Do You Need a Business To Qualify for a Business Credit Card?

ByG. Dautovic
May 18, 2022

If you're thinking about applying for a business credit card, you may wonder whether you need to have a business to qualify. The short answer is: it depends. Some business credit cards require you to have an established business in order to apply, while others are more flexible and will consider applicants with less formal business structures.

In today's article, we'll look at what you need to know to qualify for a business credit card and answer the question: “Can you get a business credit card without a business?” 

We will also go through some different types of cards and explain the benefits of using a business credit card over a personal one. So, do you need a business to qualify for a business credit card? Let's find out.

What Is a Business Credit Card, and How Does It Work?

A business credit card is a type of card designed for businesses. You can use it to buy things, take out money, and transfer money between different accounts, just like a regular credit card. But business cards come with extra features that are designed to help businesses. For example, you might be able to get a discount when you buy things with your business credit card.

Signing up for a business credit card is an excellent idea as business credit cards also help you keep track of your spending. You can see how much money you've spent in a month and what you've been spending it on. This can be helpful when it’s time to do your taxes or if you need to cut back on your spending.

Business cards work by giving you a line of credit. This is an amount of money that the bank or credit card company agrees to lend you. You can use this money to buy things and then pay the credit back over time. Usually, you'll have to pay interest on the money you borrow, but business credit cards often have lower interest rates than personal credit cards.

Different Business Credit Card Types

There are a few different types of business credit cards available, and each one has its own set of benefits. The most common type of business card is the standard credit card, which allows you to make purchases using your business's credit limit.

Another popular type of business card is the charge card. This card type doesn't have a set credit limit, but you will need to pay off your balance in full each month. Charge cards can be a great option for businesses with irregular income or business owners who want to avoid accruing interest charges. 

Finally, there are also small-business credit cards that offer various rewards, such as points or cash back rewards on purchases made using the card. These cards can be a great way to save money on business expenses or earn rewards that can be used for future purchases.

No matter which type of business credit card you choose, be sure to use it wisely and always make your payments on time to avoid damaging your business's credit rating.

How Do You Qualify for a Business Credit Card?

There are a few things to keep in mind if you are interested in qualifying for a business credit card. 

The first is to make sure that you meet the eligibility requirements. This will vary from lender to lender, but most cards require that you have an established business.

The second thing you will need to do is prove that you are a responsible borrower. This means having a good credit score and history. The better your credit, the more likely you will be approved for a business credit card.

The last thing you need to do is provide financial statements from your business, which allows the lender to see how well your business is doing.

If you meet these criteria, you should have no problem qualifying for a business credit card.

How To Get a Business Credit Card?

If you're interested in getting a business credit card, you should first research the different types of available cards and compare their features. 

Once you've found the right card for your business, you can apply online or in-person at a bank or credit union. The lender will ask you to provide some personal info and your business's financial information.

If you're a small business owner, you may also be able to get a business credit card through your personal credit card issuer. This can be a good option if you don't have time to research different cards or are just starting out and don't have a lot of financial history to show.

Once you have finished applying for a business credit card and it has been approved, you can start using it to make purchases and build up your credit history. 

It's important to pay your bills on time and in full every month, as this will help you build a strong credit score.

What Are the Benefits of Using a Business Credit Card Over a Personal One?

There are a couple of benefits of using a business credit card over a personal one. Let's see what they are.

Higher Credit Limits

One of the main business credit card benefits is that the credit limits are generally higher than those found on personal credit cards. 

This can be extremely helpful if you have large purchases to make or need to carry a balance from month to month. It is also handy if you are trying to rebuild your credit, as it will allow you to spend more without maxing out your credit limit.

Points for Business Expenses

With a business credit card, users can rack up points for common business expenses such as travel, office supplies, and gas. 

They can then redeem these points for cash back, gift cards, or travel expenses, which is a great way to save money on business expenses.

No Personal Guarantee Required

When you sign up for a business credit card, the credit card issuer will not require a personal guarantee, meaning that if your business cannot pay the debt, you will not be held personally responsible for it. 

On the other hand, with a personal credit card, you would be responsible for the debt, potentially damaging your credit score.

Discounts for Early Payment

Many business credit cards offer discounts for early payment, which can be a great way to save money on your monthly expenses and help you avoid late payment fees. 

Be sure to check the terms and conditions of your business credit card agreement to see if you are eligible for this type of discount.

Additional Perks

Now that you know how business credit cards work, let’s also look at some of their additional perks. These cards offer clients various advantages, such as travel insurance, extended warranty protection, and purchase protection

Such benefits can save you a lot of money and give you peace of mind when making business purchases, which is why they are worth considering when choosing a credit card.

We have seen some of the benefits of using a business credit card. Now let's look at how to qualify for one.

How Are Business Credit Cards Different From Personal Ones?

Business credit cards can give you access to a higher line of credit and special perks that are not available with a personal card. One of the most important benefits is that, as the account holder, you will be responsible only for your business expenses and not the combined business and personal expenses. 

So if you’re asking yourself: “Can I get a business credit card?” the answer is yes. However, you should be aware of a few things before taking the plunge and ensure to get the best business credit card for your needs.

Another thing that differentiates business credit cards from personal ones is reporting business expenses. 

With a business credit card, you will get a separate statement for your business expenses to itemize all of your charges. This can be helpful come tax time as you can easily see what costs were incurred for business purposes.

Final Thoughts

If you're looking for a credit card to help with your small business, it's important to understand the benefits and drawbacks of each type. You should compare different offers to find the card that best suits your needs. 

Read the fine print and understand the terms and conditions before you apply for a business credit card to ensure you are getting the best deal possible. With a bit of research, you can find the perfect business credit card for your small business in no time.

FAQ

Can I get a business credit card if my personal credit is bad?

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If you have a bad personal credit score, it is unlikely that you will be approved for a business credit card. Business credit cards are mainly made for those with good credit scores, so you may not be eligible if you have a history of missed payments or high debt levels. 

However, there are some cards that are designed for those with bad credit, so it is worth checking out these options as well.

Can you get a credit card with an EIN number?

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The employer identification number (EIN) is a nine-digit number used to identify businesses for tax purposes. 

Most credit card issuers require a Social Security number when customers apply for a business credit card. So even if you have an EIN, you will most likely have to provide your Social Security number as well.

What credit score do you need to open a business account?

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There is no definitive answer to this question as it varies depending on the credit card issuer. However, it is generally recommended to have a good or excellent credit score before applying for a business account at your bank of choice.

So, can you get a business credit card without a business? You definitely can. However, you'll likely need a strong credit score to qualify.

About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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