Key takeaways

  • A business credit card is a tool that can help small business owners and entrepreneurs keep their personal and business finances separate.
  • These business-focused cards often offer perks like sign-up bonuses, rewards and annual travel or business-related credits.
  • When applying for a business card, you’ll provide basic information about your business, including your role in the company, as well as a Social Security number or Employer Identification Number.
  • If your application is denied, follow up with the issuer to learn why. If it’s due to a low credit score, you may be able to get a secured business credit card.

In the early, chaotic days of starting a new business, it’s easy to blur the line between your personal finances and your business finances. You may be financing your business out of your own pocket, for example, with all business profits becoming your personal income.

But to simplify your finances for your future self, it’s a good idea to keep your personal spending separate from your business. Applying for a business credit card is a great first step. 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.

And business cards aren’t just for business newcomers — business veterans can benefit from shopping around for better cards offering stronger benefits that match your growing business. And, importantly, your growing business credit score.

Here’s what to consider when deciding on a new business credit card, including how to compare the market and steps to applying.

1. Determine your eligibility

Many of the top business credit cards require good to excellent credit, and issuers are likely to use your personal credit score in estimating your business’ creditworthiness if you haven’t yet built up a business credit score.

It 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.

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 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, which is fine.
  • Your role in the company. If you’re applying for a business credit card, chances are the lender will want to know who you are and what your role at the company is. This is relevant because it tells them who’s liable for any debt accumulated on the account.
  • 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 rewards and 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. And 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 for a card, your issuer will mail your card, which typically takes 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.

FAQs

  • 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.
  • 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.

The bottom line

It takes some work to get a business credit card, but doing so is helpful for tracking your business spending — and it can help make managing your business and personal finances a whole lot simpler.