Qualify for a Business Credit Card

Applying for a business credit card is a fairly straight forward process. Although in general your personal credit will impact your application, there are some differences between a personal credit card and business credit card that are worth knowing about.

First of all, having a business credit card is something great to have, because it’s going to build your business credit, as well as providing a variety of business benefits. This includes having access to a flexible source of capital, whilst at the same time earning you perks and rewards that will help you run your business. 

It’s also a great way of keeping your personal expenses and business expenses separate. This will benefit you a lot, both in terms of managing your taxes, cash flow, and also your credit for both personal and business. 

So, lets go over some of the requirements. 

First, who can qualify for getting a business credit card? 

If you sell goods or services for a profit, and have a reason to have a business credit card, for example purchasing materials, paying expenses, etc then you have the ability to apply for a business credit card. 

This can apply to many businesses including start-ups, freelancers, hobbyists, sole proprietorships, partnerships, S-corps, and C-corps. 

Personal guarantee? 

Almost all business credit cards will have in their conditions that if the primary payer does not meet their obligations, you will be personally be responsible. 

This means that if your business cannot pay, they will go after you personally to settle the debts. Know the terms and conditions of your bank, and also make sure you do not over borrow on your business. Be smart with your accounting. 

Is my personal credit score important?

Love it or hate it, the answer is yes. The way it is viewed is that your personal credit score is related to your financial responsibility at the present and historically. 

So when you apply for your business credit card, ensure you do a full background check on your personal credit score. Know what your score is, what has been reported on you, and see what can be done to fix your personal credit score. 

If your credit score is not great, you can work on that, both from a business credit point of view, and a personal credit score. 

Information you will need to apply for a business credit card:

Legal Business Name and Entity type: If you’re registered, you will need to provide the exact spelling of how you registered the name with the secretary of state. 

Contact Business Information: Mailing address and phone number of your business 

Industry Type: The type of industry you are in. The industry generally will reflect risk related to you and your business, so make sure you select the most accurate business. 

Time in Business and Number of Employees:Select the most relevant. If it’s just yourself, then select 1 

Annual Business Revenue and Estimated Monthly Spending

These will be used to estimate your ability to pay off bills, and your revenue so that the bank can generate the right limits for you. 

Federal Tax ID or EIN

This is issued by the IRS for a registered business. In some case if you don’t have one, you can use a social security number. 

From here your application will be processed by an underwriter. They will perform a variety of calculations, which include a debt-to-income ratio and other revenue calculations, to measure the risk of your business, your ability to pay off credit, and how fast or slow your business is growing.

This will vary from bank to bank, but the good news is, once you have a business credit card, with correct management you can generally improve your credit for that card and increase limits on your card over time.

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