A business credit card can help you manage cash flow for your business, earn rewards, build business credit history, and keep business and personal finances separate, among other advantages. Many business owners find business credit cards invaluable, particularly to meet startup expenses and cover seasonal stock variations.
It’s often thought that business credit cards are for corporations. But there are different types of credit cards designed for small businesses. Even sole proprietors, or freelancers and gig workers who are self-employed only part of the time, can often qualify for a business credit card. So, whether you’re a student driving for hire in your spare time, or a single mom running a business from your home, or the director of a company employing 50 people, you can apply for a business credit card. You also don’t need to have an established business to get a credit card. Card issuers are often willing to consider businesses that aren’t making any money yet but have a reasonable expectation of doing so. Many people use business credit cards to meet the initial expenses of their new business ventures. You can apply through online forms for most business credit cards.
Card issuers may also ask you for personal information such as your date of birth, your household income, your home address and telephone number, your Social Security number, and your mother’s maiden name.
Whether you qualify for a business credit card depends in part on your credit score. Most business credit card issuers want a good to excellent credit score. Fortunately for new businesses, the credit score doesn’t have to be from your business alone. Your personal credit score can also be taken into account. For more credit score information, read “Credit Score Ranges: What is an Excellent, Good, or Poor Credit Score?”
The card issuer will check your business’ credit score first. There are several bureaus that record business credit information, but the issuer may do their own credit scoring using information that you provide, such as your business plan and cash flow forecast.
If your business doesn’t meet the issuer’s credit criteria, then the issuer will check your personal credit score. If you have a good to excellent score (670-850 points) your application for a business card may be accepted even if your business credit score is low or non-existent. The credit limit and interest rate on the card will then be based on your personal credit score. Credit limits on business credit cards are typically higher than on personal credit cards, which can be a boon for a new business – and some business cards have no pre-set spending limit – see “Key Differences Between Business and Personal Credit Cards”.
You may additionally be asked to sign a personal guarantee. This means that if the business fails to make payments in accordance with the terms and conditions, the card issuer can recover the balance directly from you.
Some card issuers will accept applications from people with low credit scores, but the interest rate on the card is likely to be high and they may require a security deposit.
