How to Get Cash From a Business Credit Card

A business credit card serves as a flexible financial tool, allowing companies to manage expenses, facilitate purchases, and build a credit history. These cards typically offer a revolving line of credit, enabling businesses to make transactions up to a set limit. While primarily designed for operational expenditures, business credit cards can also offer avenues for accessing cash. This article explores methods for obtaining funds from a business credit card, detailing processes, associated costs, and financial implications.

Understanding Business Credit Card Cash Access

A direct method for obtaining cash from a business credit card is a cash advance, which differs significantly from standard purchases. Unlike regular transactions that typically offer an interest-free grace period, interest on cash advances usually begins accruing immediately. This immediate interest accrual means even a short-term cash advance can become a costly form of borrowing.

Cash advances incur specific fees, typically a flat fee or a percentage of the amount advanced, often 3% to 5% or a minimum of $10. The annual percentage rate (APR) for cash advances is generally higher than for purchases, frequently 25% to 30% or more. Businesses can find exact terms and conditions for cash advances, including fees and interest rates, in their cardholder agreement or online account portal.

To obtain a cash advance from an automated teller machine (ATM), a business credit cardholder must have a personal identification number (PIN). The process involves inserting the card, entering the PIN, selecting the cash advance option, and specifying the desired amount. Alternatively, cash advances can be obtained directly from a bank teller by presenting the business credit card and identification. The teller processes the request and disburses funds.

Some business credit cards also offer “convenience checks,” which function similarly to personal checks but draw funds directly from the credit card’s available credit line. These checks can be used to pay individuals or businesses that do not accept credit card payments, converting a portion of the credit limit into cash. Convenience checks typically carry their own fees, often comparable to cash advance fees, and interest usually accrues from the date the check is cashed.

Alternative Approaches for Obtaining Funds

Beyond direct cash advances, businesses can explore indirect methods to access funds from their credit card via third-party payment platforms. Services like PayPal, Square, or Venmo allow users to link a business credit card and send money to another account, including a business’s own linked bank account. This process converts credit card funds into liquid cash, though it has costs and considerations.

Using these payment platforms, businesses typically incur processing fees for credit card transactions, ranging from 2.9% to 3.5% of the amount, plus a small fixed fee like $0.30. To initiate this, the business credit card must first be linked to the payment platform account. Once linked, funds can be sent from the credit card to another business account, such as a separate bank account.

The procedural steps involve selecting the option to send money, choosing the linked business credit card as the funding source, and specifying the recipient account. Verification may be required, and a waiting period, typically one to three business days, is common for funds to clear and become available.

Many payment platforms and credit card issuers prohibit using their services for self-transfers or to bypass cash advance fees. Engaging in such practices can lead to account suspension, closure, or other penalties.

Broader Financial Considerations for Your Business

Utilizing a business credit card for cash access carries broader financial implications beyond immediate fees and interest. One significant consideration is the impact on a business’s credit utilization ratio, a key factor in calculating its credit score. Cash advances increase the amount of credit used, and a high utilization ratio can negatively affect the business’s credit score, potentially making future financing harder to obtain.

From a cost of capital perspective, accessing cash through a business credit card is generally an expensive form of financing. Immediate interest accrual and high fees make it more costly than many other business financing options, such as traditional lines of credit or small business loans. Business credit card cash access is typically best suited for very short-term liquidity needs rather than a long-term funding solution for operational or growth capital.

Accurate accounting and careful tracking of these transactions are important for financial management. Businesses should meticulously record all cash advances, associated fees, and interest charges for proper financial reporting. Understanding tax implications is also relevant, as interest paid on business credit card debt, including cash advances, may be tax-deductible as a business expense, though specific rules and limitations apply.