personal credit score in mind when using business credit cards. In some cases, the activity on a business credit card account may be included in your personal credit report. For example, late payments on a business credit card will end up on your personal credit report and draw your score down. Similarly, high credit card balances on business credit cards could make you look overleveraged and pull your personal credit score down as well.

How to avoid credit score impact: To avoid having business card balances artificially inflate your personal credit utilization ratio, stay with issuers that don’t report business credit card balances to the credit rating agencies. While some business card issuers automatically report business credit card balances to the credit agencies, some do not. For example, according to the Wall Street Journal, American Express and JP Morgan Chase only report business account balances to the commercial credit bureaus, such as D&B and Experian’s Small Business Services. Only in the event that the account becomes delinquent do they report that balance to the personal credit rating agencies as well.

4. Have a back-up in place.
Credit card loans are easier to come by, but terms are more liable to change. At any point in time, card issuers can choose to slash credit limits or increase the minimum monthly payment due. And even if you go with a card issuer that pledges not to hike interest rates retroactively, card issuers can still raise rates on future purchases and charges.

How to access alternative sources of funding: Take steps early on to build your business credit score and increase your chance of qualifying for other types of business financing down the road. For example, develop a relationship with a local bank or credit union; they are more likely to take into account personal relationships when evaluating loan applications. If necessary, explore other financing alternatives, such as account receivable financing.

5. Take advantage of perks and benefits.

Most business credit cards come with bookkeeping and expense reporting features that can help you manage and control business expenses. Expense reporting, for example, will automatically sort purchases by category; options for downloading card activity into accounting software programs like QuickBooks can also simplify bookkeeping tremendously.

How to benefit: Taking out additional authorized user cards for employees can help fast-track expense reporting and keep all key business expenses in one place, enabling you to get a quick overview of where your money goes each month.

Traditionally, card issuers have only reported business credit card accounts to the three credit reporting agencies, Experian, Equifax, and TransUnion, if the account became delinquent. Now, however, according to the Wall Street Journal, some major credit card issuers have begun reporting business credit card action along with personal credit card information. This carries far-reaching effects for a cardholder’s score.

Small business cards usually carry very generous credit limits, reflecting the higher revenue stream that businesses typically have. For the company cardholder, making use of this extensive credit line can greatly ease cash flow management and give greater flexibility in a business’ day-to-day operations. However, when card issuers report business credit card debt alongside personal credit card debt, the resulting combined debt load easily gives the appearance that the business card holder has overextended themselves by taking on excessive credit card debt.

For example, a cardholder with $13,000 in personal credit card debt and $35,000 in business credit card debt would appear to have $48,000 in credit card debt. This is a figure far beyond what most people’s personal income can support, even while it may be a relatively small amount in relation to the company’s revenues. By artificially increasing the overall outstanding credit card debt, cardholders’ credit utilization ratio will be inflated, potentially drawing down FICO scores.

In addition, other credit card issuers looking at the debt load may flag the cardholder as an increased credit risk, failing to take into account that the debt will be paid off by the cardholder’s company, and not by the cardholder. This could result in a snowball effect of lowered credit limits and interest rate hikes. Furthermore, if the business cardholders were to apply for another type of loan, their business credit card debt load could hurt their debt-to-income ratio by making their debt obligations look artificially high, since business revenues would not be counted as part of the person’s income.

To avoid these drawbacks, anyone considering applying for a business credit card may want to look for issuers who report business credit card card activity separately, and not as part of the personal credit card information. For example, American Express and JP Morgan Chase report business card accounts only to commercial credit bureaus such as D&B and Experian’s Small Business Services—unless the account is behind in payments. This allows small business owners to maintain their personal credit record while still taking advantage of the benefits small business credit cards offer.

Business credit cardholders should keep in mind, however, that all credit issuers report defaults on business credit card accounts to the major credit bureaus, so in the case of default, there is no way to avoid the default pulling down personal credit as well.

Further, business credit cardholders should be aware that should the company fold and be unable to pay off the business credit card, the credit card agreements of business credit cards generally give card issuers’ the right to go after cardholders’ personal assets. Lastly, before applying for a business credit card, take into account that the new provisions of the Credit CARD Act do not apply to credit cards used for business or professional purposes.

Professional credit cards are basically small business credit cards, with a twist. While business credit cards traditionally have been restricted to small business owners (who could produce an Employer Identification Number), professional credit cards are as easy to get as traditional bank credit cards. Applicants are simply required to check a small box indicating that they are a “business owner” or someone with “business expenses.”

So, why are some card issuers lining up to hand out the once restrictive business credit cards to regular Joes like you and I? For one simple reason: business credit cards (and their new cousins, professional credit cards) are not covered by the regulations of the new Credit CARD Act.

The rules rolled out in 2009’s Credit Card Accountability Responsibility and Disclosure Act apply only to personal credit cards. In other words, all the consumer protections introduced by the Act—including bans on retroactive rate hikes, 45-day notice on raising rates on future charges, curbs on late fees and over-the-limit fees, etc.—don’t apply to professional cards.

According to the Wall Street Journal, consumers across the country, who didn’t even realize they had applied for a business card, are discovering the not-so-subtle difference the hard way. Professional credit cards appear more attractive up front; card issuers offer low attractive up-front rates, because on business credit cards card issuers are still allowed to change interest rates without giving advance notice or even specifying a reason. As a result, consumers who sign up for a card offering a low 8.99 percent APR could find that rate bumped up to a hefty 18.99 percent without warning. In the case of some business credit cards, a single, day-late payment could trigger a whopping 29.99% penalty rate. Further, the rate hikes on business credit cards are retroactive, which means that they apply to any existing balance on the card.

Because professional credit cards aren’t protected by the CARD Act, card issuers are also at liberty to shorten payment periods to less than 21 days, charge over-limit fees and high late payments, and change cardholder agreements without notice. In addition, payments above the minimum amount due are not required to go towards highest-interest debt first, but rather will be applied to the balance to the lowest interest. Consequently, debt on professional cards can take longer to pay off.

For the savvy credit card user, however, professional credit cards can offer attractive benefits Consumers with excellent credit habits might choose to take advantage of the lower APRs and better promotional rate terms card issuers extend through business credit card offers. Just be sure to keep up those great credit habits and have a strategy in place for paying down any outstanding balances on the card, should it be necessary. Otherwise, one slip-up could leave you paying upwards of 30 percent interest on that credit card balance.

The study, which was carried out by the economics and public policy consulting firm Keybridge Research, was based on a nationally representative sample of 4,240 small businesses. Findings suggest that for every 1 percent increase in available business credit card credit, there was a corresponding .051 percent boost in firm employment. The study also found that for every 1 percent increase in business credit card credit, companies saw a .14 percent jump in revenues.

As a result in the increase in revenues and firm employment, the researchers estimate that the business credit card expansion between 2003 and 2008 contributed to the creation of over half a million new jobs in the U.S.

Small businesses play a vital role in the U.S. economy: in addition to representing 50 percent of the country’s total employment and 44 percent of all annual pay, small businesses are one of the fastest growing sources of new jobs. In the past 15 years, 65 percent of new jobs were created through small businesses.

One reason that business credit cards increasingly play a role in small business funding is that, in contrast to other types of business loans, business credit cards afford an easily available source of credit. According to a recent survey by the National Federation of Independent Businesses, only 39 percent of small businesses applying for bank loans get approved for a loan, and only one in three applying for a credit line get offered one with satisfactory terms. In contrast, three out of four applications for small business credit cards get approved.

Despite the benefits, the study notes that the evidence on the net impact of credit cards on business success in the past has been contradictory. While small business credit cards boost revenues and job creation by affording easy access to credit, the sometimes high carrying cost of credit card debt as well as uncertainty of terms may increase the risk of business credit card use.

In the wake of the 2008 credit crisis, more and more businesses have had to turn to business credit cards to fund their business operations: A 2009 survey by the National Small Business Association showed that 59 percent of small businesses use credit cards to meet their capital needs, and more than one-third of small businesses obtain 25 percent or more of their overall debt financing from credit cards.

The main benefits of business credit cards may derive from the fact that they provide businesses with access to credit where no other types of credit are available. The study did not address whether gaining greater access to more traditional form of business financing might ultimately prove equally or more beneficial for small businesses.

Overall, the study concludes, small business credit cards provide important economic benefits by allowing firms not only to borrow funds long term, but also to stretch out their funds, manage monthly expenses, and more efficiently allocate funds. In the continuing tight credit climate, business credit cards can mean the difference between making it or breaking for small business owners with no other recourse to credit for financing business operations.

Significantly the consumer protections of the new Credit CARD Act do not apply to business credit cards. As a result, business credit card issuers still can, and many do, levy harsh penalties on business cardholders. In extreme instances, a late payment can trigger default penalty rates as high as 29.99% APR on existing balances.

To help small business owner navigate through the choppy sea of business credit card offers, here are our picks for the best business credit cards of 2010:

For Business Cardholders Who Don’t Carry a Balance

Capital One Venture for Business
For business owners who want to leverage business expenses to earn rewards, Capital One’s Venture for Business card offers one of the best rewards credit card programs out there. Cardholders earn two miles for every dollar spent—twice what many other programs offer. Rewards earnings can be redeemed not just for free travel, but for cash back, car rentals, hotel stays, gift cards, and other rewards as well.

The miles earnings translate into a straight 2 percent rewards earnings for every dollar spent. Miles earnings can be put towards any airline at any time, with no expiration dates or limitations on the number of miles that can be earned. The redemption value for cash back redemption varies, however, and according to Capital One customer service representatives, is based on each cardholder’s individual credit rating.

Capital One currently offers 10,000 sign-up bonus miles to business cardholders who spend $1,000 in the first three months, and an additional 5,000 miles for signing up additional cardholders within the first 60 days. The card’s $59 annual fee is waived the first year.

An added benefit of the card for frequent overseas travelers is that Capital One does not charge foreign transaction fees on overseas purchases; these fees run upwards of 3 percent for most other card issuers.

For Business Owners Looking for a 0% APR Balance Transfer

Chase Ink with Ultimate Rewards
For business owners looking for short-term 0% APR financing—Chase’s Ink with Ultimate Rewards card offers 0% APR on both new purchases and balance transfers for the first six months with a balance transfer fee of 3%. After the end of the promotional period, cardholders pay an APR ranging from 11.24% to 17.24% variable, depending on creditworthiness.

The Chase Ink Ultimate Rewards card also offers rewards at a rate of one point per dollar spent. Rewards earnings can be used towards travel, shopping, entertainment, and more. Ink holders can earn double points on travel booked through the online “Ultimate Rewards Travel Booking Tool,” and 10 points per dollar on purchases made though the “Ultimate Rewards Mall.” There are no expiration dates or limits on points accrued.

Cardholders will want to stay on their toes with this card, however. Making a late payment, exceeding the credit line, or having a payment bounce may result in a 29.99 % default APR on the existing card balance. The default rate will also be triggered if cardholders make any of the above transgressions on other accounts held with JP Morgan Chase-related companies.

Best Business Credit Cards for Carrying a Balance

For business cardholders who wish to carry a balance from month to month, Bank of America business credit cards offer a unique advantage. Unlike other card issuers, Bank of America has pledged that it will apply the new rules of the Credit CARD Act for the bank’s business credit cards as well.

This means that Bank of America business cards, such as the Platinum Plus for Business MasterCard, unlike other business cards, should offer protection from retroactive interest rate hikes as well as 45 days notice prior to rate increases on future purchases.

The BofA business credit cards currently feature some of the lowest APRs in the industry. The regular APR weighs in as low as Prime + 5.99% for people with good credit. The APR increases with declining credit scores; cardholders with not so great credit can expect to pay interest rates as high as Prime plus 16.99%. Both the Bank of America Platinum Visa for Business and Platinum Plus for Business MasterCard come free of annual fees and currently offer 0% APR intro on purchases for 6 months.

The cards come with the usual additional benefits of business credit cards, such as free employee cards with controllable spending limits, monthly employee spending reports, and, as an extra perk, Employee Misuse Insurance Protection.