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CAN I QUALIFY FOR A SMALL BUSINESS CREDIT CARD?

A small business credit card offers a wide range of benefits. However, many entrepreneurs and part-time business owners don’t think they can get one. Yet qualifying is often easier than you might realize.

Follow along to better understand what you need to apply and get approved for a business credit card.


MOST BUSINESSES WITH REVENUE CAN GET A CREDIT CARD

You don’t need a registered business or be a full-time entrepreneur to qualify for a small business credit card. Even small, part-time ventures may generate enough income to open a new account.

If you earn money performing any service or selling any product, it counts as a business. Anything from a booth at the farmer’s market to lawn care and snow removal count as a business. If you get paid and run it yourself, it counts as a business. There is no specific minimum income to qualify as a business. Each credit card company has its own rules for income and other qualifications.

You don’t even have to be registered with your state. You can apply with your own name and personal information.

APPLYING FOR A CREDIT CARD WITHOUT A REGISTERED BUSINESS

When applying for a personal credit card, you must submit your personal contact information. This includes your name, address, phone number, and Social Security number. If you aren’t registered with your state’s Secretary of State as a business, you can still use your personal information when applying.

A registered business usually has an Employer Identification Number (EIN) from the IRS. If you have an EIN, you can use this instead of your Social Security number.

In either case, the credit card issuer will still want your personal information. Most business credit cards ask for a personal guarantee that you’ll pay off the balance if the business can’t. That means you have to put your own credit on the line even when opening a business account.

MOST ISSUERS REQUEST YOUR PERSONAL CREDIT HISTORY

If you struggle to get a personal credit card, finding a business one may not be any easier. A string of negative entries on your personal credit report may halt your application. Most credit card companies look at your credit history when applying for a new account. That includes your credit report and credit score.

The same type of activity can disqualify you from approval with both personal and business cards. Late payments and missed payments harm your prospects. Collections, bankruptcies, and other derogatory information are even worse.

If you have a strong history of on-time payments and well-managed accounts, getting a small business credit card is a lot easier. You can view your credit report for free by visiting the government-mandated website AnnualCreditReport.com, or you can get your credit score for free from a number of banks and free online credit websites.

The most important methods to improve your credit score are to always pay on time and keep your credit card and other revolving balances low. If you can do that over time, you should be in good shape when you apply for a business credit card.

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BUSINESS CREDIT CAN BE IMPORTANT

Many people don’t realize that businesses have their own credit files. Dun & Bradstreet, Experian, Equifax, and FICO are all companies that track your business credit score. Your business may also have a credit report.

Business credit scores don’t work the same way that personal credit scores do, but the principles are similar. Consistent, on-time payments improve your score. If you don’t have a business credit history, the credit card issuer will rely primarily on your personal credit information.

If you are a brand-new business, it may help you to register with Dun & Bradstreet. This profile helps lenders report your payment history correctly. It also makes it easier for credit card companies to verify that your business is real.

But if you don’t have any business credit history, don’t worry too much. Strong personal credit can make up for that. It also helps to show that you’ve been in business for a long time if you are able.

Nav is the leader in free credit reports for businesses and is similar to Credit Karma in many ways. You can sign up for Nav for free, but getting all available details requires upgrading to a paid account.

GET YOUR FINANCES IN ORDER BEFORE APPLYING

If you have good credit and a business that earns regular revenue, you are in prime position to qualify for a small business credit card. But don’t rush through the process, or you may face an unwarranted rejection. Take the time to organize and prepare your finances so you can answer important questions while applying.

If you use accounting software like Quickbooks, you should be able to quickly gather what you need. A profit-and-loss statement from the past year is a must. Prior year reports are helpful as well if you can get to them.

If you don’t use fancy accounting and bookkeeping systems, don’t worry. You can still get the information you need. Consider a spreadsheet to track your sales and costs. If you have a dedicated business bank account, you can use past statements to compile the same information as a profit-and-loss statement.

As your business grows, it is important to keep your business and personal finances separated. Mixing up your money can lead to a series of costs and problems. Higher taxes, lost legal protections, and difficulty tracking business revenues and costs can follow.

 

FIND THE RIGHT CREDIT CARD FOR YOUR BUSINESS

Now that you know how to get approved for a credit card, you have to pick the right one for your business needs. Consider the type of rewards you want to earn and the features you consider most useful.

Some business owners are entirely focused on rewards. Others prefer a card with low fees and a low-interest rate. There is no right or wrong answer when choosing a card. As long as you are aware of the costs and your business needs, you can make an informed choice.

Don’t discount getting both the personal and business versions of similar cards. For example, United Airlines, Southwest Airlines, and Marriott all offer personal and business cards. If you already earn miles or points for a preferred travel rewards program, adding a new card for the same program can turbocharge your earnings.

UNLOCK THE BENEFITS OF A SMALL BUSINESS CREDIT CARD

Even a hobby that generates a small part-time income may be able to qualify you for a credit card. You can use the card to help you manage supply orders and other costs. Even better, a business credit card may offer unique benefits and rewards you can’t get with a personal card.

If your business uses shipping services, phones, or the internet, you could earn bonus rewards from the Chase Ink Preferred card. If you value premium travel, the American Express Business Platinum is a top contender. This card can get you access to premium airport lounges around the world. With certain Capital One cards, you can effectively erase charges from your bill with a statement credit.

Whether you want to travel, get cash back, or tap into a new method to manage cash flow, a small business credit card can do it, and qualifying might be easier than you realize.

Editorial disclaimer: The content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. All opinions expressed here are the author's alone.

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TRUiC has partnered with CardRatings for our coverage of credit card products. TRUiC and CardRatings may receive a commission from card issuers.