Whether you are opening a small part-time side hustle or planning on opening a large-scale concern - if you are making profits from selling goods and services - you will be eligible to apply for a business credit card. However, if you are just starting out, you may be uncertain about how to qualify for business credit cards and whether you are eligible.
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Why Should You Apply for a Business Credit Card?
Before we describe how to qualify for business credit cards, let's take a look at the benefits of applying for a business credit card for you and your company.
Build Up a Sperate Business Credit History for Better Benefits
All types of businesses can benefit from developing a business credit history that is separate from their personal credit score. A strong business credit history will help you to apply for business loans, earn more points and benefits, and qualify for cards that allow you to earn more points and miles when you spend money on travel or office supplies.
Keep Your Personal and Business Spending Separate
Keeping your business spending separate on a business credit card will help you to accurately judge your profit margins and submit your tax filings. It can be difficult to pick out your personal purchases and business spending when
Access a Credit Line to Grow Your Company
If you need funds for getting your company up and running, or to help move it up to the next level, then applying for a business credit card can help you access the capital you need. You can get credit for your inventory or have some security to cover unexpected expenses.
How to Qualify for Business Credit Cards
No matter whether you are running a small or large business, you can apply and qualify for business credits. No matter what structure your organization has, you will be able to apply for a card, including:
- A sole proprietorship.
- A business partnership.
- A corporate business.
- An LLC (Limited liability company.)
You don't need to have an existing business credit history to apply for a credit card for small businesses. A small business owner or sole proprietor can apply for a business credit card using their personal credit score and history to support their application.
Can I Apply for a Business Credit Card as a Sole Proprietor?
If you are a sole proprietor or an unincorporated business, you may be confused about whether you can apply for a business credit card. These can include independent contractors and self-employed and freelance workers such as online resellers, bloggers, pet sitters, or childminders.
As a sole proprietor, you are eligible to apply for a business credit card and enjoy the benefits and perks of a business credit card. Here are the steps you need to take before applying.
Make Sure You Choose the Right Type of Card for Your Business Spending
Do your research and make sure that you are picking the right type of business account for you. If you are just starting, then a $0 annual fee business credit card may be the best option for you. Some of the cards you might consider are:
- The Blue Business Plus Credit Card from American Express
- Ink Business Cash Credit Card from Chase
- Amazon Business Prime American Express Card
- Bank of America Business Advantage Customized Cash Rewards Mastercard credit card
You can also check the benefits and rewards programs business credit card issuers offer to enable you to build up points with your everyday business spending. Different business credit card options may be better fits for certain companies.
For example, if you have a company that involves a lot of printing of labels and mailouts - you can apply for a small business credit card which will allow you to earn points on purchases made at office supply stores. If your business involves lots of travel, you can get cards that can reward you for ticket purchases or spending on fuel.
You should also make sure to check that you are comfortable with the interest rate that the card offers and whether that is sustainable with your annual income. You should find that as your business credit score improves over time, you will be able to enjoy lower interest rates on your spending.
Check Your Company Finances Against the Credit Card Eligibility Criteria
Make sure that your business meets the minimum requirements for the card you have chosen to apply for. Most providers will detail how to qualify for a business credit card on the details page online. If not, you can contact them to ask for details before you apply.
If you apply for a card without checking the requirements and get turned down, this could hurt your business credit score and harm your chances of successfully applying for another. So, make sure to do your research beforehand.
Ensure That You Have a Steady Credit History Before You Apply
Before you apply for a business credit card you should make sure that you have a steady and reliable credit history for at least twelve months before you apply. Whether you will be applying on the strength of your business or personal credit report, you should ensure that you don't have any outstanding balances, have made no delinquent payments, and have steady spending habits both personally and professionally.
Although you will be applying for a credit card to cover business expenses, creditors will often also look at personal credit histories, particularly if you are a new business. So, make sure you are all set in your personal credit standing as well.
Get All of Your Paperwork in Order to Support Your Application
You will need to make sure you have all of your paperwork to support your application. Collecting everything beforehand will make sure that you don't run into any delays when you submit your application. Information that banks may require includes:
- Details of the business owner(s)
- The legal name of the business.
- Registered business address.
- Information about the formal structure of your business.
- Your business TIN (Tax Identification Number.)
- Details of your business turnover and expenses.
- The number of employees you have in your company.
Business credit card issuers will want to see information about any debts or expenses your company is subject to and your overall business financial history. They may also need to see details of your personal financial history to assess your application.
Complete Your Application and Submit Your Information
Once you have picked the right business credit card, ensured that you meet the application criteria, and pulled together all your paperwork - it is time to apply. You should be able to do this online in a lot of cases, but some banks will require you to come into your local branch to complete the application.
After processing your business credit card application, the card provider will be in touch to let you know if you have been approved, what the credit limit will be, and what level of APR will be applied to your account. You will then be in a position to accept those terms if they make sense for you and then your card will arrive with you in the mail!
Summary: How to Qualify for a Business Credit Card
Learning how to apply for a business credit card is slightly more complicated than applying for a personal card. But if you follow the steps we have detailed above, you should find that the process of how to qualify for business credit cards should be a smooth and stress-free process.
The Difference Between Business and Personal Credit?
When it comes to credit, there is a big difference between Personal Credit and Business Credit.