No matter the size of your business, applying for a business credit card can offer a variety of benefits. You can use a business credit card to cover everyday expenses, build your credit history, and, in most cases, earn rewards for your spending.
Plus—unlike personal credit cards—business credit cards tend to have higher limits and include unique tools to help you organize your finances.
You can usually apply for a business credit card online, and the process is generally similar to getting a personal credit card. Here are five steps to follow.
Although there will be some variation based on the issuer and type of card, your eligibility will be largely based on your personal credit score, especially if you’re applying as a newer business. You’ll want to check your credit to get a sense of where you stand before choosing a business credit card.
Many credit cards require good or excellent credit, while others are designed to accommodate those with fair or average credit. If you have bad credit, you can look for secured business credit cards, which require cash collateral.
Credit card issuers may also consider your business credit score, as well as annual revenue or annual income, as part of the decision-making process. Issuers may use these requirements to set interest rates and credit limits as well.
Your annual income can be particularly important if you’re a new business that doesn’t have any revenue to report. Issuers will use your personal income to make sure that you have enough money coming in to repay any balance you accrue on the card.
Once you have a better sense of where your business stands, you can start researching different business credit card options. You’ll want to think about your qualifications, card features, and reward options. Here are some things to keep in mind when you’re comparing cards:
0% Intro APR Period
A 0% intro APR business credit card can be a good option for startups that want to finance specific purchases over a longer period of time without accruing interest. These cards allow you to roll over your balance with no interest for a set amount of time after you sign up for the card.
The American Express Blue Business Card Plus, for example, offers a 12-month introductory period. After your 12 interest-free months are up, a variable APR sets in at a rate depending on your creditworthiness. This rate will also vary with the market, so you’ll want to be sure to check the issuer’s terms and conditions for the latest APR information.
It’s also important to remember that after the 0% APR period, you’ll need to be sure you can pay off your balance—if you can’t, your balance will carry over and it will begin to accrue interest based on the variable APR.
An annual fee is a cost that the card issuer charges to you to account for the card’s rewards and benefits. This means that cards with more rewards tend to have higher annual fees. If your ideal card offers significant benefits that pertain to your business needs, it might be worth paying an annual fee.
For example, you might consider the Chase Ink Business Preferred Credit Card—it has a $95 annual fee, but it has no foreign transaction fees and employee cards come at no extra cost. Plus, the rewards points you earn never expire, and you can redeem them for a variety of perks—like travel, cash back, and gift cards.
On the other hand, if you’d prefer to have a business credit card with no annual fee, there are many options as well—including cards with great benefits. In fact, the AmEx Blue Business Plus card we discussed above has no annual fee. This card also offers 2x reward points for every dollar you spend on your first $50,000 in purchases annually.
In comparing different business credit cards, you should think about the type of rewards you would prefer to earn for your spending. Are you looking for points, straight cash back, or miles? Would you prefer to earn flat-rate or tiered rewards?
Flat-rate rewards offer you the same amount of points regardless of what category you spend in. These are the most common type of reward offered among credit card issuers because they’re fairly straightforward.
Tiered rewards offer higher reward percentages for big spending, or for spending in a certain category, such as gas, groceries, department stores, or even Amazon purchases.
The Chase Ink Business Cash® credit card, for example, earns you 5%, 2%, or 1% cash back depending on where you spend. Qualifying spending channels include office supply stores, internet, cable, and phone services, gas stations, and restaurants.
Foreign Transaction Fee
If you travel abroad often, you might prioritize a card that avoids the standard 3% foreign transaction fee—which is typically charged when you make purchases outside the U.S. or if you buy a product online from a foreign retailer.
Although many issuers charge foreign transaction fees, there are some exceptions—Capital One, for example, has eliminated these fees. Additionally, many business travel credit cards offer no foreign transaction fees as well as travel-specific rewards like earning points on all travel-related purchases (rental cars, plane tickets, hotel rooms), redeemable miles, and free hotel stays.
With a business credit card that offers a welcome bonus, you’ll get extra points, rewards, miles, or cash back if you spend a certain amount of money within the first few months of using your card.
Although not all business credit cards include this type of perk, it might be worth exploring the ones that do if you plan on making substantial purchases within your first few months with the card—this way, you’ll be truly maximizing your spending. The Chase Ink Business Unlimited® card, for example, offers a $900 welcome cash back bonus if you spend $6,000 in the first three months.
Before choosing one of these cards, however, you’ll want to be sure to read the fine print to see exactly how much money you’ll need to spend—and on which types of purchases—to make sure that you’ll be able to access the offer.
After you’ve narrowed down your options and determined the right card for your business, you’re ready to start the application process. You can usually complete and submit a business credit card application online within minutes, especially if you’ve gathered the necessary information ahead of time.
Although there may be some variation based on issuer and type of card, here’s what you’ll typically be asked to provide:
You’ll want to keep in mind that major red flags in your personal credit history, like tax liens, bankruptcies, collections, and judgments, could disqualify you from approval, whereas on-time payments, low credit utilization, a low debt-to-income ratio, and a clean financial history will all help your chances of approval.
If you’ve been in business for a few years, however, your personal information may not weigh as heavily in your application as your business financials and credit history.
At the end of the process, you’ll be asked to agree to the terms and conditions before submitting the application. These terms and conditions will likely include a personal guarantee.
A personal guarantee states that the card issuer holds you personally, financially responsible if the primary payer—which most likely means your business—fails to repay their credit card bills. Most business credit cards will require a personal guarantee, therefore, the only way to ensure your personal finances are protected is to pay your bills on time and in full every month.
Once you submit your business credit card application, it shouldn’t take too long to hear back if you’re approved. Most online applications will tell you almost instantly if you’ve been approved for the card. Upon approval, you should also get a notice of when you should expect your business credit card in the mail.
On the other hand, if you find out you were denied for a business credit card, you’ll want to review the denial reason provided by the issuer. If you find out that something is negatively impacting your credit score, you’ll want to work to remedy it so that you improve your chances for approval in the future.
After you’ve been approved for a business credit card, you’ll likely receive an email with information to create an online account. Depending on the card and the issuer, you may be able to use a virtual card for online purchases before you receive your physical card in the mail.
When you do receive your card, you’ll want to activate it as soon as possible and review any accompanying information. You’ll likely receive details about your credit limit, interest rate, rewards program, and any additional terms and conditions.
Once the card is activated, you can use it for every day purchases and spending.
Although you can technically use a personal credit card for your business, there are a number of advantages to applying for a business credit card—even if you’re a sole proprietorship or brand-new startup.
Here are some business credit card benefits to consider:
Rather than charging everything to your personal credit card, using a dedicated business credit card allows you to maintain an important separation between your business and personal finances.
Separating these finances will not only make things easier come tax season, but it will also help you protect your personal finances from any potential legal trouble that arises with your business.
Getting a business credit card can also help you build your business credit. Unlike your personal credit history, your business credit will be tied directly to your employer identification number and the spending and payments your business makes.
Why is business credit so important? Like your personal credit score, your business credit score is used to illustrate your trustworthiness as a borrower. Responsible spending, therefore, improves your business credit, which can help you qualify for business financing in the future.
Getting a business credit card grants you access to working capital, which can be particularly useful if you’re a new business, as it will be more difficult to qualify for a loan or other similar financing products. Plus, if you pay down your balance every month, you don’t have to worry about accruing any monthly interest.
Applying for a business credit card, therefore, gives you relatively instant access to a revolving line of credit—giving you the opportunity to use the funds you need to start growing your operations.
Most business credit cards offer the potential to earn rewards for your spending. Depending on the type of card you choose, you’ll be able to redeem points and earn miles, cash back, gift cards, and more. Plus, some credit cards even offer a sign up bonus when you open an account and fulfill the necessary qualifications.
You might also have the opportunity to take advantage of additional perks, like travel accident insurance, extended warranties on certain purchases, and even early access to tickets for major entertainment and sports events.
Randa Kriss is a senior staff writer at Fundera.
At Fundera, Randa specializes in reviewing small business products, software, and services. Randa has written hundreds of reviews across a wide swath of business topics including ecommerce, merchant services, accounting, credit cards, bank accounts, loan products, and payroll and human resources solutions.