Getting a business credit card for your small business can be a great way to pay for ongoing expenses while earning rewards and taking advantage of other perks.
You may be wondering, though, what it takes to qualify for one, especially if your business is brand new or a side hustle. While the process can vary a little by credit card issuer, it’s generally straightforward. Here’s what you need to know.
10 things you’ll need to qualify for a business credit card
While it’s possible to apply for small business credit cards at your local bank branch or over the phone, the simplest way to do it is online. Before you start shopping around for the right card, here’s what you’ll need to fill out an application and get approved.
1. A decent personal credit score
While a business credit card is designed for your business, credit card issuers still run a personal credit check when you apply. And while there are business credit cards available for bad and fair credit, the best ones require at least a good credit score to get approved.
2. A personal guarantee
The reason business credit card issuers run a personal credit check is because they require a personal guarantee on the account. Another term for this is joint and several liability, which means that if your business can’t pay off the debt you incur with the card, you’re personally on the hook for it. If you don’t, it could damage your personal credit.
There’s no specific clause you need to sign to agree to a personal guarantee. Rather, submitting the application constitutes an agreement to the terms.
3. Your business’ legal name
You can qualify for a business credit card if you have a for-profit business. This means that if you get a 1099 form for tax purposes or you earn income from performing a service or selling a product, you can get a business credit card.
If you have a business name, enter it on the application page, and it will be included on the front of your credit card. If you don’t have a business name or you’re a sole proprietor or general partner, you can just put your legal name.
4. Contact information
In addition to your personal address and other contact information, you’ll also be asked to provide the mailing address and phone number for your business. If they’re the same, which is common with home-based businesses, you can typically check a box to copy the information from one to the other.
5. Industry type
You’ll typically get a list of industries to choose from, and some credit card applications even include sub-industries to narrow down the type of business you’re running. Don’t worry if your exact industry isn’t listed, though. Just choose the one that applies to your company the most.
6. Business structure
With some credit card issuers, you’ll need to share how you’ve legally structured your business. Typical examples include corporations, partnerships, LLCs, and sole proprietorships.
If you choose a corporation or a partnership, you may need to share more information, such as whether you or anyone else directly or indirectly owns at least 25% of the business.
If the business has other owners who have direct or indirect ownership of at least 25%, not including yourself, you may be asked to provide their information as well.
7. Tax identification number
There’s a spot on a business credit card application for an Employer Identification Number (EIN). However, you’re not required to have one to get approved if you’re a sole proprietorship. In that case, you can add your Social Security number (SSN) instead.
Keep in mind, though, that even with an EIN, you’ll still need to provide an SSN for the card issuer to run a personal credit check.
8. Business revenue and expenses
For the business credit card issuer to know how likely you are to pay back your debts, it needs to know a little about your business financials. Knowing your revenue and expenses will also help the issuer determine your credit limit.
This part of the application can be a little scary for new business owners who have little or no revenue at all. For this, you’ll also be asked to provide your annual personal income, which can help if your business isn’t earning any money yet.
9. Other business information
A couple of other things you’ll be asked to include are how many employees you have and how long you’ve been in business.
10. Role in the company
The card issuer wants to know that you have the authority to apply for a credit card in the business’ name. It does this by asking about your position in the company. Typical examples include owner, general manager, partner, president, vice president, treasurer, or member.
How to improve your chances of getting approved
It’s a lot easier to get a business credit card than it is to get a business loan or line of credit. But that doesn’t mean it’s easy for everyone.
In general, the most important factor in any credit card application is your personal credit score. So it’s important to apply for a credit card that’s targeted to your credit score range. Over time, work on improving your credit score, so you’ll have more options the next time you need a card.
It can also help if you have a low debt-to-income ratio (DTI), which is calculated by dividing your monthly personal debt payments by your gross personal monthly income. If your DTI is too high, it could be a red flag.
While it’s not required to have revenue to get approved for a business credit card, it can help improve your chances. That said, it’s essential that you tell the truth, even if it could make it more difficult to get approved.
This article was originally written on November 27, 2018 and updated on July 18, 2022.
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