How to Get a Business Credit Card

A business credit card offers small business owners a variety of rewards and benefits. Whether you're a freelancer or start-up owner, a business credit card can help streamline finances and is a popular alternative financing option to business loans.

The rate on business credit cards is often lower than the national average. In April 2018, the APR of business cards offered online was 2.5% lower than the national average for general purpose cards, averaging around 14%.

For funding purposes, around 30% of small business owners were more likely to obtain business credit cards for capital. Startup businesses came in around 44%, proving that business credit cards are popular with entrepreneurs looking for access to capital.

What You Need To Apply:

1. Your state-registered business name.

You will be required to submit your business's state-registered legal name. This is the name you will conduct business under and it will appear on your business credit card if you are approved. If you decide to conduct business as a sole proprietorship, freelancer, or general partnership, you can submit your own legal name.

2. Your business contact information.

This should include your business address, phone number, and other means of contact. Business owners that operate from home can use their home address and phone number.

3. Your business' legal structure.

You will be asked about the type of business you're operating as, such as a corporation, partnership, non-profit, LLC, or sole proprietorship. As of May 2018, new laws require that personal information should also be provided for beneficial owners who own 25 percent or more of a business.

4. Your industry type.

Banks will want to know which industry your business falls under. For example, agriculture, finance, beauty, medicine, etc. You will have the option to select which industry suits your business.

5. Your business history and number of employees.

You will be asked how long you've been in business and how many employees you currently have. If you're starting a new business, you can choose the lowest option provided to you. In addition, sole proprietors or freelancers can list one employee.

6. Your federal tax ID.

Also known as an Employer Identification Number (EIN), this refers to the nine-digit number the IRS provides to registered businesses. To obtain an EIN, complete the online application on the IRS website. There is no application fee required. Sole Proprietors that don't have an EIN can still apply for a credit card using their Social Security number.

7. Your annual business income.

Banks and credit card companies will want to know how much income your business brings in every year. This information is required so that card issuers can confirm you are able to pay them back and to help calculate your debt-to-income ratio.

It's important to note that your business doesn't have to be your main source of income in order to be approved for a business credit card. If you are a freelancer or independent contractor, you can submit your personal revenue.

8. Your personal information.

You will have to submit your personal contact information, including your legal name, Social Security number, address, and more. In addition, you will need to describe your role in the business. The credit card company or bank will use this information to check out your personal credit score.

How to Get a Business Credit Card:

1. Check your personal and business credit.

Before you start the application process, be sure to check and maintain a good credit score for both your personal and business finances. Banks may consider factors that affect both your personal and business finances, such as business profits and expenses, as well as your personal income.

If you have no or low credit scores, you can still apply for a business credit card but your options may be limited. However, there are steps you can take to improve your credit score, such as paying all bills on time, staying below your credit limit, and bringing your balance down to 30%.

Alternatively, you could apply for a secured credit card, which was designed for individuals with low credit scores. With this card, users are able to improve their credit score with responsible usage and graduate to an unsecured credit card.

2. Research which business credit card suits your business needs.

Consider the type of business you operate and research how you can improve your rewards based on your business' expense requirements. To help make the decision, compare each business credit card provider side-by-side, and weigh the benefits and disadvantages.

You need to keep four factors in mind when comparing business credit cards:

• Annual Percentage Rate (APR).
• Fees.
• Rewards.
• Card type.

3. Prepare your annual revenue reports.

Almost all banks will request to see your financial documents, especially your annual revenue. Card issuers will want to ensure that you are able to pay back your balances. If you are starting a business, you can use your personal income as reassurance. This way, your credit card qualification will depend on your personal income reports.

4. Make sure you have all the information you need to apply.

Before you can apply for a business credit card, you will need to get all your financial reports and business information in order. To apply, you will be required to submit certain information, such as your state-registered business name, your legal business structure, Employer Identification Number (EIN), your business' contact details, and more.

Read about what you need to know before applying.

5. Apply for a small business credit card.

Once you've researched the different options and chosen the business credit card that suits your business needs, you can begin the process by applying. For faster results, check to see if you can apply online as most credit card companies now offer an online application option. However, traditional banks may require you to follow the in-person application process.

6. Be responsible.

Once you've received your business credit card, you will have access to instant finances. However, this does not mean you have the freedom to swipe whenever the opportunity arises. Ensure that you only use your credit card when necessary, always try to stick to your business budget, and make sure all repayments are done on time.