Know These 8 Things Before You Get a Business Credit Card

Know These 8 Things Before You Get a Business Credit Card

Know These 8 Things Before You Get a Business Credit Card

We frequently get questions about how to get a business credit card, and whether a business card is better for a small business than a personal credit card.

Business and personal credit cards may look similar, swipe the same, and may even offer similar terms and rewards as personal credit cards, but business credit cards have a few distinct differences that can trip up a new business owner looking for a credit card.

Let’s look at a few important things to consider when looking for the right business card.

Benefits of Getting a Business Credit Card

A business credit card can provide a lot of positive benefits to your small business. Some ways business credit cards can benefit your business include:

  • More flexible business spending. A business credit card gives you the option to take advantage of opportunities you otherwise might not be able to afford.
  • Interest-free periods. Some business credit cards don’t charge cardholders interest for a specific number of months after account opening. 
  • Rewards on expenses you already buy. Many business credit card options have fantastic rewards points or cash back rewards. Basically, they pay you back for using the card on eligible purchases. 
  • The ability to set employee spend limits. Business credit card accounts typically allow you to control how much your employees spend on their cards, which can help you to avoid overspending.
  • Better protection. Credit cards often give cardholders more protections on business travel and other purchases than debit cards, so it can be safer to spend money using a credit card.
  • The potential to build business credit. A business credit card may report your activity to business credit bureaus, which might help you to establish your business credit scores.

Why Should You Get a Business Credit Card?

With so many business financing options out there, from small business loans to a line of credit, why consider a business credit card?

Well, to start, your business might not need a $10,000+ business loan, but it might need a way to cover business expenses when cash flow is slow.

And new businesses and startups might not be eligible for other financing options because they haven’t been in business for long enough. However, they may qualify for a business credit card.

Business credit cards can be a great way to build a credit payment history for your business, as long as you pay your balance on time (and in full when you can). This will open up great financing options down the road.

Business credit cards can offer perks like employee cards or rewards like cash back or gift cards, which offsets the interest you pay on purchases. There are also often welcome offers that waive the annual fee or interest rate for the first year.

Here are eight things that you need to know before you apply for a business credit card.

1. You Don’t Need to be Incorporated.

While business credit card applications will ask for your company’s Employer Identification Number (EIN), you might not have one if you are operating as a sole proprietor. You can use your Social Security number (SSN) instead.

And freelancers, rejoice. You can qualify for a business credit card too!

2. You Don’t Need an Employer Identification Number.

While business credit card applications will ask for your company’s Employer Identification Number (EIN), you won’t have one if you are operating as a sole proprietor. You can use your Social Security number (SSN) instead.

3. Business Credit Cards Aren’t Covered by the Same Rules as Personal Cards.

The CARD Act of 2009 created some rules that credit card issuers had to follow, but it also carved out some major exceptions for business credit cards. 

For example, the CARD Act requires a minimum 21-day grace period to pay a bill before it is considered late. It also makes card issuers apply payments to the highest interest rate balances first and give customers a 45-day notice before raising rates on future charges. 

Yet small business credit cards are exempt from these requirements. Thankfully, many credit card issuers have chosen to voluntarily apply these rules to their small business cards.

4. Your Personal Credit Will Likely Factor into Whether You Get Approved.

While you might assume that approval for small business credit card applications would be based on business credit scores and history, your personal credit scores likely will also be considered, especially if you don’t have much of a business credit history.

You will likely also be required to provide a personal guarantee to open an account, which means that if your business doesn’t pay its bills, you are responsible for doing so.

Some cards will report to your personal credit report, your business credit, or to both. The business credit bureaus that some cards will report to are: Equifax, Experian, and Dun & Bradstreet.

5. There are Business Credit Cards for Different Types of Credit.

There are all types of businesses with all types of credit profiles, and there’s a credit card for each one. For example, the Petal® 2 “Cash Back, No Fees” Visa® Credit Card is ideal for those looking to build their credit. If your credit is good or excellent, consider the CitiBusiness® / AAdvantage® Platinum Select® Mastercard®.

6. Business Credit Cards Can Offer Promotional Financing.

If you’re looking for a small business credit card to help you finance your company expenses, consider a card that offers an interest-free financing period as a welcome bonus. 

Small business credit cards can come with 0% introductory APR financing on new purchases the first year, balance transfers, or both. For instance, the American Express Blue Business Cash card currently offers new applicants an intro APR of 0% on purchases for the first 12 months of card membership.

7. You Can Combine Your Business and Personal Rewards.

If you enjoy using your personal credit card to earn points and miles with your favorite airline or hotel loyalty program, you can add to your rewards with a small business credit card. When you apply for either a personal or a business credit card that’s co-branded with an airline or hotel, you will be asked for your loyalty program number. Since you’ll use the same number for the rewards you earn from both your business and personal credit cards, all of your points and miles will be pooled.

And if you’re earning rewards directly with a credit card program, you’ll also have your points combined. For example, the American Express Membership Rewards and the Chase Ultimate Rewards programs both allow you to combine the rewards you’ve earned from your personal and business credit cards.

Look for a business credit card that allows you to rack up bonus points on categories where you commonly make business purchases, like at gas stations or office supply stores. You may be able to reap rewards as statement credit, travel rewards, or gift cards.

8. A Business Credit Card Might Duplicate the Benefits of Your Personal Credit Card.

Many business credit cards are nearly identical to the personal version. For example, the CitiBusiness® / AAdvantage® Platinum Select® Mastercard® comes in both a business and a personal version, each with a $99 annual fee. Both cards offer priority service when flying American Airlines as well as 2x bonus points for American purchases. Therefore, you might want to think twice before getting both the business and personal versions of the same card.

How to Get a Business Credit Card

Once you decide which card is best for your business needs, follow these steps.

Step 1: Check Your Credit

Check both your personal and business credit scores to see what cards you can qualify for. If your scores are low, consider working on building them up before applying.

Step 2: Know Your Annual Business Revenue

You’ll be asked for both your business and personal income on your business credit card application to provide a full picture of all the places you receive income from.

Step 3: Research Available Reward Options

Do you travel frequently for business? Maybe a travel rewards business credit card is right for you. Do you need a card you can transfer existing debt onto? Consider a balance transfer card.

Step 4: Understand  Your Rates

Business credit cards offer comparable APRs to that of personal credit cards, but APRs do vary by card and are influenced by your credit scores and income. If you are applying for a business charge card, make sure you understand the fees. Paying your balance in full each month can minimize the interest you pay.

Step 5: Know Eligibility Requirements

In particular, you should know the credit score requirements for the card. If you end up getting denied, understand that multiple credit card applications over an extended period can damage your personal credit scores.

Step 6: Apply Now!

You can apply for a business credit card online and get a decision typically in minutes. You’ll be asked details about your business, including:

  • Contact information (business name, address, phone number)
  • Time in business
  • Number of employees (and how many you want to be cardholders)

Once your application and creditworthiness have been reviewed, you will be approved for a card. You’ll receive the card in the mail as well as details on your credit limit and interest rate.

Applying for a Business Credit Card

The credit card application process isn’t super complicated and can often be done online. Qualifying for a business credit card starts with applying for a card that you can meet the requirements for, so make sure you understand them. Before you get a business credit card, you’ll need to gather certain information and documents, like:

  • Your full name and business address
  • Your social security number and date of birth
  • Your business’s tax ID number
  • Years in business
  • Your business’s revenue

Because you need to prove your business is legitimate, you likely won’t be able to get a business credit card to start a business. For the same reason, it may be harder for a new LLC to get a business credit card as well.

After you apply, lenders will usually perform a credit check on your personal credit. They may also check your business credit, but this depends on the credit card provider. 

Potential Issues with Getting Approved for a Business Credit Card

Your personal credit history can have a big impact on your business credit card approval odds. If you have bad credit, however, there are options. You may not be able to get rewards cards at first, but secured business credit cards may offer a path toward them. Secured cards require a deposit and have lower credit limits, but can be easier to get than other credit cards. Using one may help you to increase your credit score.

Also, some retailers of office supplies or warehouse supplies offer their own business credit cards. These cards may be easier to qualify for than other business cards.

Credit cards also offer variable APRs, so if you’re approved, the lender may mitigate their risk by making yours higher than someone with good or excellent credit. 

Using a Business Credit Card

A business credit card can be incredibly useful for increasing your cash flow when business opportunities arise that your cash reserves can’t cover. You can use it instead of, or in addition to, a business line of credit. 

Using a credit card in your business can simplify your bookkeeping. But you’ll still want to establish clear rules around:

  • Who can use a business credit card
  • How many employee cards you’ll hand out
  • What the cards can be used for
  • How much you can spend each month
  • How you will pay back the charges

Proper planning of your business’s credit card use can help you avoid difficult circumstances in the future. Additionally, using a business credit card may help to build your business credit. This may open up opportunities to get small business loans in the future.

Things to Be Aware of

While business cards can be helpful, there are a few things to be aware of. 

First are the fees you’ll pay. In addition to interest on purchases, you may be charged foreign transaction fees, transfer fees, or late payment fees. You’ll want to pay attention to when billing cycles fall so you always make your payments on time.

Keep an eye on your spending limits so you don’t have your credit card declined when trying to make an important purchase that your business needs.

It’s a good idea to separate your personal finances and business finances, so always pay your business credit card debt from your business bank account to keep accounting simple. Looking for the best card for your business needs? Nav has the best business credit cards and reviews. Check it out!

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This article was originally written on June 8, 2018 and updated on February 8, 2023.

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11 responses to “Know These 8 Things Before You Get a Business Credit Card

  1. I’m a new business owner with a LLC and looking for business credit cards to help fund my business. what banks are good for starters with no business credit and what would I need to apply for one

  2. I got an llc that’s involve with real estate. My business card didn’t come in the mail. I got alot of properties to purchase. I got lenders as well, do I need a business card to do transactions because I got a business bank.

  3. Hi,

    What if I’m a non us resident – I own an LLC based in Florida which has 200K+ Annual income.
    How can I apply or where can I appyl for a credit card ? I also have EIN and SSN.


  4. I am trying to start a business but to form my business structure in the particular state i live is very expensive. Can i get get business credit just by using my SS number with no entity, EIN or D&B account?

  5. Great info! Quick question: does opening a new small business credit card account effect my personal credit profile? For instance, will it somehow bring my personal credit score down the way a hard inquiry would?

    1. Most small business credit cards do check the owner’s personal credit and it will create an inquiry on the credit report used. Inquiries generally only result in a drop of 3-7 points and they don’t affect credit scores after a year. (That impact is on personal credit scores. It’s generally not an issue for business credit scores.)

  6. I was involving in such personal cards during my travel vacation in summer time. Personal card is really useful especially when you are in travel. You can really obtain more benefits of your personal card. I agree with that.