How To Get a Business Credit Card

A business owner makes an inventory purchase with his business credit card.
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Carlina Teteris / Getty Images

If you own a small business, you may want to consider getting a business credit card. The increased purchasing power allows you to finance the goods and services your company needs, keeps your business and personal spending separate, and makes reporting your expenses much easier come tax time. To enjoy the financial and operational benefits that come with a business credit card, it’s important to learn what it takes to get one.

Key Takeaways

  • A business credit card can help you separate your business and personal expenses  and finance your company’s needs.
  • Most business credit card lenders require a personal guarantee, which means you’re on the hook for any balance owed if the business can’t pay.
  • Business and personal credit cards are similar in many ways, but most provisions within the Truth in Lending Act (TILA) don’t apply to business accounts.
  • You should compare business credit cards carefully to ensure you get one that meets your business needs.
  • A secured business credit card could be a good option if you have less- than- perfect credit.

Requirements for a Business Credit Card

Every lender will have different requirements for business income, credit score, and other factors. However, you can usually expect a credit card issuer to review both your personal and business credit reports before making a lending decision—especially if your business doesn’t have its own credit history yet. Most business credit card companies will also require a personal guarantee, which means you’re personally liable for any balance or outstanding debt owed if the business can’t pay.

How Business Credit Cards Work

Business credit cards and personal credit cards share several similarities. If approved, you’ll get a revolving line of credit you can use to cover any business need that arises. And just like with your personal cards, you’ll need to:

  • Manage your business account responsibly by making timely payments. 
  • Pay interest on balances you carry over from month to month (unless you’re within an interest-free promotional period).

Because you may accumulate many expenses on your business credit card, it’s important to obtain cards that offer points and cash-back rewards for travel, shipping costs, and more. 

However, one key distinction between business and personal credit cards is that the Truth in Lending Act (TILA) only applies to business accounts in limited situations. The TILA was passed to ensure that lenders educate consumers about the terms and cost of the credit being issued. Fortunately, two important provisions of the law cover business owners. You can’t be issued a card unless you requested it, and you won’t be held responsible for fraudulent charges exceeding $50 if your card is lost or stolen.

How To Get a Business Credit Card

While getting a business credit card may feel daunting, the steps below can help guide you through the process. 

Check Your Credit

It’s critical to first check your personal credit report and correct any errors that you find, which can include incorrect personal information, account status, balance, or credit limit. 

You can access your report from each of the three major nationwide credit bureaus for free by visiting AnnualCreditReport.com.

If you spot an error, write a letter to both the credit bureau and reporting lender disputing the information. Make sure to include any paperwork that supports your claim. Your dispute must be investigated, and you have the right to contact the Consumer Financial Protection Bureau if the mistake doesn’t get fixed.

By catching and fixing mistakes, you can boost your credit score and increase your chances of getting approved for a business credit card. 

Research Card Options

There are many business credit cards on the market, so your next step is to research and compare the different options available. Here are some of the elements you should consider:

  • Card type (secured, unsecured, low-interest, etc.)
  • Annual percentage rate (APR)
  • Introductory interest rate 
  • Promotional interest rate 
  • Fees (annual, late payment, foreign transaction, cash advance, etc.)
  • Rewards (points, airline miles, hotel stays, cash back, etc.)
  • Eligibility requirements (credit score, business income, etc.)
  • Credit reporting (ideally, the card should report to business credit agencies so you can build credit that’s separate from your personal file.)

When choosing which card to apply for, think about your business needs and goals. If you’re trying to save every penny and believe you may have to carry a balance, a card with no annual fee and a low interest rate may be your best bet. But, if you’re always traveling to grow and manage your company, a card that earns airline miles or hotel stays could be right for you.

Apply for a Card

Once you’ve identified the right business credit card for your company, it’s time to apply. Each issuer will have its own application form and will require different information to reach a decision. However, you should be prepared to provide several pieces of personal and business information, including your personal annual income, personal credit score, type of business, how long you’ve been in business, annual revenue, federal tax ID, and more. 

Options for Those With Poor or Limited Credit

If your credit history isn’t great (or is non-existent), you may still be able to get a business credit card. For example, a business partner with stellar credit could co-sign on the application to increase your chance of approval. But if that’s not an option, consider these others below.

Secured Credit Card

A secured credit card is typically easier to qualify for because you have to give the bank a security deposit (hence the name) to open an account. The value of your security deposit becomes your available credit line. Once approved, you can use the card to make purchases. 

Timely payments demonstrate financial responsibility and strengthen your credit profile. If you maintain the account responsibly for long enough, the bank may switch you to an unsecured card, which doesn’t need to be backed by your own money. 

If you fail to pay the balance owed or default on a secured business credit card, the issuer can take your security deposit.

Vendor Credit

To improve your credit standing (and cash flow), you could also apply for vendor credit. With this arrangement, you receive goods and services from your vendor now with the understanding that you’ll pay for them within a specified net term. As long as you pay within that time frame, you won’t get charged any interest. That means you essentially get a short-term interest-free loan.

Your vendor probably will review your credit before approving your application. But, you can increase your chances of getting a “yes” by paying your invoices on time (or early) for a lengthy period before applying. Plus, you can start with a very short net term, like 10 or 20 days, to show you can handle the responsibility. Then, next time you apply for a business credit card, your list of vendor credit agreements in good standing may help you get approved.

Frequently Asked Questions (FAQs)

Can you get a business credit card without a personal guarantee?

You may be able to get a business credit card without a personal guarantee, but that’s not the norm. Most credit card issuers will require one. That way, if your business can’t cover the debt for any reason, the lender can go after you personally for payment. However, there are a few business credit card options that don’t require this guarantee.

What’s the easiest business credit card to qualify for?

The easiest business credit card to qualify for is a secured credit card. A secured credit card is of low risk to the lender because you’re required to back the account with your own money via a security deposit. Plus, if you default, the credit card issuer can take your security deposit as payment.