How to Apply for a Small Business Credit Card

September 15, 2021
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It’s no secret that funds are what keep a business going. You need money to stock your shelves and take care of your employees so that the wheels keep turning. Ideally, your business will have a healthy cash flow where there’s always enough money to pay those everyday business costs, but sometimes it doesn’t work out that way. 

When your revenues and expenses don’t quite line up, or when a big business opportunity arises, you need to be able to access credit at the right moment to handle those costs. That’s why many business owners have a business credit card. 

A small business credit card is useful for both new business owners and established business owners. It can be challenging to manage your small business finances without a dedicated business account and a line of credit. 

Why Open a Small Business Credit Card?

Small business credit cards can help your business grow by giving you the funding you need to get things rolling. It’s also a great way to build business credit, as you might need an established business credit score for larger loans and financing issues. 

In terms of your overall organization, getting a separate business account with its own credit card is a helpful bookkeeping step for keeping good financial records, which will be essential for dealing with taxes, in addition to general business planning. 

Even for sole proprietorships with no employees, a credit card separate from your personal card can be a life-saver. Business credit card plans are built for business needs, and the higher credit limit reflects that. 

If you get cards for your individual employees as well, it can give you greater control over their business expenses. They may also appreciate not having to go through the reimbursement process. On top of all of these perks, many credit cards offer various kinds of rewards or sign-up bonuses. If you find the right card, you may be able to turn each of your expenses into an opportunity. 

What are the Best Small Business Credit Cards?

The best small business credit cards will depend on what you’re looking for. Some cards offer great benefits, while others offer a chance to increase your credit score. Then there’s also the question of your credit score going in. If you and your business don’t have an excellent track record, then the best credit card will need to be one you’re still eligible for. 

Some credit cards have benefits and a significant rewards program, while others have higher approval odds. But no matter what your credit score is, all business credit cards will offer you benefits by helping you build credit and qualify for tax benefits. 

Cards with Great Benefits

Some card rewards programs let you make your money back with points after you spend using the card. Some may even offer cashback rewards for certain kinds of purchases. Of course, you’ll want to ensure that the rewards available line up with the types of expenses you’ll be making already. 

If you often travel for business or incur many international expenses, you will want a card that offers travel rewards to help you make some of that money back. You’d also be best served by a card without any foreign transaction fees. 

When it comes down to it, if you’ve already got a business system, you want a credit card reward program to reward you for that system, not necessarily reshape your spending plans. 

Cards for Good Credit

If you’ve established excellent credit, there are business credit cards that will reward you for that. However, it will be challenging to get approved if your credit is still lacking. Some of these cards also work very effectively for balance transfers. If you can transfer your debt from another card to one of these, you may be able to save yourself some money with a better interest rate. 

Cards for Mid-Range Credit

Then there are the mid-range small business credit cards. These might not be quite as impressive as the high-end credit cards in terms of interest rates and benefits, but they get the job done and may be easier to be approved for. 

If you’re working on improving your credit over time, these cards may also serve as an excellent step up to save money if you’ve been paying high-interest rates on a card with lower credit requirements.  

Cards for Poor Credit

Credit cards with low credit requirements are likely to have lower spending limits and higher interest rates, but they can still get the job done, and you have to start somewhere. You can always transfer to another card later as you build up your credit over time and improve your business credit score. 

Don’t rush into any credit card agreements, however. Be sure to carefully read through the terms and conditions for any card or account you open. You want to know what you’re signing your business up for. 

How to Apply for a Small Business Credit Card

Here’s a quick guide to the basic steps involved in getting your small business credit card. Make sure you don’t rush into anything before you’ve taken the time to consider your long-term business strategy and finances. 

Consider What You’re Looking For

The first thing you should do is consider your priorities. What kinds of benefits are you looking for? Consider the needs of your business and what sort of credit card would work best. Are you most concerned with rewards, cashback, or opportunities for low or zero interest periods? What kind of spending limit do you need?

Research Card Options

The next step is to research the card you’ll want to apply for. Look into your options and see which cards offer which benefits. You might come up with a list of possibilities and rank them by preference. 

Gather Application Information

Next, you’ll gather the required information for your credit card application. This will be primarily information for identifying yourself and your business and demonstrating your credit record. To identify yourself, you’ll most likely use your employer identification number (EIN) or your social security number.  

Then you’ll need to provide the information required for the credit card company to evaluate your credit score. If you don’t have a business credit score at this point, then your personal credit score will be the main number that matters. After all, you are the business owner that will be responsible for backing up your purchases if your business fails. 

Apply and Wait 

Once you have your application prepared, you’ll apply and wait for your credit card approval. If your credit score is on the edge or outside the preferred range for a credit card, you should be prepared to apply for a different card if you are not approved for your top choice. 

When Not to Apply for a Business Credit Card

While there are many good reasons to acquire and use a business credit card, not every small business or owner needs a credit card, and there might be times when it’s simply not a good investment. 

If your personal credit card debt and credit score are not in good shape, or your business already has a lot of outstanding debt, then taking on more debt with another credit card may be a bad idea. 

While finding a way to refinance and make your debt more manageable is important, you will only worsen your situation and lower your credit score further if you take on more debt and cannot pay it on time. You should have a steady stream of revenue to be able to pay down your card regularly. 

If your business is seasonal or you have a long-term project, term loans or lines of credit might be more beneficial than applying for a credit card.  

Consult an Accountant

Small business credit cards are a valuable tool for business owners. If you’re hoping to apply for a card but you’re not sure what cards might be best or within your eligibility range, consult with an accountant to go over your options and get professional advice. 

Let an expert from 1-800Accountant help you think through your finances and make a plan for small business success. 

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.