How to get a business credit card? Many business owners are searching for the answer to this question without even knowing that they are eligible for it. Explore here!
How to Get a Business Credit Card in 3 Easy Steps
If you’re looking to get a business credit card, the process may be more involved than getting a personal credit card. In all honesty, it’s not extremally hard to start a business.
So, let’s just say you want to be a dog walker, you can easily become one and it will be a legit business called sole proprietorship.
It is a business entity where you are the business and for tax purposes, everything is tied to your social security number.
Even if you are planning to start a business but have no source of revenue, you can still get a business credit card and a business checking account without having a physical location or even a business website.
Your credit score is usually used as an indicator of how responsible you are with money and serves as an indication of how much debt you’ve accumulated.
Also, keep in mind that having a strong personal credit score can be beneficial when applying for small business loans or lines of credit in the future.
Benefits of Business Credit Cards
There are so many other things to consider but, before diving deep into the question and its answer, let’s look at some of the benefits of having a business credit card.
1. Increased Cash Flow
When you use a business credit card for expenses, you can later pay off those charges over time instead of all at once. This helps improve cash flow and keeps your finances organized.
2. Tax Savings
Businesses can write off certain expenses incurred with their business credit card on their taxes each year. This reduces taxable income and saves money on taxes overall.
3. Easier Tracking of Expenses
Not only can it help you build business credit, but it also provides added convenience and flexibility when it comes to making payments and purchases.
It is easy to track expenses when they are all charged onto one account (your business credit card). This makes bookkeeping and accounting much simpler tasks.
Factors for Choosing the Right Business Credit Card
Let’s look at some of the factors you must keep in mind, as a business owner, before choosing your business credit card.
1. Credit Card Fees
Inquire regarding the different fees from the bank. Fees like annual fees, subscription fees, transaction proceeding fees, and more on your business credit card.
Also, inquire about the bank-provided interest-free credit period, so you know about the interest to be paid and the right card to choose.
2. Bonus on Sign-up
After spending a particular amount, on every dollar you spend, you might get an introductory bonus, or sign-up bonus, on spending the amount in the initial months of signing up.
This bonus will give your business a head-start, especially since it is one of the small business credit cards, but you must compare it with the credit card’s annual fee.
3. Different Costs as well as Business Expenses
Searching for a credit card with a low-interest rate, maybe even a 0% sign-up rate offer for balance transfers or eligible purchases, is going to be the best thing to keep down your interest rate, especially knowing that you will have to carry a balance.
Almost all credit cards have a variable APR that will change with the change in the interest rates in the economy.
And a low-interest credit card will be offered to you, partly, based on your credit score. The chances of getting that business credit card will increase with your credit scores.
International travelling business owners will want to look for a business credit card that won’t charge foreign transaction fees from them.
4. Rewards
Inventory charges can be decreased significantly if you choose a credit card that offers many different rewards and benefits.
If your business requires a lot of travelling, select a card that will give you miles for travel and reward points. Knowing these rewards, benefits, and cashback will be quite beneficial.
How to Get a Business Credit Card: The Steps
Getting a business credit card is important in taking control of your finances and maximizing rewards.
The right card can help you save money on everyday expenses while giving you access to perks like bonus points and exclusive offers.
To ensure you choose the right card for your business needs, it’s important to consider factors such as personal credit score, monthly expenses, expense management tools, combined purchases, and the types of purchases your business typically makes.
When looking for a business credit card, consider features such as credit limit (which determines how much you can spend) and statement credits which help reduce costs.
Credit line options are also vital as they give you flexibility when it comes to paying back any amount that exceeds your available credit.
Finally, keep in mind that certain cards may require membership fees so always read the fine print carefully before applying.
1. Eligibility for a Business Credit Card
A high personal credit score (7–9 on a 0–10 scale) is preferred when applying for any loan or card, so make sure you keep an eye on your credit history.
When applying for a business credit card, most card issuers will ask for both personal and business information to determine whether or not you qualify for the account opening.
Some of the card issuers will also require some form of security deposit such as a personal guarantee from you before issuing the account.
Additionally, some card issuers may want to check your business’s financial history through some major consumer credit bureaus and commercial credit bureaus.
Some places for the same are Dun & Bradstreet or Equifax (you can also check your personal credit report and credit score) to make sure that your company can meet its payment obligations on time.
Make sure to read up on all of this information before signing up for an account so that there are no surprises later down the road when you try to access financing or receive rewards points.
2. The Type of Card You Need
It’s very important to understand the type of card that best fits your business needs – whether it’s a travel rewards card, a balance transfer card, or a business advantage card.
So, you must select the best business credit cards.
2.1. Cash Back Business Cards
The versatility of cash-back business cards is unmatched. The rewards that you earn can be redeemed by depositing into the card account/ bank account or as a statement credit.
Some cash-back cards will earn you the same rewards on all eligible purchases (on every dollar spent), but others will vary depending on where you spend them like office supply stores, phone and internet providers, and gas stations.
2.2. Travel Credit Cards
If you have to travel a lot for your business, consider getting a credit card that will give you travel benefits like airport lounge access and other benefits like reward points on travel expenses.
Some travel credit card companies give more rewards if you take up their card membership.
2.3. 0% APR Cards
Selecting a 0% APR credit card (introductory) will help you in financing a larger-than-normal purchase and even in consolidating currently present debts.
3. Apply for Your Business Credit Card
Getting a business credit card is an essential part of starting and running a business, whether it’s a small business or a start-up.
3.1. Apply for Small Business Credit Card
You need to submit the business credit card application form online to the business credit card issuers.
In addition to your personal information like name, birth date, Social Security Number, phone number, monthly rent/mortgage payment, email, home address, and annual income, you will have to give your business information like legal name, phone number, and address of your business.
Business type (corporation, co-operative, etc.), Business structure, Federal tax identification number (your EIN and/or SSN), Number of employees, Annual Revenue of the business (approx.), Monthly credit card expenses and revenue (estimated).
If you have business partners or beneficial owners, with a 25% share in your business, you will have to submit their information as well.
3.2. Apply for Business Credit Card for Start-up
When applying for a business credit card for your start-up, then, with all your personal information, also give the following information:
- Legal name, phone number, and address of your business
- Business type (corporation, co-operative, etc.)
- Business structure
- Federal tax identification number (your EIN and/or SSN)
- Number of employees
- Annual Revenue of the business (Approx.)
- Monthly credit card expenses and revenue (Estimated)
Frequently Asked Questions
1. How do I start taking credit cards for my business?
As long as they want to keep their personal and professional expenditures separate and have excellent to outstanding personal credit, the majority of business owners are eligible for business cards.
It is not necessary to have a storefront or many employees, although a better card may demand proof of income. Start by locating a small company credit card processing service.
2. Who is eligible for a business card?
Anyone with a strong credit history who is a self-employed professional, entrepreneur, or partner between the ages of 21 and 70 is qualified for a business card.
3. Can I get a business credit card in my name?
Just like other enterprises, sole proprietors can apply for business credit cards. If your company has a distinct mailing address and telephone number from your home, give those details.
Bottom-Line: How to Get a Business Credit Card
Now that you know how to get a business credit card, you should apply for yours and enjoy the financial freedom your business gets from it!
Last Updated on March 7, 2023 by Gourvi gupta
