How to Get a Business Credit Card 

Written by Banks Editorial Team
7 min. read
Written by Banks Editorial Team
7 min. read

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If you recently launched your new business venture, you’ll need capital to help you grow. The same applies to existing business owners looking to scale. You can get loans, lines of credit, and other types of financing to get the capital you need, but business credit cards are one of the best options around. Business credit cards are a convenient way to access funds, but you should understand how they work and what you’ll need to be eligible for a business card before applying with a credit card issuer. 

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What is a Business Credit Card?

A business credit card is a revolving debt product catering to small business owners and entrepreneurs. Like traditional credit cards, they can be used at the point of sale or online to complete transactions. Still, they should only be used for business expenses. 

It’s not uncommon for business credit cards to come with higher limits than you’ll find with personal credit cards. Furthermore, many have generous cardholder perks to make them more attractive to potential customers. 

Common Requirements to Get a Business Credit Card

Below are some general guidelines to be mindful of when applying for business cards. Remember that each credit card issuer has its own requirements that could be more or less stringent than what’s listed below. 

Identification Documents

You will need to provide personal information, such as your legal ID, social security number, and employer identification number, during the business credit card application process. The issuer wants to make sure they are speaking with the right person. Credit card companies have encountered many fraudsters and use these protective measures to minimize the likelihood of someone pretending to be you.

Business Income

Credit card issuers want to know you can comfortably make monthly payments and ultimately repay what you borrow over time. Consequently, they’re interested in how much you earn from both your business and other sources, along with how much you pay for financial obligations. In addition, credit card issuers want to know that you have enough of your annual revenue left over after other debt payments before giving you a business credit card. 

Time in Business

Most credit card issuers require you to disclose the amount of time you’ve been in business. However, the minimum amount of business experience you’ll need varies by the credit card issuer, and some will approve you for a business credit card even if you’re just getting started. Others may require 1-2 years of experience to apply for a business credit card.

Personal and/or Business Credit Scores and History

Your personal credit scores and history are both assessed by credit card issuers to determine if you’re a good fit for a business credit card. If your credit score is on the lower end, you could be denied a business credit card. Having adverse-credit items, like collection accounts and bankruptcies, in your credit report will make it more difficult to obtain a business credit card. These negative items indicate you may have struggled to responsibly manage debts in the past. And if the credit card issuer decides to give you a chance to prove you’ve turned a new leaf, expect a high annual percentage rate (APR) and annual fee.

If you’ve been in business for some time and established a business credit history, it may hold weight when you apply for a business credit card. Issuers may be happier to work with you and even offer a lower interest rate for your card. However, many credit card companies also consider your personal credit profile unless you’re applying as a corporation. The way you manage your personal finances can tip off your ability to manage corporate finances.

You’ll also need to disclose the type of business you have. It could be a sole proprietorship, partnership, corporation or limited liability company. You may need to provide additional documents depending on your company’s business structure.

Guarantees

Most credit card companies require business owners to provide a personal guarantee when applying for business credit cards. It means you’ll be on the hook for the total amount owed if the company experiences financial difficulties and the account becomes delinquent. A personal guarantee also means the past due balance and late payments could be reported to the three major credit bureaus – Experian, TransUnion and Equifax – and negatively affect your personal credit rating. However, if you keep up with business credit card payments, it can reflect positively on your personal credit score as well.

Typical Process How to Get a Business Credit Card

Are you ready to apply for a small business credit card? Follow these four steps to streamline the application process and get the capital you need for your company minus the hassle. 

1. Determine Which Business Credit Card is Right for You

A simple online search for business credit cards will give you several options to choose from. But how do you know which are best for your company’s needs? It depends on your financial profile and what you’re looking to accomplish. 

For example, if you’re looking to make a few big-ticket purchases soon and would prefer to finance them while paying little to no interest, consider a card with a 0 percent introductory APR. You can purchase what you need without exhausting your cash reserves and avoid interest if you pay the balance in full before the promotional interest period expires. 

Or maybe you’re seeking a credit card that features travel and cashback perks. In that case, a business rewards credit card could be best. Business credit cards often feature attractive rewards programs that provide more perks and points than personal credit cards.

Be sure to reference the fee schedule before applying. Some cards boast impressive interest rates but come with steep annual fees that may not make them the best option for your financial situation. 

Fund&Grow - Business Credit Lines
Obtain up to $250,000 of Safe & Easy-To-Use Funding. 0% Introductory interest rate. 30,000+ Businesses with over 1.4 Billion dollars of growth capital funded.

2. Check Your Eligibility, Including Credit Scores

Each credit card has a minimum credit score requirement. The credit card issuer may not disclose this number, but you can possibly get pre-qualified on their website to see where you stand. Pre-qualification can help you avoid hard credit inquiries for a business credit card application destined for rejection. It’s better to avoid the credit score hit and focus on a card provider that will approve your application. You may also find that your score is on the lower end, and you’re better off working towards improving your credit score to qualify for more competitive business credit card offers. 

Another option for business owners with a minimal credit history or lower credit scores is a secured credit card. It requires a security deposit that’s typically equivalent to the credit limit. 

It’s also worth reviewing your credit report to identify any errors that could be dragging your score down. If so, file disputes promptly to have them resolved. 

3. Prepare Requirements and Documentation

Be sure to complete the credit card application in its entirety and provide accurate information. Also, ask the credit card issuer about any documentation requirements they may have so you can prepare what you need beforehand. That way, you’ll avoid hiccups and delays during the application review process. 

4. Submit Your Application and Wait for Approval

It’s possible to receive an application decision within minutes of applying. However, some credit card issuers may delay issuing a decision and request that you submit additional documentation to substantiate the responses you input in the application. 

Advantages of Getting a Small Business Credit Card

The best business credit cards from companies like American Express and others provide several advantages for small business owners.

Build Your Business Credit Score

Wonder how some small business owners get low-interest rates and higher loan amounts? A high business credit score plays a significant role, and a business credit card can help. A business credit card establishes a line of credit, and on-time payments will improve your business credit card. As your credit score rises, you will qualify for better financing in the future. Some business owners take out secured business credit cards just to get started and then swap to unsecured credit cards once they build good credit.

Get Extra Financing

Businesses need money, and business credit cards provide the extra funding you need. Your credit limit varies depending on multiple factors, but you get more capital that you can use right away.

You Only Pay Interest When You Borrow Against the Card

A small business card is a great resource that you don’t need to borrow from right away. You won’t have to pay any interest if you don’t borrow from your card, and if you need the funds, you can wait patiently and buy what you need. Small business loans also provide capital, but you must immediately pay interest on them, even if you took out more money than you needed. You can use your business credit card right away or wait a bit to ensure you are making the right investments for your company.

Enticing Bonus Points and Travel Rewards Programs

The best credit cards have great bonus points and travel rewards programs for their customers. You can get cashback and rewards on every purchase and use them to make additional business investments. Most business credit cards have more enticing rewards than personal credit cards, but you can only use a small business card for company expenses. 

Disadvantages of Getting a Small Business Credit Card

While business credit cards offer several advantages, they aren’t perfect. Keep these disadvantages in mind before applying for a business card. 

Higher Interest Rates and Annual Fees

You only have to pay interest if you borrow against the business card’s line of credit, but when you do, you can expect a higher interest rate than average. Other financing options offer lower interest rates which reduce the burden of the debt. Most business credit card companies also charge annual fees to use their cards, and those fees are higher if you have bad credit or no established credit history.

You will also have to pay more money for a cash advance. Many credit card issuers charge cash advance fees, and those cash advances immediately show up on your credit card balance. As a result, interest will accumulate and can put you in a challenging spot if you fall behind on payments. 

Your Credit Score Can Take A Hit

Credit card issuers report your transaction activity to the major credit bureaus. While a business credit card is a great way to establish and build credit, having a card can hurt your credit score if you fall behind on payments. Most credit card issuers have a short grace period of 2-4 weeks in case you fall behind on payments, but it’s best not to rely on that perk. If your business credit score goes down considerably, it will become more difficult to qualify for financing, and you will have to settle for higher interest rates.

Most credit card issuers will immediately hurt your credit score by conducting a hard credit check. A hard credit inquiry is necessary for credit card issuers to assess your finances and determine their risk. Issuers may do this for your business and personal credit reports. A single hard credit check will reduce your score by a few points. It’s not a big deal, but if you apply for too many credit cards, the hard credit checks will add up.

The Personal Guarantee

Many business credit card providers and banks ask for a personal guarantee when you borrow money for your business. This personal guarantee makes you financially responsible for your company’s debt if your company cannot afford payments. While this is an inconvenience for a sole proprietor, the personal guarantee can get messy for business partnerships. For example, if you give a personal guarantee and your business partner spends carelessly, you could become legally responsible for the debt if you cannot pay it with your company’s revenue. 

Less Purchase Protection Than Personal Credit Cards

Business credit cards do not have the same level of purchase protection as personal credit cards. You may find it more difficult to get a refund on a purchase if something goes wrong. The best credit card companies offer some type of purchase protection, but this is usually more comprehensive for personal cards. 

Consider a Cheaper Alternative to Access Funds When You Need Them

Are you struggling to find business credit cards that are a good fit? Then, a cheaper alternative, like Fund&Grow offering up to $250,000 in safe and easily accessible capital, could work for you.

Its signature business credit card stacking membership features a host of benefits, including: 

  • Access to up to $250,000 in unsecured funding with 0 percent introductory interest rates for up to 18 months that isn’t reported to the consumer credit bureaus
  • Up to $100,000 of non-recourse corporate credit that isn’t tied to your personal credit profile 
  • Credit consulting and premium business coaching related to real estate, tax strategies, investing, incorporation, and so much more

Plus, there’s a 60-day money-back guarantee in case the done-for-you business credit card stacking membership doesn’t quite work for you. 

Take the first step toward unlocking funding for your business. You can fill out a simple form to request more information and learn how you can borrow up to $250,000 for your business.

Fund&Grow - Business Credit Lines
Obtain up to $250,000 of Safe & Easy-To-Use Funding. 0% Introductory interest rate. 30,000+ Businesses with over 1.4 Billion dollars of growth capital funded.

 

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