Thinking about applying for a business credit card? Smart move. Using a business credit card comes with a lot of perks for small business owners. Plus, applying for a business credit card is a great secondary financing option when you’re in the need for financing but don’t necessarily qualify for a more traditional business loan just yet.
How to Get a Business Credit Card in 5 Simple Steps
You can use one for backup business financing, to build business credit, to cushion your cash flow, to earn rewards on your purchases… The list of benefits goes on and on. In fact, it’s hard to find a reason not to use a business credit card for your small business.
So you’re fully convinced of why you need a business credit card, but do you know how to get a business credit card?
It’s not all that different than applying for a personal credit card. But it’s more than just clicking the “apply” button on the first business credit card offer that comes your way. If you want to get the best business credit card for your business, it’ll take some thought and consideration on your part.
Wondering how to get a business credit card that fits your business? Use this guide to find out.
How to Get a Business Credit Card: Follow These 4 Steps
If you need help on how to get a business credit card, don’t worry—it’s a relatively painless process, but only if you do it right.
Here are the 4 start-to-finish steps you need to take to get a business credit card that fits your needs perfectly.
Step 1: Decide between a business credit card or a business charge card.
If you’re wondering how to get a business credit card, we’ll ask you this first:
Are you sure that it’s a business credit card that you want?
If you’re shopping around for business credit cards, you have two options: a business credit card and a business charge card. What you decide to apply for will depend on the financial strategies and structure of your small business. But here’s what sets the two apart:
Balance and Interest
The balance and interest on a business credit card works no different than your average personal credit card. You can roll your balance over from month to month, as long as you’re making the monthly minimum payments on the card. And as your balance roles over, it’ll accrue interest along the way. For your credit score and your wallet, it’s best to make your payments each month on your business credit card. However, you do have the flexibility to roll over payments when you need to.
Business charge cards, on the other hand, need to paid in full every month. And if you miss a payment, you’ll get charged a sizable late fee—usually 3% of the balance. Plus, if you’re late on the payment, you risk getting your line of credit suspended. On the bright side, if you pay in full every month, you won’t need to deal with interest on your expenses, any surprise fees, or outstanding debt.
Business credit cards come with a preset spending limit based on your personal and business finances. If you spend below that limit, you’re all set. But if you go over your spending limit, your transaction could be declined or you could be charged for it.
Business charge cards don’t come with a preset spending limit, giving you the flexibility to make large purchases without hitting your limit. This is sometimes preferable to a business owner who doesn’t necessarily always know how high their expenses will be each month. With a business charge card, you have the capacity to cover expenses no matter how steep they are. Just remember—you’ll need to pay off that balance before the end of the month!
Step 2: Look up your credit score.
The next step for how to get a business credit card?
See where your credit score stands. This shouldn’t come as a huge surprise—you are applying for business credit, after all.
Every business credit card issuer will consider your personal and business credit score (if you have one) on your application. But your personal credit score will be the major decider in what business credit cards you can get (this isn’t unlike your personal credit score and your business loan eligibility). Your personal credit score is especially important if you don’t have much (or any) business history under your belt.
Your credit score helps creditors gauge how responsible you are with your finances. If you’ve been a responsible borrower in the past, odds are you will be in the future.
And if you have a less-than-stellar credit score, don’t worry—you’re not out of the running for all business credit cards. But you will have limited options. Know which business credit cards are an option for you before you apply, or consider secured business credit cards instead.
Step 3: Be Prepared to Present Your Annual Revenue
When you apply for a business credit card, almost all issuers will want to see how much revenue your business is bringing in.
After all, they won’t approve a credit card if they think you don’t have the means to pay off your balances.
That’s why they’ll want to see how much you’re bringing into your business on an annual basis.
But what if you just started your business? Are there still credit card options for you, despite the fact that you likely can’t show an annual business revenue just yet?
Absolutely. This is no reason for a startup owner to avoid getting a business credit card—all startup owners should have a business credit card!
If you’ve just started your business, you can include your personal income on your application. In fact, you might even need to include your personal income on your business credit card application even if you do generate business revenue. In this case that you don’t generate that much business revenue—or none at all—a credit card issuer can use your personal income for reassurance that you’ll be able to pay your business’s credit card debts back.
Remember, businesses without a proven track-record will need to lean on the business owner’s personal track record to qualify for its first credit accounts.
Step 4: Know what you need from your business credit card.
Wondering how to get a business credit card?
Well, you can’t even approach applying for one until you’re sure you’ve found the best option for your small business.
So, have you considered what you need from your business credit card?
Not every small business credit card is created equal. In fact, there’s a large spectrum of business credit cards out there.
Some cards offer bonus points when you spend on the card, and some just offer easy, cash back savings on your purchases. And on top of that, certain business credit cards let you earn and maximize your rewards on specific spending categories—like travel, hotels, gas, office supplies, or entertainment.
Some cards offer valuable sign-up bonuses that can have real returns once you start using the cards. (If that’s appealing to you, check out Chase’s Ink Business Preferred—it has the best sign-up bonus on the business credit card market right now!)
Before you just sign up for any card, you need to think carefully about how your business operates and how you plan on using your business credit card. Only you will know what you spend the most on for your business and the best way you can maximize your earnings.
Once you have a good idea of what kind of business credit card you need, do a side-by-side comparison of the best options.
Which card lets you earn the most cash back, bonus points, or perks for your business? And which business credit card saves you the most rates and fees?
These are the questions that you’ll need to answer to make sure you’ve found the right fit in your business credit card.
Step 5: Apply for your business credit card.
Now for the heart of the matter: how to apply for a business credit card.
Well, there’s really not much to it—online applications make it pretty simple to apply for a business credit card. Once you’ve found the right business credit card for you, sign up for it online! There are a lot of different business credit cards out there—ones that offer cash back rewards, bonus points, or travel rewards. Compare all your business credit card options to find the best match.
When you find the right one for you, here’s the business information you’ll usually need to provide:
- Your legal business name (or your Doing Business As name)
- Contact information for your business
- Industry type
- Company structure (corporation, partnership, or sole proprietorship)
- Time in business
- Number of employees
- Annual business revenue
- Estimated monthly spend on the card
- Federal Tax ID (or your Social Security number, if you don’t have a Federal Tax ID)
As the owner of your business, you’ll also need to provide the following personal information:
- Contact information
- Social security number
- Personal annual income
- Personal outstanding debt (like mortgage or car payments)
If you’ve been in business for a few years, your personal information won’t be as important in your business credit card application. But if you’re a startup and you’ve just registered your business, credit card companies will weigh your personal financials a little more heavily in their decision to extend credit to your business.
As one of the decision-makers for your business, you’ll be the one who signs your business credit card application. Keep in mind that most of the business credit cards on the market require a personal guarantee. So when you sign that application, you’re agreeing to be personally responsible if your business can’t pay its credit card debts.
After you submit your application, you can expect to hear back quickly—sometimes within seconds!
If you’re approved for your business credit card, activate it as soon as you get it in the mail. Then you can start using it—responsibly—right away. The credit limit you’re approved for generally depends on how strong your credit score is, and what your (or your business’s) income is. Sometimes issuers are conservative when extending credit limits at first to make sure that they’ll get their money back. Although business credit cards tend to have higher credit limits than personal credit cards do in the first place.
If you’re not approved for the card, figure out why. Under the Equal Credit Opportunity Act, lenders are required to tell you why your application for business credit wasn’t approved. If it was a credit score issue, you can take steps to start improving your credit score so you have more options down the road.
The Next Step? Use Your Business Credit Card Responsibly
How can you get a business credit card?
Well, follow that 5 step guide and you’re well equipped for applying to business credit cards.
And once you’re approved, congrats! You’re well on your way to boosting your business credit score while earning rewards on your purchases.
But remember: once you’re approved for the right business credit card, the work isn’t over. In order to get the most benefit from your business credit card, you’ll need to use it responsibly.
As long as you’re following the business credit card best practices—spending wisely and paying off your balance on time and in full—you’re in great shape!
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