Requirements for a Business Credit Card
Every lender will have different requirements for business income, credit score, and other factors. However, you can usually expect a credit card issuer to review both your personal and business credit reports before making a lending decision—especially if your business doesn’t have its own credit history yet. Most business credit card companies will also require a personal guarantee, which means you’re personally liable for any balance or outstanding debt owed if the business can’t pay.
How Business Credit Cards Work
Business credit cards and personal credit cards share several similarities. If approved, you’ll get a revolving line of credit you can use to cover any business need that arises. And just like with your personal cards, you’ll need to:
Manage your business account responsibly by making timely payments. Pay interest on balances you carry over from month to month (unless you’re within an interest-free promotional period).
However, one key distinction between business and personal credit cards is that the Truth in Lending Act (TILA) only applies to business accounts in limited situations. The TILA was passed to ensure that lenders educate consumers about the terms and cost of the credit being issued. Fortunately, two important provisions of the law cover business owners. You can’t be issued a card unless you requested it, and you won’t be held responsible for fraudulent charges exceeding $50 if your card is lost or stolen.
How To Get a Business Credit Card
While getting a business credit card may feel daunting, the steps below can help guide you through the process.
Check Your Credit
It’s critical to first check your personal credit report and correct any errors that you find, which can include incorrect personal information, account status, balance, or credit limit. You can access your report from each of the three major nationwide credit bureaus for free by visiting AnnualCreditReport.com. If you spot an error, write a letter to both the credit bureau and reporting lender disputing the information. Make sure to include any paperwork that supports your claim. Your dispute must be investigated, and you have the right to contact the Consumer Financial Protection Bureau if the mistake doesn’t get fixed.
Research Card Options
There are many business credit cards on the market, so your next step is to research and compare the different options available. Here are some of the elements you should consider:
Card type (secured, unsecured, low-interest, etc.)Annual percentage rate (APR)Introductory interest rate Promotional interest rate Fees (annual, late payment, foreign transaction, cash advance, etc.)Rewards (points, airline miles, hotel stays, cash back, etc.)Eligibility requirements (credit score, business income, etc.)Credit reporting (ideally, the card should report to business credit agencies so you can build credit that’s separate from your personal file.)
When choosing which card to apply for, think about your business needs and goals. If you’re trying to save every penny and believe you may have to carry a balance, a card with no annual fee and a low interest rate may be your best bet. But, if you’re always traveling to grow and manage your company, a card that earns airline miles or hotel stays could be right for you.
Apply for a Card
Once you’ve identified the right business credit card for your company, it’s time to apply. Each issuer will have its own application form and will require different information to reach a decision. However, you should be prepared to provide several pieces of personal and business information, including your personal annual income, personal credit score, type of business, how long you’ve been in business, annual revenue, federal tax ID, and more.
Options for Those With Poor or Limited Credit
If your credit history isn’t great (or is non-existent), you may still be able to get a business credit card. For example, a business partner with stellar credit could co-sign on the application to increase your chance of approval. But if that’s not an option, consider these others below.
Secured Credit Card
A secured credit card is typically easier to qualify for because you have to give the bank a security deposit (hence the name) to open an account. The value of your security deposit becomes your available credit line. Once approved, you can use the card to make purchases. Timely payments demonstrate financial responsibility and strengthen your credit profile. If you maintain the account responsibly for long enough, the bank may switch you to an unsecured card, which doesn’t need to be backed by your own money.
Vendor Credit
To improve your credit standing (and cash flow), you could also apply for vendor credit. With this arrangement, you receive goods and services from your vendor now with the understanding that you’ll pay for them within a specified net term. As long as you pay within that time frame, you won’t get charged any interest. That means you essentially get a short-term interest-free loan. Your vendor probably will review your credit before approving your application. But, you can increase your chances of getting a “yes” by paying your invoices on time (or early) for a lengthy period before applying. Plus, you can start with a very short net term, like 10 or 20 days, to show you can handle the responsibility. Then, next time you apply for a business credit card, your list of vendor credit agreements in good standing may help you get approved.
title: “How To Get A Business Credit Card” ShowToc: true date: “2022-12-23” author: “Sudie Mathews”
We’ll look at some of the key benefits and how to qualify for a business credit card here.
Why Get a Business Credit Card?
Business credit cards are intended to give business owners and employees a payment method for business-related expenses—they are not meant for personal use. As such, the benefits and perks that you may find on business cards will usually be tied to business-spending categories like travel, office supplies, telecommunications, or shipping. Business credit cards make it easier to track business expenses—many offer expense tracking compatible with popular accounting software. They also provide a line of credit for times when you might need to make an on-the-spot purchase for the business.
Who Can Get a Business Credit Card
To apply for a business credit card, you have to own a business or be an employee authorized to apply for the card.
Basic Eligibility
Qualification requirements for business credit cards vary by issuer. For example, according to an American Express spokesperson, business owners—as well as up to 99 of their employees—can be eligible for an American Express Business Card account. Potential cardholders must be authorized by the company they work for to make financial decisions on its behalf. “We offer a variety of business card products to help entrepreneurs and long-standing business owners in any industry and at any stage of their business journey,” the Amex spokesperson told The Balance in an email. To apply for a Wells Fargo business credit card, your business must be established for at least six months, a Wells Fargo spokesperson said in an email to The Balance. “Wells Fargo will verify the business exists and is in active status as part of its due diligence, using public record websites so the customer does not have to provide proof,” the spokesperson said.
Credit Considerations
When you apply for a business credit card, issuers will still look at your consumer credit history. Most business credit cards require good to excellent credit scores (670 and up). “A strong personal credit score is a measure of financial health and can be a critical factor in determining eligibility for both personal and business cards,” the Amex spokesperson said. Issuers will typically consider your business’ financial health, too, including a look at revenue, business credit score, and the repayment capacity of both the business and the owner, Wells Fargo’s rep said.
Don’t Lie About Your Business
Card issuers will vet your business, so it’s not a good idea to try and pitch a hobby or small side gig as a full-fledged business. Wells Fargo says doing so could result in a decision to decline and American Express could put your account in default if it suspects you provided false business information in your application. For Chase business cards, the application includes a requirement that you agree to several conditions, including:
You or your employees will use the account for business and not personal, family, or household purposes.You are liable, both individually and jointly with the company, for payment of all balances.You are authorized to request this business card account.Rewards are redeemed for the company’s business purposes only.If you leave the company, you are still responsible for all account balances until the account is closed and paid—or until a new authorized user is substituted on the existing account.
Finding the Right Card
Choosing the right business card for your needs depends on a few factors.
Size of Your Business
If you’re a solo practitioner, your spending levels will be very different than a larger company that has a dozen authorized cardholders. Just like with consumer cards, some business credit cards are more entry-level (no annual fee and basic rewards), while others are more premium for big-spending business users.
Perks, Benefits, and Spending Requirements
You want to find a business card that aligns with your business’ spending style and offers rewards you can maximize and reinvest back into the business. For instance, the CitiBusiness AAdvantage Platinum Select Mastercard is geared toward business travelers who fly American Airlines, offering complimentary checked bags, preferred boarding, and frequent flyer miles on American flights. The card would be a good fit if your business requires frequent travel and you don’t mind limiting yourself to American Airlines flights. If you’d rather earn cash back instead of airline miles, the Spark Cash from Capital One for Business is a good example of a card that offers a single-cash-rewards rate for all spending (in this case, a generous 2%). The card’s simple rewards structure is excellent if you want an easy way to earn cash back. If you prefer luxury perks, a card like the Amex Business Platinum Card features the array of VIP-type perks you can expect from a premium card. But it also comes with a hefty annual fee and higher spending requirements for welcome bonuses.
Your Bookkeeping Needs
Business credit cards can help keep business and personal spending separate and make reconciliation and tracking easier. When selecting a business credit card, explore the tools that the issuer offers to see if and how they integrate well with your accounting platform. The Bank of America Business Advantage Cash Rewards card is one of several cards that allows you to download your transactions to QuickBooks.
How To Apply for a Business Credit Card
Applying for a business card is a fairly simple process. Assuming you are authorized to make financial decisions on your company’s behalf, you can start the application process online or with a paper application. Be prepared to share both your individual consumer information as well as specifics about the business, including details on:
Your business’ industryYour company structureYour annual business revenueThe number of employees you haveThe length of time your business has been operating
In some cases, the issuer may request additional financial statements and documentation.
