Whether you’re a freelancer, the owner of a startup or someone who runs a more established business, getting a small business credit card can help you manage your business’s finances and earn rewards. However, applying for a business card can be a bit different than applying for a consumer card. We’ll walk you through the steps of how to apply for a business credit card.
What do you need to apply for a business credit card?
Here’s some information you’ll need to have handy when applying for a business card:
- Your business structure. For example, Capital One allows you to select from the following options on its business card applications: sole proprietorship, corporation, partnership, nonprofit corporation, single-member LLC, multiple-member LLC or other.
- Your Employer Identification Number (EIN). Depending on the issuer and how your business is structured, you may or may not need to include your EIN on the application. For example, American Express requires this only if your business is a corporation or a partnership, while Capital One requires it for all structures other than a sole proprietorship.
- Your total annual business revenue. Don’t feel the need to inflate your revenue if your business is new.
- Your business’s full legal name. Your business’s legal name should be what’s listed on your EIN.
- Your business’s DBA. A DBA is a “Doing Business As” name. American Express, for example, requires you to provide your business’s DBA or mark that it doesn’t have one.
- Your estimated monthly spend.
- The type of industry.
- The business address and contact info.
- The length of time in business.
- Number of employees.
- Your position in the business.
- Your personal information, such as Social Security number, birthdate, etc.
How to choose the best business credit card
Here are a few questions to ask to help you evaluate the best type of card that will benefit your business most:
- Do you need employee cards? If so, you’ll benefit from considering a card that offers free employee cards, rather than charging an additional fee for each one.
- What type of purchases make up the bulk of your business spending? Some business cards offer higher rewards rates in specific spending categories — office supply stores, for example. Other cards offer a flat rewards rate on every purchase, regardless of category.
- Does your business require frequent travel? You may want to consider applying for a travel credit card, gas credit card or airline credit card that can offset some of those expenses.
- Do you need to finance a big purchase? A card with introductory 0% APR can be a money-saver for large expenses. Or, if you want to earn extra cash back or rewards on a big purchase, this could be a good time to consider a business card with a generous sign-up bonus.
- How much do you think you’ll spend on a card each year? Determining your annual spend will help you evaluate whether a card with an annual fee is worth it or not. For example, if you’re using a card that offers 2% cash back and charges a $95 annual fee, you’ll need to spend $4,750 per year to recoup the amount of the annual fee.
For recommendations, take a look at our article on the best small business credit cards.
Does a business card affect your personal credit score?
In most cases, a business credit card will not appear on your personal credit report. The exceptions are Capital One and Discover, as both issuers report business card activity to the consumer credit bureaus.
However, if you are significantly late paying your business card bill — from any issuer — it’s likely to be reported to your personal credit report and can damage your personal credit score. That’s because most small business credit cards require a personal guarantee, meaning you are the one ultimately responsible for paying off what’s charged to your business card.
Read our guide on how business cards affect personal credit.
Are there business credit cards for bad credit?
If your personal or business credit score is less than stellar, you might have trouble qualifying for some of the higher-end business credit cards. Your best option may be to apply for a secured business card, such as the Wells Fargo Business Secured Credit Card. Secured credit cards require you to put down a security deposit (usually in the amount that you want your credit limit to be) that protects the issuer in the event that you don’t pay off what you charge to the card.
The Wells Fargo Business Secured Credit Card allows you to earn 1.5% cash back on every $1 spent or earn 1 point on every $1 spent and receive 1,000 bonus points when your company spend is $1,000 or more in any monthly billing period. It charges an annual fee of $25 per card, and the credit limit can range from $500 to $25,000, based on your deposit.
If you have fair/limited credit, you might consider the Capital One Spark Classic for Business
https://www.comparecards.com/blog/capital-one-spark-classic-business-review/
. It’s an unsecured card (in other words, a regular credit card) with a $0 annual fee, and cardholders can earn 1% cash back on every purchase.
Business credit card FAQs
Can you get a business credit card without a business? You should have at least some kind of business income, or the expectation that you will earn business income, before applying. You don’t necessarily have to run a full-fledged business with a storefront and employees, however — something as simple as doing freelance work from time to time could allow you to qualify.
What’s a business charge card? In general, with charge cards you must pay off your card’s balance within a billing cycle, whereas a credit card allows you to roll over a balance from month to month.
Can you use a business credit card for personal use? The best practice is to keep business and personal expenses separate — use a business card for business expenses and a personal credit card for personal expenses. That way, if you ever need to produce records documenting your business expenses, they aren’t jumbled together with personal purchases.
What are the best business cards for startups? One card designed specifically for startups is the Brex For Startups. It’s unique in that it doesn’t require a personal credit guarantee, and it also offers the opportunity to earn generous rewards. Check out our Brex For Startups review for more details.
This article originally appeared on CompareCards.com and was syndicated by MediaFeed.org.
Featured Image Credit: iStock/jacoblund.
