Can You Apply for a Business Credit Card Without a Business?

You can if you know what qualifies as a "business"

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The rewards and perks of some business credit cards rival those offered with personal credit cards. Some of the best cash-back and travel credit cards for small businesses have large bonuses and generous rewards structure. The offers can be so good that you might be curious about whether you can apply for a business credit card without actually having a business. If you’ve got a side hustle, you may be in luck.

Is That Income Business Income?

If you’re part of the $204 billion gig economy making money from a hobby or as an independent contractor, you may be considered a sole proprietor—a type of unincorporated business owned by a single individual. This additional income may be considered business income, and with it, you can apply for a business credit card as a sole proprietor. 

According to the Internal Revenue Service, business income can include money received from selling products and services, fees from a regular professional practice, or rent.

Applying for a Business Credit Card Without a Business

If your gig or side hustle incurs expenses, like supplies or transportation costs, using a business credit card could help you keep those expenses separate from your personal expenses (which is important at tax time) and simultaneously let you earn rewards on your business spending.

Some credit card issuers limit your ability to earn multiple bonuses within a specific period of time, e.g. two years. Those limits may apply to business credit cards you apply for with the same credit card issuer as well. If you’ve already maxed out the number of bonuses you can qualify for, you may not qualify for the new cardmember bonus with a business credit card.

The terms and conditions of business credit cards may differ slightly from those of personal credit cards, so it’s important to understand the credit card issuer’s expectations and your responsibilities. For example, in applying for a business credit card, you may be agreeing to use the credit card for business expenses only and you’ll still be responsible for repaying your balance—even if you end your profit-generating activities.

When you’re applying, be prepared to answer questions about your business, even though it may not be a separate entity. If the classification applies, you may identify your business as a sole proprietorship and use your Social Security number rather than the business’s tax identification number. Other information about your business, including annual business revenue or sales, may be required to complete your application.

In addition to business information, you’ll also have to provide your personal information just as with any other credit card application. If you don’t have a separate business entity, your account information will likely be reported on your personal credit report and can affect your credit score and your ability to get approved for other credit cards and loans. You may be held personally liable for any purchases made on the card, which would be the case even if your business were a separate entity.

Your application could be turned down if your personal credit history doesn’t meet the card issuer’s qualification standards. You can also be turned down if your business income isn’t high enough to support the card’s credit limit. An existing relationship with a bank may improve your chances at getting approved as it gives the credit card issuer a way to verify your assets and gauge your ability to pay.

Be fully transparent on your credit card application, resisting any temptation to inflate the numbers so you can get approved. You could be prosecuted for committing fraud if the credit card issuer requests additional documentation and it doesn’t match the details provided on your application.

Risks of Using a Business Credit Card

Business credit cards don’t have all of the protections that consumer credit cards do. For instance, credit card issuers are required to give advance notice and opt-out instructions before raising fixed interest rates on consumer credit cards. The same rule doesn’t apply to business credit cards, which could lead to an unexpected interest-rate increase on your balance.

And if your business credit card has balances with different interest rates, the credit card issuer isn’t required to apply above minimum payments to the highest-rate balance, which could lead to more expensive finance charges.

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Article Sources

  1. IRS. "Independent Contractor (Self-Employed) or Employee?" Accessed March 6, 2020.

  2. Small Business Administration. "Sole Proprietorship." Accessed March 6, 2020.

  3. Nav. "Do Business Credit Cards Report to Personal Credit?" Accessed March 6, 2020.