5 Simple Steps to Get a Business Credit Card

Are you a small business owner looking to build credit history and grow your business? Look no further than a business credit card. According to the Small Business Administration, using a business credit card is one of the quickest ways to establish credit for your business. With a strong credit history, you’ll have access to more favorable rates and terms, as well as opportunities for business growth.

Why do you need a business credit card?

A business credit card offers several benefits for your business. Here’s what it can do for you:

• Pay for business expenses: With a business credit card, you can start paying for your business expenses, giving you more flexibility in managing your cash flow.

• Simplify business processes: Running your expenses through a single account simplifies how you do business.

• Separate personal and business expenses: Having a dedicated credit card for your business makes it easier to separate personal and business purchases. It’s time to stop using your personal card for business purchases.

• Earn rewards: With a business credit card, you can earn rewards from your purchases that you can use for personal travel.

• Build your business credit score: If you’re responsible with your business credit cards, your business credit score could increase. This is a separate score from your personal credit score and can range from one to 100.

Requirements for a business credit card

Before applying for a business credit card, it’s essential to know the requirements. Here’s what you’ll need:

• A business: You may qualify for a business credit card without realizing it. Even if you sell on Etsy or tutor part-time, you qualify. Other traditional business structures, such as sole proprietors, corporations, LLCs, and partnerships, also qualify.

• A good personal credit rating: Your personal credit will be evaluated when applying for a business card, even if you apply with an Employer Identification Number (EIN). A good personal credit score can help you qualify for the best small business credit cards.

• Profitability and cash: Lenders look for businesses with solid financials, including how much money your business makes and how much money you have in your bank account.

• No need for a legal structure, business history, employees, or a physical location: You don’t need an LLC, partnership, or corporation to apply for a business credit card. You can use your Social Security number to apply, and you can qualify even if you’re a new business owner or work alone from home.

Getting a business credit card in 5 simple steps

If you’re ready to apply for a business credit card, follow these five steps:

1. Check your credit: Before applying, review your credit report and make any necessary improvements to increase your chances of approval.

2. Choose a credit card: Research different business credit cards and consider factors such as fees, APR, rewards structure, online and mobile banking features, extended warranties, and other perks. Some popular choices include the Ink Business Unlimited® Credit Card.

3. Collect the necessary information: Gather all the information you’ll need for your application, including your business name, address, type of business, structure, number of employees, revenue, expenses, years in business, contact details, and EIN or Social Security number.

4. Apply: Complete the online application, which usually takes less than 10 minutes. You’ll receive an immediate decision in most cases. If you’re not approved, you can call the reconsideration line for further assistance.

5. Start using your credit card: Once approved, your card will arrive in the mail within a week. You can then start using it for appropriate business purchases.

How to apply for a business credit card

As a small business owner, you can apply for a business credit card using either an EIN or your Social Security number. Here are some details to keep in mind:

• Applying with an EIN: When applying with an EIN, you’ll also need to provide your personal information. Your personal credit score and income can help you qualify for a business credit card. However, qualifying on an EIN alone requires meeting specific requirements, such as having ten employees, a pristine business credit history, yearly revenue over $1 million, cash reserves for a year, and one year or more in business.

• Applying without an EIN: You can apply for a business credit card using your Social Security number. If you prefer to use a separate EIN for your business, you can apply for one online through the IRS, which usually takes only a few minutes.

Alternatives to business credit cards

While business credit cards can be beneficial, there are also alternative funding options for your business:

• SBA loans: Consider qualifying for an SBA loan, a business loan guaranteed by the U.S. Small Business Administration, which can range from $500 to $5.5 million.

• Business line of credit: Borrowing the amount of money you need up to a limit, similar to a credit card, provides flexibility and the ability to pay interest only on what you borrow.

• Merchant capital advance: Also known as a merchant cash advance, this option allows you to trade a percentage of your future credit card sales for a lump sum to fund your business operations. Keep in mind that fees can be high.

• Home equity loans: Tapping into the equity in your home, either through a home equity line of credit (HELOC) or a home equity loan, can provide funding for your business. However, be cautious as defaulting on these loans could put your home at risk.

• Personal loans: Although personal loans may be more expensive and have lower borrowing limits, they don’t put your home at risk if you default. Explore various lenders that offer personal loans tailored to your needs.

TIME Stamp: Getting a business card is easier than you think

Contrary to popular belief, the requirements for getting a business credit card aren’t as stringent as you might think. You don’t need an EIN or a legal business structure to qualify. The main requirement is to have a business and use the credit card for your business expenses.

You can choose from some of the best small business credit cards available to start building your business credit score, separate your personal and business expenses, and earn rewards on your business purchases. There’s tremendous value for business owners in having a good business credit card.

Frequently asked questions (FAQs)

• How does a business credit card work?
  Business credit cards work similarly to regular credit cards, with the main difference being that they are solely for business expenses.

• What is the best small business credit card?
  The best small business credit card depends on your business’s specific needs. Consider the features you require and the rewards you want to earn.

• Can you get a business credit card with bad personal credit?
  While having bad personal credit may lower your chances of approval for many business credit cards, it’s not impossible. Some issuers specialize in cards for those with poor credit, and secured credit cards are also an option.

For more information on personal finances and business tips, visit Personal Finances Blog.

[EIN]: Employer Identification Number
[APR]: Annual Percentage Rate
*[HELOC]: Home Equity Line of Credit