A business credit card is one of the easiest ways for small business owners to access reliable financing. You can get approved for up to $500,000, and the money can be available in as little as a week. As for interest rates, they start as low as 8% and go up to 24%. It’s important for entrepreneurs to know how to get a business credit card so they can have access to every financing option possible.
A business credit card boosts your working capital and gives you the flexibility to spend it for nearly any business purpose. Whether you need to add to your inventory, buy a new forklift, renovate your office, or install new software, you’ll have the money you need. Each month, you’ll pay for your purchases up to that point, setting yourself up for another month of financing.
One of the most enjoyable aspects of a business credit card is that you’ll be able to leverage a rewards program. Whether you choose to redeem your card points for cash, miles, gift cards, or some other perk, you’ll get extra benefits for purchases you’d be making anyway.
If this all sounds familiar, it’s because business credit cards have so much in common with the personal cards you likely have in your wallet right now. Not only are they made of plastic and measure 3 3⁄8 inches by 2 1⁄8 inches, but they’re a low-pressure, streamlined way to get the money you need.
Choosing a Business Credit Card
Before you can get a business card, you’ll need to choose the best one for your unique situation. There are business card options for just about every kind of operation, and your ideal choice will depend on your spending strategies, type of business, and preferred card rewards.
The 4 most important things to consider as you choose are card are:
- Type: You’ll need to decide up-front whether you want a credit card or charge card. With a credit card, you can carry a balance that will accrue interest. Charge cards require you to pay the full balance each month, so there are no interest charges involved.
- APR: Short for annual percentage rate, this metric helps you see how much you’ll owe in interest each year when you carry a balance on a credit card.
- Costs: Be aware that some cards come with steep fees. Entrepreneurs generally dislike high annual fees, but some cards have compelling enough benefits to make the larger fee worth it.
- Rewards: With so many different forms of rewards, it’s important to find a card that fits your lifestyle. For example, if you travel a lot for work, then miles could be your ideal reward. Also, you’ll need to decide if you want a card with flat-rate per-dollar rewards or one that offers bonus categories.
Qualifying for a Business Credit Card
One of the most beneficial elements of a business credit card is that even new business owners can often qualify. This feature is noteworthy because those in the early stages of entrepreneurship can struggle to qualify for loans and other forms of financing.
Your personal credit plays a major role in the qualification process. To get a business credit card, you should have a credit score of 680 or above. Your business tenure is a bonus, but as mentioned earlier, it’s not necessarily a dealbreaker. Many card companies allow you to personally guarantee your card, even if you don’t have the most impressive business history. In this scenario, you’d sign a form saying you’ll personally pay any debt that your business isn’t able to cover.
If your credit score is particularly low, your options will understandably be limited. But some companies will still be willing to work with you, particularly if you’re already a customer of the bank you’re seeking a business credit card from. As long as your existing accounts are in good health, the bank will have positive data to influence their decision.
It’s worth noting that business credit cards are accessible to businesses of all sizes. Got a 5-story building and hundreds of employees? Check. Are you running a solo operation from your basement? That’ll usually work as well. Freelancers and any others who provide services for profit can qualify.
Getting a Business Credit Card
While business credit cards share similarities with personal cards, the application process has many differences. You’re sending the lender information that goes well beyond you as an individual—you’re also describing your business, its organization, and its functions.
To get started, you’ll provide the lender with the legal name of your business. This name will appear on your card, so make sure it matches up with everything else associated with your business. If you set your business up as an LLC or corporation, the name should match what you used when you registered it with your state government. If you’re a freelancer, you can just use your legal name.
Next, you’ll need to provide your tax identification number. For partnerships and incorporated businesses, use your 9-digit federal Employer Identification Number. Freelancers can again take a more personal route, simply using their Social Security number.
Now it’s time to describe your business so lenders can understand how it is structured and how it fits within your industry. Most applications include a list of possible industries, so you can pick one that comes closest to your own. You’ll also identify your role in the business.
For the credit card company to properly process your application, you’ll be asked to provide contact information. If your business has a standalone office, use that address. If you operate out of your home, that’s the one to include. Final details to include in your application include the amount of time your business has been up and running, how many employees you have, your annual revenue, and your monthly spend.