Business Credit Card 101 – How To Get Approved For Your First Card

When it comes to credit cards, there are a few differently levels of credit cards. As an individual person, you are probably familiar with consumer credit cards, but there are also credit cards targeted towards business, and for large companies, there are corporate credit cards. For this article, we are going to discuss business credit cards, and how you can get approved for one (it’s easier than you think)

Why You May Want a Business Credit Card

If you are just starting out in the world of businesses, you may not know why you would even want a business credit card. You already have a credit card you say! Well, here are a few very important reasons you may want to consider getting one. 

One of the main reasons to have a business credit card is to be able to separate out the different expenses you have into business and personal. It’s much easier to stay organized when it comes time to file your taxes, when all of your business expenses are in one place, and on one credit card. Imagine how awkward it is to go through your statements and highlight which expenses count as business expenses. Additionally, if you are using your personal card for business expenses. The proper way to do that would be to reimburse yourself from the business. Just putting the charges on the business card avoids that problem entirely. 

Something that’s unique to business cards (except for Capital One and Discover business cards) is that the business cards do not show up on your credit report. The hard inquiry will show up on your credit report. However, the credit card account will not. This is important for two reasons. The first is that the new card will not count against your 5/24 or other sign up restriction status because it doesn’t show up on your credit report. The second, and actually more business oriented reason is that it allows you to run expenses on it like most business would, but without penalizing you. What I mean by this is sometimes businesses run large deficits for a very short amount of time. This may be to meet payroll, or to buy some expensive equipment. Some sort of reimbursement, or earning money will allow the user to pay off the card shortly thereafter. But, because the account doesn’t show up on your credit report, the high utilization will not hurt your score.

Finally, more relatable to the website, is actually the ability to earn more points! Many business credit cards have a consumer level counter part. Sometimes they offer the same thing, sometimes the business card offers a higher sign up bonus. Regardless, the additional card gives us another opportunity to earn even more points so long as we are buying business related things!

What Qualifies as a Business

You may be surprised to hear this, but you actually may actually have an approved business already. Even if you havn’t filied for a business license, or an LLC from your state/local government, you might actually be able to get a business credit card. There are a few things that qualify as a business. All the credit card issuer is really looking for is something that makes you money outside of your normal job. This can include reselling things on EBay/craigslist, or being a freelance worker such as a wedding photographer or graphic designer. As long as you can show that you’ve been earning money, you should be good to go.

Of course, what also counts as a business is actually being legally considered a business. This would include having a business license and being recognized by the state and local government. 

How To Apply and Get Approved

Finally, we get to the fun stuff in this article. If you have a qualifying business, you can use that business to get yourself some business credit cards! Here’s how we can apply.

The application process is pretty similar to the consumer application. There are a few key difference though. It will obviously vary from issuer to issuer, however, the first step sometimes includes opening up a separate business account/login. Once this is created, then the application will be similar to whichever issuer you chose.

If you have a traditional business, recognized by the state and local governments, fill out the information about the business normally. You should not need any sort of special direction. All you need to know is that you are applying on the business’ behalf. If you have a non-traditional, sole proprietor,  or not recognized business, you can still get approved! There are just a couple of things you need to be aware of.

For business name, you’ll want to put your own personal name. Unless you have a fictitious name certificate issued by the state for your business ex, Alex Smith running a business called Smith’s Electronics). If Alex did not have a fictitious name certificate, he would use his full name, if he did have the certificate, he’d use Smith’s Electronics for the business name.

When it asks for a EIN, that is the number used by the IRS to link your taxes to the business. For sole proprietorships, use your social security number. For business with an EIN, obviously use the EIN for this section. 

For a business address, if you have an actual office building, you’ll want to use that. Otherwise, for sole proprietors that work from home, you can use your home address. 

Finally, the only other oddball section would be how much money your business makes. If you are just starting out, bank realize that you probably aren’t making money yet. Enter in what you expect to make within the year, however, some credit card issuers will only approve you if you expect to make more than $1,000. If you have a normal business, obviously enter in what your company has made or is projected to make. 

That’s about it! The rest of the application should be pretty straight forward. Once you submit your application, give the credit card issuer some time to process your application. You may be asked to offer supporting documents, like proof of your business, any sort of income history, licenses with the state, etc. Submit whatever they ask for, and you should be good to go.

Final Thoughts

Business credit is an interest one to talk about. Most people don’t realize it, but what they do on the side for fun may actually count as a business. Business credit just make it easier to really stay organized and on top of things. Even better, it gives us the opportunity to earn more points for little effort on our end. 

Do you have any business credit cards? What’s your experience apply and using them? Let us know down in the comment section below!

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