How to Get a Business Credit Card: What to Know Before You Apply

A business credit card can be a great financial tool for small business owners. It can help you manage your cash flow and streamline your day-to-day expenses. It also helps separate your business finances from your personal finances. Additionally, many business credit cards offer rewards programs, which can provide things like cash back or other perks.

So how do you get a business credit card?

Let’s explore what it takes to get a business credit card and what type of card could be right for your business.

How to get a business credit card.

Getting a business credit card starts with doing some research. You can begin by evaluating your business needs and researching which cards may be the right fit. Look into the different types of cards available and pay attention to things like interest rates, annual fees and rewards.

Once you’ve selected a card, gather any necessary documentation. That may include your business registration, employer identification number and financial statements.

Next, submit your application. The lender will evaluate your business’s creditworthiness and make their decision. If approved, you should receive your business credit card in the mail within a week or two.

What do you need to qualify for a business credit card?

Different lenders and cards may have different qualification requirements. Be sure to do your research when selecting a card to apply for. Here are a few things that may affect your eligibility:

1. Business and Personal Credit Scores

Your personal and business credit scores can play a big role in determining your eligibility. Lenders will often consider both when reviewing your application — though you don’t necessarily need an established business credit score to qualify. This is because your credit history is often used as an indicator of how well you manage credit. Having a strong personal credit score can help if you have little or no business credit history.

2. Annual Revenue

Lenders may require your business to meet a certain annual revenue threshold before they’ll approve you for a credit card. They want to see that your business revenue is enough to cover your business expenses, including your credit card payment.

3. Time in Business

The amount of time your business has been operational can also affect your eligibility. Companies who have been in business longer are typically looked at more favorably because they present less of a risk to lenders.

4. Debt-to-Income Ratio

If your business is already carrying debt — such as a term loan or line of credit — it may impact your ability to qualify for a business credit card. A lower debt-to-income ratio shows a well-managed balance between income and debt, and can show that your business is financially stable.

5. Industry Type

Some industries are considered more risky than others due to economic fluctuations or regulatory challenges. This means the type of business you run could potentially impact your eligibility. Demonstrating industry expertise, stable revenues and a solid business plan can reassure lenders of your creditworthiness, even in higher-risk industries.

Who can qualify for a business credit?

A wide range of business types can qualify for a small business credit card — from sole proprietors and partnerships to LLCs and larger enterprises. Even startups may qualify if they have a good credit score and solid business plan. However, businesses with a poor credit history, lack of revenue or certain legal issues may struggle to get approved.

How hard is it to get a business credit card?

The difficulty of obtaining a credit card largely depends on the lender and your business’s financial standing. You may be able to find cards designed for new businesses with limited credit history, while others will require a more established credit profile.

Be sure to do your research about the card you wish to apply for. If you have an established business with excellent credit, you may qualify for cards that come with better terms such as lower interest rates plus other perks such as travel rewards, cash back and sign-up bonuses. However, if you’re just starting out or you don’t have well established credit, you may want to look for a card that is easier to qualify for and will help you build business credit history.

How do you apply for a business credit card?

The application process will be different for each lender, but in general here are a few steps you’ll need to take after researching and selecting the right card for you:

1. Gather the necessary documents. You’ll need a few documents to complete a business credit card application. This could include things such as your business’s tax ID, business license, checking account statements and proof of ownership. You’ll also likely need the business owners’ personal information including Social Security numbers, contact information and personal identification.
2. Complete the application. You can typically complete an application online or in person depending on the credit card issuer. Be sure you provide accurate information and double-check all the details before submitting your application.
3. Wait for your decision. After submitting your application, the credit card issuer will review your information. This process can take anywhere from a few minutes to a couple of weeks, depending on the lender.

Why would I consider a business credit card?

Business credit cards can be a great business tool, but there are some other benefits to consider.

They help protect your personal finances. Having a business credit card can help separate your business and personal finances. Business credit cardholders won’t need to rely on a personal credit card to fund business purchases. This can also make tax season a little easier.

They can help build business credit history. If your credit card issuer reports to the business credit bureaus, then a business credit card may help you establish business credit history. This can come in handy when trying to secure funding in the future.

What are some alternatives to a business credit card?

A business credit card isn’t the right option for every situation. There are other types of business funding available that may be better suited for your business needs.

Business term loan. A business term loan is a type of funding that provides you with an upfront lump sum of cash you can use for large business purchases. You pay the loan back over a set period of time in smaller installments. They can be useful for things such as upgrading equipment or expanding your business.

Business line of credit. A business line of credit provides you with access to funds you can borrow from, up to a set credit limit, and as you repay the borrowed funds they become available again. They are similar to credit cards in that they are a form of revolving credit, but they may come with a higher limit and they can be used in place of cash. They can be useful for ongoing financial needs and stabilizing cash flow.

The Bottom Line

In the right situation, securing a business credit card can be a good move that offers your business many benefits. It can help you manage cash flow and build business credit history. Plus, certain rewards credit cards may offer additional perks.

Be sure to do your research and select a card that suits your business needs. You should also be aware of how you may be affected after account opening. Making payments on time and in full can look good on your credit report, but missing payments may damage your score.

For those looking for more information or who need more personalized help, consider talking to a financial professional. They can help you find the best business credit card for your business.