More and more small businesses are turning to business credit cards as a way of having back up financing and improving their business credit scores at the same time. Many business credit cards offer perks just for using them, including frequent flyer miles and cash rewards. Business credit cards are great for business owners who need back up credit for emergency situations or to offset irregular cash flow. Additionally, making on time or early payments on a business credit card will help your business build its credit so that your business can secure better terms with vendors and suppliers, government and high profile private contracts, and the right business financing at the right price.
But how does one go about getting a business credit card? While the process is relatively painless there are many choices to take into consideration. Let’s take a look at some of the steps you’ll need to take in order to obtain a business credit card.
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- 1 Close your eyes, take a deep breath, and look up your credit scores.
The people to whom you’re applying for a business credit card will want to know how responsibility you behaved with your credit. A low credit score will not automatically keep you out of the running for all cards, but if you find yourself getting denied, you can check out this list of business credit cards with lower credit standards.
- 2 Choose the right business credit card.
Spend some time thinking about how you plan to use your card so you can pick one that meets your needs. Do you want rewards? If so, cash back or miles (or something else)? Do you pay in full or plan to carry balances from time to time? If the latter, a low interest rate will be important. You’ll also want to understand whether the cards you are interested in are available based on your credit scores.
Time Saving Tip: Check out Nav’s business credit card marketplace if you need help choosing a business credit card or signup for a free Nav account and get matched to credit card and financing offers based on your credit.
- 3 Apply for your new business credit card!
These applications usually ask for basic business and personal information such as your name and date of birth, the name of your business, its address, and your EIN (or SSN if you don’t have an EIN). If you’re the company owner, you will likely be required to give your personal social security number as well. You’ll also need to provide information regarding the type of business you’ve started—the options being sole proprietorship, partnership, and corporation—along with the number of years you’ve been in business and a little bit about your industry.
If you’re a startup wondering how to get a business credit card, know that business credit card applications are going to require your personal household income information. Usually when you’re filling out your application, you’re asked to enter your business income for the previous year. Since you didn’t have a business income last year, your creditor will have to look to your personal household income when making their decision.
- 4 Sign the business credit card application.
This should be done by of one of the decision-making parties of your company. If you’re the only decision-making party of your company, so much the better. Keep in mind that most of these cards will require a personal guarantee on the part of the applicant. That means if your business does not pay the debt, you will be personally responsible.
A final note: The name “business credit card” is somewhat misleading. It’s more accurate to think of it as a small business credit card, because you can apply for one even if you don’t own an established business. Small businesses take many forms: the successful mom-and-pop bakery down the street qualifies as a small business, but so does the YouTube channel whose owner reviews video games as a hobby and charges a small subscription fee to her viewers. In the case that the YouTuber is a sole proprietor without an EIN, she would use her SSN to apply.
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