How to Get a Business Credit Card
A business credit card is very much like any personal credit card. The only difference is that, where personal credit cards are used for settling individual expenses, business credit cards are intended for use in business purposes. Your business’ size is irrelevant here, as any business of any size is eligible for a business credit card.
Business credit cards help businesses build their credit profiles. This can, in turn, help these businesses gain better borrowing terms in the future. A business credit card gives businesses credit based on their worth. In this article, we’ll discuss how to get a business credit card for any business.
How Does a Business Credit Card Work?
Business cards are issued the same way regular personal credit cards are issued. Numerous lending institutions issue them out, so there is a vast market for them. Applications can be made and approved with or without an Employer Identification number, so it’s relatively easy to get a card.
Business credit cards are an even faster option if your business needs credit facilities because it takes less time to make a credit decision on cards than it does with regular loan facilities. The limit set on the card is the agreed amount that can be outstanding on the card.
Getting business credit cards means you have to deal with higher interest rates when you begin to repay, however. This is because credit card loans are not secured with any form of collateral, and lenders face a higher risk.
Who Can Apply for a Business Credit Card?
Business credit cards come in several types. There are business cards meant for large corporations with many cardholders, and there are cards created for small businesses with just a few cardholders.
Some of these cards have expense and reimbursement policies, as well as special needs, but ultimately one thing is guaranteed: Anyone can get a business credit card; it just depends on their creditworthiness to determine which type they can get.
Secured credit cards are usually recommended to businesses with a low credit history.
Lending institutions take into account several factors when reviewing credit card applications:
Type of Organization
Some lenders don’t issue cards to businesses like nonprofits or sole proprietorships.
Some lenders avoid certain industries; hence they will not extend credit to businesses operating in them.
Lenders consider applicant qualifications as well, such as their credit score or income.
One piece of advice for the application process is to find an issuer that best suits your specifics. Whether big or small, your business can find the perfect credit card company.
How To Get a Business Credit Card for a New Business
If your business is fairly new and doesn’t have any valid credit history, fret not. It doesn’t mean you or your business are disqualified from applying for a credit card. Instead, the lack of credit history just prompts the issuing company to consider your personal credit. And this can be a good thing.
Business owners may be apprehensive that the fact their businesses haven’t yet started generating large profits will affect their applications. There is no need for that. You just need to indicate the lack of a detailed credit history in your application and provide information essential to the approval.
Here are some details you need to provide when you apply for a business credit card:
- Tax Identification Number: If you don't have a separate tax ID for your business (and many entrepreneurs don't), you can use your Social Security number.
- Your Business Name: If you are a freelancer, just fill in your name.
- Business Type: Is your business a sole proprietorship, a partnership, or a limited liability company? You need to indicate the structure of your business in your application. Whichever it is, they are all eligible for credit cards.
- Revenue History: If your business is very new, you can just fill $0 in the application.
- Phone Number and Address: This can either be separate contact details for your business or your own details if they aren’t different.
- Business Start Date
- Industry Type
The “How to get a business credit card for a new business” process also requires that you provide a personal guarantee. Personal guarantees enable your new business to get a credit card. It details all your personal information and is a guarantee that you are responsible for the credit given on the card, and your personal assets can be used to cover any debts.
A hard credit check will be conducted on your score to gain more insight into your money management habits. Some of the details you’ll need to provide with the personal guarantee are your name and job title, address, phone number, annual income, Social Security number, the ownership percentage of the business, date of birth, and email address.
There are some factors that you should look out for when getting business credit cards. These include:
- Annual fee: Some cards have annual fees that, in turn, give you perks. You should, however, find out how much these fees cost, so you can choose what’s best for you.
- Special Rewards: Some cards can offer you immense value with the rewards they give when you use them. It’s best to confirm if these benefits and rewards are of actual value to you.
- Traveling Features: Foreign costs on cards can be expensive. If you or your business travel a lot, you might want to pick a card that doesn’t charge foreign transaction fees and saves money for you.
Here’s a list of credit card companies you might consider.
How To Get a Business Credit Card with Bad Credit
If you or your business have bad credit, that could make the application process for credit cards difficult. It’s not impossible, however. You just need to build up your credit score first.
Credit scores are important in the lending process because they help the lenders assess a potential borrower’s creditworthiness. If you have bad credit and you need to get a credit card for your business, the smart thing would be to find ways to build up your score.
One great way to find out why your score is low is to check your credit reports, which you can get from any of the credit bureaus. It’s one of the recommended approaches on how to get a business credit card with bad credit.
When you move your score up to a good level, applying for a card will become much easier. And when you get the business credit card, be sure to avoid any practices that could drop your score. Make payments on time, and when your cards are maxed out, try reducing the balance below your credit limit.
Business Credit Card Pros
Business credit cards come with a range of benefits that serve as incentives for customers, usually not extended to individuals. Examples include travel perks, flexible repayment terms, or cashback on purchases.
Business credit cards are excellent at giving businesses separate identities. This is one of the reasons most businesses apply for a business credit card in the first place. With this separation, accounting for expenses and tax is made easier, and there are no mix-ups.
Business Credit Card Cons
Personal guarantees could be considered the downside of business credit cards.
Meeting the minimum requirements for a credit card can be challenging. To make up for this, lenders usually request personal guarantees, which hold the owners and their assets responsible for payments.
Some issuing companies ask for personal guarantees even when businesses meet the requirements, so it’s important that you read the fine print in credit card offers so you know what you are getting into.
Note that any negative reports about your business could be transferred and damage your personal credit score.
How To Get a Business Credit Card Without a Business
There is almost no distinction between applications for business credit cards and personal cards. So, even if you don’t have a business, you can apply for a business credit card; and register your name as a business.
You would need to provide your tax identification in your application, and if you don’t have one, your Social Security number will suffice.
A Separate Identity with Special Perks
A business credit card is an excellent way to give your business its own identity and separate it from your personal dealings. Applying for a credit card is easy; you just need to follow the guidelines.
No matter the kind of business you run, figuring out how to get approved for a business credit card is one of the easiest things to accomplish in the business environment.
You only need to tick a few boxes: have a business you make profit with; apply for cards that suit your credit score and pick the best offers; fill an application with your EIN or SSN, and you should be good to go.
There are several business credit cards with easy approval processes. You can check our detailed reviews for the best credit cards.
Yes. Anyone with a business can apply for a card.
Figuring out how to get a business credit card for the first time might look daunting, but it really isn’t that difficult at all.
You need to know your credit standing by calculating your credit score, do research on credit companies and cards that best fit your business and its style of operation, fill out your application for the card, wait for approval, and voila! You have your card.
However, you should remember to use your credit card wisely, or it could lead to a pile of debt and damage your credit score.
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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