How to apply for a business credit card

If you are a business owner, you can apply for a specific card for professional use. You can be approved for a card even if you are a sole proprietor.

What if you don’t have an Employee Identification Number (EIN)? Its good. Instead of an EIN, you can use your social security number on the application.

You should already have a business checking account. You will be asked to provide this information on the credit card application. Also, you should already have your business registered.

It makes sense to have separate personal cards and business cards. This makes all of your financial reporting much easier, whether you do it monthly, quarterly, or annually.

What is a business credit card?

Apparently, the card is only used for purchases or business activities. Uses can include things like travel and supplies.

You can even use the company card to pay for utilities such as phone service and electricity or purchase items from office supply stores. It’s a good thing if you use a card that gives you a percentage of money back as a credit on your statement. The cash back credit will be issued based on the amount you pay on the balance.

Personal credit cards are only used for your personal purchases, such as household items, clothing, and groceries. These items are not eligible purchases for a company card.

Why you should apply for a business credit card

Now that you have the answer to what business credit cards are, the next question should be why get a business credit card. There are many good reasons to apply, and here are a few:

Increase business credit scores – When you apply for a business credit card, you will be asked to provide your personal credit score. It might help you get the business card, but your personal score doesn’t affect your company’s credit rating. Using the card and paying the balance on time improves your business rating. Major consumer credit bureaus review both scores on loan applications.

Tax deductions – The annual fee and interest charges are tax deductible as business expenses.

Financial monitoring – You will receive year-end statements for your business and personal credit card. This paves the way for easier tax filing at the end of the year. Separating personal and business finances makes things easier for small business owners.

Credit line – It’s easier to get a credit card than to get a loan, especially if you only have a good credit score. As long as you don’t go over your limits, you’ll build up a business credit history as you make payments.

Cash back – Business credit cards usually offer a discount as a percentage of your payment.

For more information, see Why use a business credit card? Here are the main reasons.

6 Simple Steps to Applying for a Credit Card for Your Small Business

1. Check that you meet the requirements for business credit cards

Business card issuers will look at your (personal) credit score. Good personal credit scores can help you get lower annual fees. Business credit card issuers will perform a personal credit check of your finances.

2. Make sure you have all the necessary documents

You will need proof that your business is registered. You will provide an EIN or use your social security number.

If you’ve been in business for a year or more, you can provide business financial reports.

Major credit card issuers may also set you low credit limits initially. This can be based on both your personal credit report and your business report. If you make timely payments, your preset spending limit can be adjusted and your business credit rating will continue to improve.

3. Compare business credit cards

There are many card options out there, and it’s important to do your research and choose the right business credit card. Here are some key business categories of card features:

Credit limit – Credit card companies are naturally conservative and can start with low limits. But the best business credit cards adjust that number as you make timely payments. Secured business credit cards require you to make a deposit as personal guarantee before you can use the card. It works the same way as a rent deposit – it’s there for the card company to seize if you fail to pay.

Annual Fee – Many cards advertise a 0% annual fee. The 0% fee can last up to 15 months. However, it is important to know that if you make a late payment, an annual fee will be imposed.

Foreign transaction fees – If you are not going to travel or do business in foreign countries, you do not need to worry about this.

Benefits – Most business credit cards include benefits such as cash back, points or miles (to be applied towards air travel). You can get a sign-up bonus. Choose the benefit that best suits your needs.

Additional Cards – Will you need cards for your trading partners? Will you need cards for employees (like for gas)? Will the issuing company provide free employee cards or will there be a charge?

4. Find out your credit score based on your personal credit history

Before applying for the card, refund or refund your personal card. You certainly do not have an overdue balance, which would have a considerable impact on your credit report. Your payment history for things like a mortgage, utilities and more will be reviewed.

Commercial credit bureaus will review your personal finances. If your rating is good to excellent, you will have many business credit card options. If your rating is “fair”, you can earn an APR of up to 25%. To get a lower APR, you can only get a business credit card that is “secured” by a deposit.

5. Complete your business credit card application

Complete the application and verify your work.

If you use a PO box for mail to your home, be sure to provide everyone’s physical address as well.

6. Start using your small business credit card

Start building your business credit score by using your small business credit cards for everyday business purchases. Establishing business credit leads to a favorable business credit report. Steller business credit reports are a great help when applying for a loan from a lender.

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