A business credit card is a financial tool small business owners should seriously consider. Unlike cash-on-hand, a business credit card gives you increased purchasing power to finance purchases your company needs, potential sign-up bonuses and rewards, and more detailed bookkeeping features, which is always helpful come tax time. And a business credit card will likely have a higher credit limit than a personal credit card—and it’s always a smart move to keep personal and business finances separate, anyway!
The financial and operational benefits that come with a business credit card shouldn’t be overlooked. Here’s a quick overview of how to apply for one for your small business.
Requirements for getting a business credit card
To apply for a business credit card, you’re not required to have a certain business structure, like an LLC or S Corp.—you can be a sole proprietorship and apply for a card! This makes the financial tool of a business credit card available to those who freelance, do contract work, or run a side hustle.
Each lender will have their own list of requirements to apply for a business credit card. However, almost all of them will ask for your personal and business credit reports. If your business doesn’t have its own credit report yet, that’s okay! The lender, or card issuer, will then require a personal guarantee, which makes you personally liable for any balance or outstanding debt owed if your business can’t pay it.
Before you begin applying for cards, it’s smart to have this information already gathered and easy to find:
- Your personal information, including Social Security number, home address, email, phone number, annual income, and monthly rent or mortgage payment
- Business information, including business name, legal structure, industry type, address, phone number, annual revenue, number of employees, years in business, estimated monthly spending, and either employer identification number (EIN) or your Social Security number
How to apply
There are actually a few more steps before you start applying for cards, and they could affect when you apply.
First, check your personal credit report, correct any errors, and improve your score as much as possible through good credit-building habits like making all bill payments on time and charging a low percentage of your total overall credit limit each month. You can access your report for free once a year from each of the three credit bureaus (Experian, Equifax, TransUnion) or by visiting AnnualCreditReport.com.
The second pre-step to applying is to research your options. Consider your business needs—if saving money is most important right now, look for a card with no annual fee and a low interest rate; if you would benefit more from rewards like airline miles or discounts on hotels, find a card with those benefits.
Here are other factors 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 (the card should report to business credit agencies to build business credit separate from your personal report)
Remember to look for a business credit card from your local credit union.