How to Get a Business Credit Card [A Simple Guide to Follow]
Last Updated: February 2, 2023
Getting a credit card for business purposes is like getting a personal credit card. If you’re a business owner, you probably want to know how to get a business credit card and what you can use it for. This article addresses the application process and why it’s a good idea to apply for a business credit card.
Why Should You Get a Business Credit Card?
Using your personal credit card for business expenses may seem smart, but it’s not advisable in the long run. But getting a business credit card is a good idea, as it presents quick and easy access to funds that provide your business with the needed help to acquire supplies and equipment while keeping cash on hand.
How Do Business Credit Cards Work?
A business credit card ensures financial flexibility. Since these cards function on the principle of a revolving line of credit, you can use the card to conduct purchases even if you’re short on cash. These cards, however, carry interest rates and, in some cases, annual fees. But you can look for a card that has a low-interest rate, doesn’t charge an annual fee, or has a 0% introductory Annual Percentage Rate (APR).
Another benefit of such a card is that you don’t have to reimburse your employees for any business expenses they paid for out-of-pocket. Instead, you can allow them to use the card for any business-related expenses. Additionally, some card providers may be willing to issue business cards for all employees; thereby, limiting their spending. And much like any other credit card, these cards have reward programs, meaning you can get sign-up bonuses, cash-back and earn points or miles much like you would with your personal card.
Possibly the most important incentive to get a business credit card is that it provides separation of your personal and business expenses—significantly easier for detailed bookkeeping and protects your personal assets from liability. And you’re also offered a certain level of protection regarding all your other purchases. For example, if what you purchased is stolen, lost, or not delivered, you will be reimbursed for the purchase.
Can I Get a Business Credit Card Instead of a Loan?
If you need a certain amount of money for your business, getting a card is more accessible than getting a traditional business loan. The process is quicker and faster, and you’re more likely to be approved, even if you don’t offer any collateral.
How to Get a Business Credit Card for a New Business?
You can get a business card, even if it’s a startup. In such cases, owners are usually judged on their personal credit scores. The fact that a card is a more convenient payment method than cash also helps build up your business credit. Once your business has established a good credit score, it will be granted a higher credit limit if applying for any other types of loans. If you’re interested in starting a business but having trouble with the process, you can turn to trusted business plan software for help with all the start-up procedures.
Who Can Apply for a Business Credit Card?
Even with business credit cards, you have a range of possibilities to choose from. Before applying for a business credit card, determine by the type of card you need, which is typically determined on the kind of business you’re operating and the limit amount you need approved. Or, you could learn more about how to get business credit.
How Do I Get a Business Credit Card?
The most important criterion for being approved for a business card is that you have a registered business in your name. All LLCs, corporations, partnerships, sole proprietorships, and many other kinds of business are eligible to apply for a card. Another aspect you’ll be judged on is revenue. You need to be making at least a certain amount of money before applying, as credit card providers determine the limit based on your income.
Besides this, there are no specific requirements or restrictions as to who can get a business card. You may also be asking, can I apply for a business credit card without a business? You need to have some form of a registered company, but almost anyone is eligible for a business credit card—even independent contractors and freelancers can get one. Even if this is not your primary job, you can still list your side job as a business and be approved, as long as you’re making money from it.
If you’re just starting out, you can check out some of the sought-after small business credit cards. The business credit card requirements are similar to those for a personal card, and it’s relatively easy to get approved for both. The most striking difference between the two is in the reward points. Business cards get reward points on office supplies and online advertising, while personal cards get points for money spent in drugstores and grocery stores.
What Information Is Required for the Application?
Businesses often need additional funds at a moment’s notice. So many business owners opt for business credit cards, as they provide the fastest access to the needed funds. If you’ve also decided to take this course of action, you may be wondering how to apply for a business credit card? Fortunately, the application process is similar to getting a personal credit card. So if you’ve ever applied for one, you’ll have no difficulties. You need to provide some specific information about your business on the application, and you’ll be ready to go.
To start a business, you must have a registered business name—for the credit card application, too. Freelancers and sole proprietors should write their own names.
Listed Business Address
Another business requirement is that you have an address for your company listed on the incorporation documents, where you’ll also be able to receive mail. In addition, the credit card issuer requires this address as part of the official information.
Besides the physical address, one of the requirements for opening a business credit card is providing additional contact information, such as the business’ official email and phone number. In this way, the issuers ensure that you’ll be reachable at all times.
Length of Time in Business
Providers are interested to know how long you’ve been operating the business. If you have a new business, you can just input ‘0’ under this category.
When applying for a business credit card, you’ll need to report all income and profits of your business. You’ll also need to mention any outstanding company debt.
To determine your credit card limit, the issuer needs to know the number of expenses you plan on covering with the credit card balance. If you plan on paying for monthly expenses with the card, you should list all of these on the application.
You must provide your Tax Identification Number (TIN) on the application. If you’re operating a corporation, you should list the business’ Employer Identification Number (EIN). But if you’re running a sole proprietorship or LLC, you should list your Social Security number.
Type of Industry
Some (but not all) card issuers want to know in which industry you operate and what’s the exact nature of your business.
Number of Employees/Cardholders
Most applications require you to list the number of people your company employs and any additional cardholders besides yourself.
How to Get a Business Credit Card
Once you decide you’re going to apply for a business credit card, you need to know all the details about your business and learn how to open a business credit card.
Check Your Credit Score
The determining feature in business card approval is often your credit score. Before you apply, you should check your business’ credit score and make sure it’s in good standing. If you’re a start-up business owner, the card issuer will review your personal credit history, see if you have a good score, and make regular payments to other cards. The issuer needs to determine if you’re responsible for the credit you’ve been approved with.
Card issuers will also check your FICO score (Fair Isaac Corporation score), which is used to determine credit risk and whether or not the issuer should approve a line of credit.
But not all new businesses and business owners have stellar credit, so they may wonder how to get a business credit card with bad credit? In certain instances, if the company’s (or owner’s) credit score is not in the best shape, the issuer may approve only a secured credit card, which requires a cash deposit upon opening or another form of collateral. And they offer a limit that matches the value of the collateral or deposit you’ve made.
But if the owner makes regular payments to the card, they can establish a good record and then apply for an unsecured card with a higher credit limit.
Choose a Credit Card That Fits Your Needs
Before applying, you need to choose the appropriate card for your business needs. You may make your decision based on the benefits that come with the car. For example, if you want a card that earns you points, cash-back, or travel miles, you could use it for business trips.
What’s the trick as to how to get business credit cards? First, you shouldn’t aim too high when applying for business credit cards. Instead, you should focus on a card that will quickly be approved based on your existing credit score. And try to find one with lower interest rates, small (or non-existent) annual fees, or other benefits, such as a 0% introductory APR on all new purchases.
Apply for the Credit Card of Your Choice
Once you’ve found the card that fits your needs and requirements, research the process of how to open a business credit card. After choosing the card issuer and the type of card you’re applying for, you need to submit the application. Finally, you must fill out all the required information on the application and provide any additional attachments.
Then you need to submit the application and wait for a response. The approval could be immediate if you apply online and fulfill all the requirements. Or, it could take up to a month if the provider needs to conduct a more detailed check. Card issuers consider many factors when approving your card, such as current or expected revenue, the owner’s credit score, how long you’ve been in business, and if there are any additional guarantees to support your application.
Activate Your Card and Use It Responsibly
After getting a business credit card, the owner has to activate the card, following the activation instructions that come with the card. At this point, the essential part about having a business credit card begins: usage. The users must use the card responsibly and only for necessary expenses; otherwise, they could risk accumulating debt and ruining the company’s credit score.
If a debt is accumulated to your company’s name, you cannot hide behind the corporate veil and avoid paying it—which is why you need to make at least the minimum required payment to the credit card balance each month.
Business credit cards are an efficient way to gain access to funds for your business. But before you apply for a business credit card, make sure it’s the best source of finance for your business. Then, after you’ve decided on getting a business card, you need to make sure that you qualify for one and choose the one that matches your business’ needs. The last step is to complete an application and wait for approval.
If you’re still in doubt about how to qualify for a business credit card, don’t worry. You need to be a business owner, have a tax identification number and a good credit score, and you’ll be eligible to apply for a business credit card.
Small businesses can be approved for business credit cards with credit scores between 640 and 699. But some credit card issues require even higher scores. And a select few approve cards for businesses with a bad or non-existent credit score.
If you’re an LLC owner, you might have thought about how to get a business credit card? For example, you could apply for a card based on your personal credit score and be approved for various business credit cards for official business.