How to apply for a business credit card

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If you’re an entrepreneur, freelancer, or small business owner, a business credit card is something to consider. When you’re running a business, it’s important to keep your personal expenses and your business expenses separate. A business credit card can help you do that.

Aside from creating a clear distinction between your personal and business finances, a business credit card can give you an outlet for expenditures if cash flow for your business is unstable. Your monthly credit card statements for your business credit card can also be helpful tools for record keeping. Not to mention, interest that you carry on your business credit card balance is tax deductible.

You apply for a business credit card in much the same way you would apply for a personal credit card. The difference being that you’ll be asked to provide some additional information about your business. If you’re ready to add a business credit card to your spending tools, keep reading for information about the selection and application process.

Who can apply for a business credit card?

Business credit cards are not just for large businesses, and you don’t have to have a brick and mortar location to apply for a business credit card, either. If you are a person that makes money independently, you can apply. So, whether you run an online store or work as a freelance photographer, you can add a business credit card to your financial tools. And you actually don’t have to have your business up and running to apply for a business credit card. If you have the intention of starting a business and have documented business expenses, you can apply and be approved.

What to expect on a business credit card application

When you apply for a business credit card, much of the process will look familiar. You will be asked to provide the same kind of personal information (name, address, social security number, etc.) that you have to provide for a personal credit card application. If you don’t have some of this personal information available, you can still move forward with your application. However, you may have to go through some additional steps.

In addition to your personal information, you will be asked to provide information about your business. This information will vary depending on what kind of designation your business has. As with an application for a personal credit card, you can expect a hard inquiry into your credit report to check your creditworthiness. This initial pull on your credit will temporarily affect your personal credit score. After approval, however, your business credit score should be a separate score from your personal credit score.

If you are the sole proprietor for your business or a freelancer, you are personally linked to your business. For this reason, your application will focus on your personal information. If you fall under the designation of single-member LLC, partnership LLC, or corporation, you’ll need to provide some additional information. Be prepared with your Tax Identification Number (TIN) and annual business income to complete your application. You may also be asked to provide your estimated monthly spending on the credit card. You can come up with this figure by taking an average of your current monthly expenses.

For LLCs and corporations, credit issuers are required to collect some additional business information before issuing a business credit card. You can expect to receive a follow-up request for this information after initial approval. Be prepared to mail or fax copies of your Articles of Incorporation, Partnership Agreement, IRS notice establishing your Employer Identification Number (EIN) and any similar documents. You may also be asked to send a copy of a utility bill for the business to serve as proof of address.

Steps to apply for a business credit card

Applying for a business credit card requires you to have some specific information on hand.

If you have formally registered your business, you will need to have your TIN or EIN to get started. If you are working for yourself without a formal registration, you can apply as a sole proprietor of your business. Being a sole proprietor means that your business is not separate from you as the owner, so you can use your social security number to apply. Other things to prepare for your application include:

Business name

The name of your business is the name that will show up on your business credit card if you are approved. If your business has a legally registered name, that is the name you want to use on your application. If you haven’t formally registered your business, you can use your name as the sole proprietor. If your card application is approved, your name will appear on your business credit card.

Business category

Your potential credit card company will want to know what industry your business falls under. Are you providing a product or a service? And what kind of product or service do you provide? The credit card company will provide you with a list of industries to choose from when you apply. You’ll want to choose the category that best fits your business, but it’s okay if the label isn’t exact.

Annual business income

How much income your business makes is important information for your application. Annual income is often used as a factor in determining the amount of your credit limit. If your business hasn’t generated income yet, you would list your annual income as $0.

Your role in the business

Your role in the business is an important detail for liability reasons. Your potential card issuer wants to know if you are an owner, manager, partner, etc. Your role will determine your liability for the credit account. For example, if you are the sole proprietor of your business, you are personally responsible for any debt accumulated on your business credit card account.

Estimated expenditures

Not all credit card issuers will request this information, but many will want to know how much your monthly spending will be. If your business is established, you can take a look at past accounting to get this figure. If your business is new, take some time to think about what kinds of expenses you’re likely to have each month. And remember, these expenses are for the business only. It’s important to keep your personal expenses separate from your business expenses.

Business details

For your application, you will also need to provide some other details about the business. One important detail is your business address. If you don’t have an office, you can use your home address. You’ll also need a business phone number. If you don’t have one specifically for your business, you can use a personal number. You will also be asked about the number of employees for the business. Lastly, your potential card issuer will ask about the length of time your business has been open. If your business is new, you can fill this part in with a zero.

How to choose a business credit card

Choosing the best business credit card for your needs comes down to the main expenditures for your business. It’s a good idea to look for cards that offer rewards that line up with your business spending habits. For example, if your business requires you to travel a great deal, the Capital One® Spark® Miles for Business is a good option. It offers an unlimited 2x miles per dollar on every purchase and 5x miles on hotel and rental car bookings through Capital One Travel℠. If your business requires you to make a variety of purchases, you may be better off choosing a cash back rewards card like the Capital One® Spark® Cash for Business. This card offers an unlimited 2 percent cash back on every purchase.

Another key factor in choosing a business credit card that fits your needs is your credit score. Many business credit cards are looking for applicants with good to excellent credit scores. For example, The Blue Business® Plus Credit Card from American Express, which offers a flat 2x rewards points for all business purchases (up to $50,000 per year then 1x points), is looking for applicants with a score in the range of 670 to 850. The Bank of America® Business Advantage Cash Rewards Mastercard® credit card, which offers 3 percent cash back categories (on the first $50,000 in combined choice category/dining purchases each calendar year), starts its credit score range at 740. 

There are cards that are open to applicants with credit scores in the average range, but these cards often offer fewer rewards. For example, the Capital One® Spark® Classic for Business is open to credit scores of 580 to 740. However, this card only offers 1 percent cash back on your purchases. While this is low as far as rewards are concerned, you can use this card to help build up your credit to be eligible for other cards with higher tier rewards.