Thinking about applying for a business credit card? Smart move. Using a business credit card comes with a lot of perks for small business owners.
You can use one for backup business financing, to build business credit, to cushion your cash flow, to earn rewards on your purchases… The list of benefits goes on and on. In fact, it’s hard to find a reason not to use a business credit card for your small business.
So you’re fully convinced of why you need a business credit card, but do you know how to get a business credit card?
It’s not all that different than applying for a personal credit card. But it’s more than just clicking the “apply” button on the first business credit card offer that comes your way. If you want to get the best business credit card for your business, it’ll take some thought and consideration on your part.
Wondering how to get a business credit card that fits your business? Use this guide to find out.
How to Get a Business Credit Card: Follow These 4 Steps
If you need help on how to get a business credit card, don’t worry—it’s a relatively painless process, but only if you do it right.
Here are the 4 start-to-finish steps you need to take to get a business credit card that fits your needs perfectly.
Step 1: Decide between a business credit card or a business charge card.
If you’re wondering how to get a business credit card, we’ll ask you this first:
Are you sure that it’s a business credit card that you want?
If you’re shopping around for business credit cards, you have two options: a business credit card and a business charge card. What you decide to apply for will depend on the financial strategies and structure of your small business. But here’s what sets the two apart:
Balance and Interest
The balance and interest on a business credit card works no different than your average personal credit card. You can roll your balance over from month to month, as long as you’re making the monthly minimum payments on the card. And as your balance roles over, it’ll accrue interest along the way.
Business charge cards, on the other hand, need to paid in full every month. And if you miss a payment, you’ll get charged a sizable late fee—usually 3% of the balance. Plus, if you’re late on the payment, you risk getting your line of credit suspended. On the bright side, if you pay in full every month, you won’t need to deal with interest on your expenses, any surprise fees, or outstanding debt.
Business credit cards come with a preset spending limit based on your personal and business finances. If you spend below that limit, you’re all set. But if you go over your spending limit, your transaction could be declined or you could be charged for it.
Business charge cards don’t come with a preset spending limit, giving you the flexibility to make large purchases without hitting your limit.
Step 2: Look up your credit score.
The next step for how to get a business credit card?
See where your credit score stands. This shouldn’t come as a huge surprise—you are applying for business credit, after all.
Every business credit card issuer will consider your personal and business credit score (if you have one) on your application. Your credit score helps creditors gauge how responsible you are with your finances. If you’ve been a responsible borrower in the past, odds are you will be in the future.
And if you have a less-than-stellar credit score, don’t worry—you’re not out of the running for all business credit cards. But you will have limited options. Know which business credit cards are an option for you before you apply, or consider secured business credit cards instead.
Step 3: Know what you need from your business credit card.
Wondering how to get a business credit card?
Well, you can’t even approach applying for one until you’re sure you’ve found the best option for your small business.
So, have you considered what you need from your business credit card?
Not every small business credit card is created equal. In fact, there’s a large spectrum of business credit cards out there.
Some cards offer bonus points when you spend on the card, and some just offer easy, cash back savings on your purchases. And on top of that, certain business credit cards let you earn and maximize your rewards on specific spending categories—like travel, hotels, gas, office supplies, or entertainment.
Before you just sign up for any card, you need to think carefully about how your business operates and how you plan on using your business credit card. Only you will know what you spend the most on for your business and the best way you can maximize your earnings.
Once you have a good idea of what kind of business credit card you need, do a side-by-side comparison of the best options.
Which card lets you earn the most cash back, bonus points, or perks for your business? And which business credit card saves you the most rates and fees?
These are the questions that you’ll need to answer to make sure you’ve found the right fit in your business credit card.
Step 4: Apply for your business credit card.
Now for the heart of the matter: how to apply for a business credit card.
Well, there’s really not much to it—online applications make it pretty simple to apply for a business credit card. Once you’ve found the right business credit card for you, sign up for it online!
Here’s the business information you’ll usually need to provide:
- Your legal business name (or your Doing Business As name)
- Contact information for your business
- Industry type
- Company structure (corporation, partnership, or sole proprietorship)
- Time in business
- Number of employees
- Annual business revenue
- Estimated monthly spend on the card
- Federal Tax ID (EIN)
As the owner of your business, you’ll also need to provide the following personal information:
- Contact information
- Social security number
- Personal annual income
- Personal outstanding debt (like mortgage or car payments)
If you’ve been in business for a few years, your personal information won’t be as important in your business credit card application. But if you’re a startup and you’ve just registered your business, credit card companies will weigh your personal financials a little more heavily in their decision to extend credit to your business.
As one of the decision-makers for your business, you’ll be the one who signs your business credit card application. Keep in mind that most of the business credit cards on the market require a personal guarantee. So when you sign that application, you’re agreeing to be personally responsible if your business can’t pay its credit card debts.
After you submit your application, you can expect to hear back quickly—sometimes within seconds!
If you’re approved for your business credit card, activate it as soon as you get it in the mail. Then you can start using it—responsibly—right away.
And if you’re not approved for the card, figure out why. Under the Equal Credit Opportunity Act, lenders are required to tell you why your application for business credit wasn’t approved. If it was a credit score issue, you can take steps to start improving your credit score so you have more options down the road.
The Next Step? Use Your Business Credit Card Responsibly
How can you get a business credit card?
Well, follow that 4 step guide and you’re well equipped for applying to business credit cards.
And once you’re approved, congrats! You’re well on your way to boosting your business credit score while earning rewards on your purchases.
But remember: once you’re approved for the right business credit card, the work isn’t over. In order to get the most benefit from your business credit card, you’ll need to use it responsibly.
As long as you’re following the business credit card best practices—spending wisely and paying off your balance on time and in full—you’re in great shape!
The post Need Capital? No Problem: Here’s How to Get a Business Credit Card appeared first on Fundera Ledger.
from Fundera Ledger https://www.fundera.com/blog/2016/09/27/how-to-get-a-business-credit-card