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Just like a personal credit card, you’ll probably find apply for a business credit card pretty straightforward, too, especially if you do it online. But, as you might imagine, there are a few business credit card requirements that didn’t make it onto your personal credit card application.
And it’s certainly worth making sure you know about those business credit card requirements, because getting a business credit card is best decisions your business can make. No matter how small or big your business is, one of your first ports of call as a small business owner should be right to that card issuer—we’re talking even before you shoot for bigger business loans. Because having a dedicated business credit card truly sets up your business for financial success.
Your business credit card gives you access to a flexible source of capital, earns you perks and rewards to help you run your business, and separates your business expenses from your personal expenses to make tax season a little less painful. Safe to say that every small business owner wants that peace of mind.
Here, we’ll run you through the nine business credit card requirements on your application that you need to know—and the two most important business credit card requirements that aren’t on the application. Then, we’ll show you how to find the business credit card that works as hard as you do, so you’ll know exactly where to put your new knowledge to use.
Before we get into the business credit card application, we’ll answer a few questions about business credit card requirements that you may be wondering about.
Many! Essentially, if you sell items or services for a profit—and have a reason for needing a business credit card, such as purchasing materials—you have a shot at qualifying for a business credit card.
You don’t need to own a brick-and-mortar institution, manage a fleet of employees, or generate a massive profit through your business for a card issuer to consider you a small business owner. Startups, freelancers, side hustles, hobbyists, sole proprietorships, partnerships, S-corps, and C-corps may all be approved for business credit cards.
Most of the time, yes. Almost all business credit cards include a clause in their terms stating that the creditor holds you personally, financially responsible if the primary payer—which most likely means your business—fails to repay their credit card bills. You’ll find that personal guarantee hiding out in the fine print of your card agreement’s terms and conditions.
The only way to ensure that the creditor doesn’t go after your personal coin purse is, of course, to pay your bills on time and in full every month. But if that personal liability worries you, there are ways to get a business credit card with no personal guarantee.
Your best bet is to get your credit card through a bank with whom you have an existing relationship. Personal guarantees are a creditor’s safety net, which they’ll fall back on in case a borrower fails to repay their debt. So, if your bank has hard evidence on hand of your reliability—i.e., that you pay your bills on time and have a low debt-to-income ratio—then they may waive your personal guarantee.
An easy way to start building a strong relationship with a bank is to open up a business bank account and use it responsibly.
Find a Business Bank Account
A resounding yes on this one. Just like a small business loan, your credit card issuer is taking a risk when they approve your business credit card application. Put simply, they’re trusting that you, the borrower, will repay your debt (aka your credit card bills) in full and on time.
Your personal credit score is one of a creditor’s best tools for measuring your financial responsibility. The credit bureaus formulate that three-digit number based on data like the timeliness of your loan bill repayment, your credit utilization ratio, and your average balance across all types of loans. Think of it like your historical track record as a borrower.
So, your credit score is the business credit card requirement you’ll want to keep top of mind—and it doesn’t even appear on the business application proper! Rather, the card issuer will use the name and social security number provided on your application to perform a hard pull on your personal credit score. This hard credit check will slightly, though temporarily, ding your credit score.
The good news is that most card issuers will have general average credit thresholds for certain cards or types of cards. So, if you have an idea of your credit score before you apply for a business credit card, you can avoid lots of little damage to your score (the bigger damage being rejection). Only apply for cards you’re in the range of eligibility for; since it’s so easy to apply for a business credit card online, it could be tempting to go a little nuts. Instead, do just a bit of due diligence and only apply for the cards you know you’re eligible for.
And, luckily, there are business credit card options for all credit score ranges. And if your credit score isn’t where you’d like it to be right now, don’t worry too much: If you responsibly use a business credit card for building credit, you’ll bump your score enough to graduate onto a business credit card that’ll fetch you even better rewards, perks, and advantages.
Now we’ll take a closer look at a common business credit card application, so you can anticipate exactly which requirements you’ll need to fulfill to be approved. As you would imagine, some of these business credit card requirements are more straightforward than others, and the creditor will weigh some of these factors more heavily than others to determine your eligibility.
But in the name of that aforementioned, and ever-important, due diligence, we’ll provide you with all the fields you’ll need to fill on your business credit card application, so you can prepare ahead of time.
If your business set up as a C-corp, S-corp, LLC, or limited partnership, then here you’ll provide the name under which you registered your business with the state. If you’re a general partnership or sole proprietorship, then you can just provide your own legal name.
Here you’ll write your business’s mailing address and phone number. If you work from home, you can list your home address.
You’ll probably have to choose an industry from a drop-down menu or tick a box, so just choose the industry that most closely applies to you.
Here, you’ll be asked to choose your business entity type—either a corporation, partnership, non-profit, LLC, government, or sole proprietorship. If you’re a freelancer and haven’t registered your business with the state, then you’ll choose sole proprietorship.
Then, if you’re registered as a corporation or partnership, you may be asked whether your business has beneficial owners. Beneficial owners are individuals, other than yourself, who own at least 25% of your company, either directly or indirectly. To clarify, “indirect ownership” means owning equity in a business through another business. For example, if you own 100% of Company A, which owns 25% of Company B, then you’re an indirect owner of Company B.
If you do have beneficial owners who own at least 25% of your company, then you’ll be prompted to provide some basic information on those individuals. That information may include their name, home address, date of birth, SSN, and percent of ownership.
Beneficial ownership reporting was only recently initiated as part of the Customer Due Diligence Requirements for Financial Institutions. This federal mandate aims to guard against criminal financial transactions, such as money laundering, by verifying the identities of registered corporations’ owners.
Just a heads up: You may now need to report beneficial ownership information on your small business loan application, too.
If you’re a new startup, just choose the lowest option available in your application’s time in business field. And if you don’t manage any employees other than yourself, you can list 1 employee.
The card issuer wants to know your annual business revenue for two pretty good reasons:
Generally, the larger your annual business revenue, the more likely you are to have your business credit card application approved. Again, with a business credit card—or any type of small business loan, for that matter—almost every decision the creditor makes comes down to risk.
If you have more money coming into your business, the card issuer figures that you’ll have less reason to fall behind on your bills and, therefore, pose less risk. Larger revenues generally fetch larger credit lines, too.
If you’re a brand-new business and you’re making very little, or zero, revenue at the moment, don’t be tempted to fudge the numbers. The card issuer will consider your personal annual income instead. (More on that to come.)
A Federal Tax ID, aka your EIN (Employer Identification Number), is the nine-digit number the IRS assigns registered businesses. Card issuers use EINs to verify businesses. If you’re a sole proprietorship without an EIN, you can list your social security number in this field instead.
Then, as the owner of the business and the primary cardholder, you’ll need to provide the card company with some additional, personal information.
Your business doesn’t need to be your primary stream of income for a card issuer to approve your business credit card application. In fact, it’s pretty common for brand-new business owners and entrepreneurs with little capital to their name (as of now!) to apply for, and be approved for, business credit cards, since responsibly using a business credit card is such a reliable way to build your business’s financial profile.
Card issuers are interested in your total annual revenue for two, key reasons:
These two business credit card requirements are important factors by which creditors determine whether or not to approve your application.
Calculating Your Total Annual Income
When reporting your total, personal annual income, you can include whatever income you reap from your business, whether or not that business makes up the bulk of your income. In fact, you should add up any and all streams of personal and business income to generate that final number. Again, the card issuer just needs to know that you have access to substantial enough funds to repay your debt.
So, that total income calculation will include your full-time job, of course, but you should also incorporate earnings from your part-time gigs, no matter how small they may be. An amendment to the 2009 CARD Act also allows the inclusion of your spouse’s income in your calculations, as long as you truly expect to have access to their money.
Calculating Your Debt-to-Income Ratio
Card issuers use your total annual income along with your credit report to peek into your debt-to-income ratio. DTI is just another tool that lenders use to measure how well you can manage additional debt.
To come up with that ratio, you can divide your total monthly debt payments (including business loans, mortgages, student loans, credit card bills, or any other debts you have on your books) by your gross monthly income. As you can probably guess, the lower the DTI, the better, as far as lenders are concerned.
The card issuer will use your legal name and social security number to check your personal credit score—which, more often than not, is actually the most important business credit card requirement.
The nine business credit card requirements listed above are certainly useful to know about before you start your application. But in reality, the two most important business credit card requirements aren’t actually on your application. That’s your personal credit score and your debt-to-income ratio.
Card issuers consider all the information you provide on your application independently, but they’ll also use that information to acquire your credit score and DTI. More specifically, they’ll use your name and SSN to perform a credit check. They’ll also use your credit report to check out your current debts, then use your total annual income to figure out your debt-to-income ratio.
These two business credit card requirements help creditors determine whether you’re responsible and financially robust enough to manage additional debt—in other words, whether they’re willing to take the risk of issuing you a business credit card (with full faith that you’ll repay what you owe).
Although you’ll need to satisfy a few requirements on your business credit card application, in reality, it’s much easier to be approved for a business credit card than it is to be approved for a small business loan. The trick, of course, is to be mindful about which business credit cards you apply for so you maximize your shot at getting approved.
A good rule of thumb? Right of the bat, limit your search to the business credit cards whose minimum credit score requirements match up with your credit score. (Fundera will help you get your free credit score with no obligation if you don’t know it.)
Then, within that pool, find the credit card whose perks and rewards suit your business’s needs, whether that’s travel points, cash back, a credit-builder, or a long 0% intro APR period if you expect to carry a balance from month to month.
To give you a head start on your search, take a look at four of our recommended business credit cards, one for each of those common small-business concerns.
If you spend tons on trips and travel, consider a business credit card whose rewards will slash airfare, hotel, and car-rental costs. Check out the Capital One Spark Miles for Business card, which offers a solid, flat-rate rewards program and a generous sign-up bonus.
No matter what kind of business you helm, you can probably always use more cash. We recommend looking into the Chase Ink Business Cash credit card, which fetches 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, so you’ll be rewarded for a good amount of your basic purchases.
It’s best practice to pay 100% of your credit card bill every single month. But you may want the option of carrying a monthly balance without being hit with interest, perhaps if you’re paying down a large purchase.
In that case, we’d recommend looking into the American Express Blue Business Plus credit card, whose 15-month 0% intro APR period is the longest you’ll find on the market. Keep in mind, though, that your 15 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 prime rate, so check the issuer’s terms and conditions for the latest APR information.
The Capital One Spark Classic for Business is an ideal credit-building tool. Even though it’s a business credit card, Capital One reports user data to the three credit bureaus (Equifax, Experian, and TransUnion) that calculate your credit score—so your good behavior (like paying your loan bills on time) will be rewarded.
Plus, the Spark Classic card has a 550 minimum credit score requirement, so it’s one of the most accessible, unsecured business credit cards you’ll find from a major card issuer.