How to get a business credit card

Whether you’re a freelancer, a solopreneur or a small business owner, it’s important to keep your personal spending separate from your business spending. That’s why applying for a business credit card should be at the top of your to-do list. A dedicated business credit card can help you keep track of your business spending.

It also provides flexibility if you need short-term financing — like when business bills are due, but you’re still waiting for payment on customer invoices. You can also earn lucrative rewards and take advantage of other perks just for making necessary business purchases. As a bonus, any interest you pay on a business credit card is tax-deductible when used solely to make business purchases.

Steps to getting a business credit card

Getting a business credit card requires similar steps to getting a personal card. You’ll want to know your current credit score so you can only apply for cards for which you’re likely to qualify. You’ll also need to understand your business’s budget and spending so you can select the best card for you.

Here’s a more detailed breakdown of what to expect and prepare when you’re looking to get a business credit card.

1. Determine your eligibility

When you apply for a business credit card, issuers will take both your personal and business credit history into account to estimate your business’ creditworthiness. If you’re just starting out and don’t have any business credit, your personal credit score will be the primary factor.

This means that a business credit card has the potential to affect your personal credit. When you apply for a business credit card, you’ll likely incur a hard inquiry on your credit that appears on your credit report and temporarily drops your score by a few points.

And when you begin using the card, issuers will report your card activity to the credit bureaus. While some only report business credit card activity to the business credit reporting agencies, others may also report to the personal credit bureaus — especially if your account is not in good standing.

What credit score do you need to get a business credit card?

Most of the top business cards are targeted to people with good or excellent credit scores (a FICO score of 670 or higher).

It can be tough for those with low credit scores to qualify for an unsecured business credit card. In this case, a secured credit card can be easier to qualify for. They require a cash security deposit upfront, but with lower credit score requirements. And with most cards, you can graduate to an unsecured card after a period of responsible, on-time payments.

2. Gather the required application information

Gather personal, financial and business details needed to complete the application, including:

• Business name and contact information: You’ll need to provide identifying information about your business, such as your business name, address and phone number. Many entrepreneurs’ business and personal contact information is the same.
• Your role in the company: If you’re applying for a business credit card, the lender will want to know who you are and what your role is at the company. This is relevant because it tells them who’s liable for any debt accumulated on the account.
• Your personal information: In addition to providing contact information, lenders may want to know personal information such as your date of birth and your Social Security number. This allows them to check your personal credit before issuing a business credit card, and helps to establish whether you are likely to be a credit risk.
• Your annual business income: Similar to how you need to submit your personal income information when you apply for a personal credit card, you’ll need to provide your business income when you apply for a business credit card. If you’re a brand-new business that hasn’t generated income yet, you may need to report your income as $0 for the time being.
• Business details: While details vary by application and issuer, you may need to provide information about your business, such as the industry you’re in, how long you’ve been in business and how many employees you have.
• Supporting documentation: Lenders won’t always ask for supporting documentation, but they may request you provide them with information that proves you have a business. At this point, an Employer Identification Number (EIN) or tax ID number can come in handy.

3. Compare business credit cards

With so many options on the market, it can take time to find the best business credit card for your business. When shopping around, you’ll want to compare features like fees, rewards and interest rates.

Business credit card rewards often align with specific spending categories, so it can be helpful to determine the categories you spend the most in. For example, your business may require frequent travel, in which case an airline business credit card or a general business travel credit card offering travel comforts or perks can help you earn rewards that pay for future travel.

Or, you might prefer the flexibility and premium benefits of a flexible business rewards card like The Business Platinum Card® from American Express, which offers 5X points on flights and prepaid hotels booked with American Express Travel, plus 1.5X points on up to $2 million spent per calendar year on eligible purchases in key business categories and on eligible purchases of $5,000 or more.

Alongside rewards and perks, it’s important to keep both interest rates and fees in mind when choosing a business credit card. Many business credit cards offer 0 percent intro APRs on purchases, which is like providing free short-term business financing — as long as you can pay off your balance before that introductory period ends and the regular interest rate kicks in.

Don’t overlook that many top business cards come with annual fees, too. For instance, the Amex Business Platinum comes with a $695 annual fee — though with the potential for perks and benefits to outweigh that cost.

4. Apply and wait for your card approval

After you submit your application, you’ll need to wait for the card issuer to review it. If it’s an online application, it could be approved in minutes, but it’s also possible it could take a few days. If you’re approved, your issuer will mail your card, typically within a week or two after approval. Sometimes, the issuer might need to engage in a more detailed review or ask for more input from you, extending the process a bit longer.

If your application for a business credit card is denied, follow up with the issuer to learn why and whether you can remedy the situation. If it’s a credit score issue, you may be able to qualify for a secured business credit card. Since you’ll be putting down a security deposit for a secured card, it can help the issuer overlook your credit issues. After responsibly using the card for a while and building up your credit, you could be eligible for an unsecured business credit card.

Pros and cons of business credit cards

Pros

• Keep business and personal spending separate
• Track business spending and simplify business accounting
• Earn rewards on everyday business purchases
• Redeem rewards for business expenses such as travel
• Keep business spending constant when cash flow is variable
• Finance large business purchases with 0 percent introductory APR periods and spend toward business growth
• Issue employee credit cards and delegate business spending
• Build business credit score and become eligible for additional business credit cards and small business loans

Cons

• Must remember to use business credit card for all business purchases
• May need to create business budget to avoid overspending on credit
• Run the risk of overspending to earn welcome bonuses and other rewards
• Run the risk of overspending on business trips
• Run the risk of overspending if cash flow does not improve
• May pay interest on outstanding balance if purchase is not paid off when 0 percent intro APR period ends
• Business owner is liable for all charges on employee credit cards
• May take out more credit than business can afford to pay off

Should you apply for a business credit card?

If you have a small business, there are many good reasons to apply for a business credit card — including the opportunity to build your business credit score. That said, you don’t necessarily need a business credit card to run a business. You could use small business loans, for example, to get started. You could also fund your business out-of-pocket until it earns enough to fund itself on revenue and profits. Some people crowdfund their businesses, or ask family to help with starting costs. Other people, especially solopreneurs and freelancers, may want to wait to apply for a business credit card until they’re sure their business is going to take off.

There are many ways to get the money you need to start your business — but at some point, credit is likely to come into play. Even if your business is earning enough money to not need credit, a good business credit card allows you to make safe and secure online purchases. Plus, you may be able to issue employee credit cards to team members and delegate some of the work of purchasing.

What kind of business credit card is best for you?

• If you’re a freelancer or a solopreneur who primarily works from home, start with a no-annual-fee business credit card that offers cash back rewards such as the Ink Business Unlimited® Credit Card.
• Small business owners who regularly make large purchases may want to consider the Ink Business Premier® Credit Card, which offers 2.5 percent cash back on purchases of $5,000 or more.
• If you are a frequent business traveler, the Capital One Venture X Business card provides generous travel perks with a slightly lower annual fee than other premium travel credit cards.
• If your business is large enough to have employees, or if you’re the kind of small business owner who is working with a storefront, you’ll probably need a credit card designed for serious business spending — such as the American Express® Business Gold Card, which offers top-level rewards on up to $150,000 of qualifying business expenses per year and allows you to earn rewards on employee card spending.

The bottom line

It takes some research and planning to get the right business credit card for your situation, but doing so can make managing your business and personal finances simpler. Just remember to check your credit score and understand your business’s needs first, then gather the necessary personal and business information before researching options and ultimately applying for a card.

FAQs

• Is an EIN a requirement for a business credit card?

  An EIN is not a requirement for getting a business credit card. If you’re a sole proprietor, you can apply for a business card with your Social Security number.

• Can freelancers get business credit cards?

  Yes, freelancers can get business credit cards. The best credit cards for the self-employed help you keep your personal and business finances separate, simplifying bookkeeping and taxes, among other business tasks. And they typically offer rewards on purchases, sign-up bonuses and financial management tools, among other perks — many with no annual fee.