getting a business credit card is easier than you may think · a business card’s rewards can be...

Credit Cards (https://www.creditcards.com) · Credit Card News (/credit-card-news/credit-card-stories.php) ·Business credit cards: Easier to get than you may think

Getting a business credit card is easierthan you may thinkYou can qualify even if your business is tiny, or you're a gig worker

By Beth Braverman (/credit-card-news/authors/beth-braverman.php) | Published: October 5,

2018

(https://www.creditcards.com/credit-

card-

news/authors/beth-

braverman.php)

Personal Finance Writer

Covers cool and trendy credit card stories

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When it comes to starting a new business, there are plenty of things to stress out about, from

getting the right logo to the appropriate tax structure, not to mention securing clients and

funding.

But there’s one rite of passage for new business owners that’s easier than you may think:

getting a credit card for your business. Whether you have a small business with a few

employees or you’re a gig economy worker, you shouldn’t have much trouble getting a

business credit card (https://www.creditcards.com/business/) if you want one.

“Some people think you have to be successful or have been in business for a certain period of

time to get a credit card, but that’s generally not the case,” says Gerri Detweiler, head of

market education of Nav, a credit service for small business owners.

Here’s how the business credit card application process works, along with some reasons why

you may or may not want to apply for one.

Business credit card pros and cons

Pro: It can help you build business credit

Pro: The rewards can be lucrative

Pro: It can help keep your business and personal accounting separate

Con: Business cards have fewer consumer protections

Con: A personal card dedicated to business spending may be more convenient

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How to apply for a business card

The process of applying for a business card is fairly straightforward. You can apply online or

by responding to a direct mail solicitation. Business credit card applications typically require

you to enter your company's employer identi�cation number, which you can get from the IRS

(https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers), and

its legal name.

You may also be prompted to enter how much revenue your company earns and what it

typically spends per month. You'll likely have to �ll in personal details such as your annual

income and your monthly mortgage or rent payment amount, and your role in the business.

Eastchester, New York, resident Angela Schultz opened her Chase Ink Business Cash Credit

Card (https://www.creditcards.com/reviews/chase-ink-business-cash-card-review/) account a

few months after launching her physical therapy practice.

She got the card at the same time as she opened her business bank account at a local Chase

branch.

“I had to bring in my articles of incorporation to show I was a business to open the business

bank account,” she says. “Then I just set up my credit card through them. They asked for

annual income, and a couple other basic questions. It was not complicated in any way at all.”

Your personal credit may be on the line

If your business is small or doesn’t earn much revenue, the issuer will use your personal

credit history to determine whether or not to approve your card. While that makes it easy to

secure approval, it also means that you’re personally guaranteeing

(https://www.creditcards.com/credit-card-news/personal-guarantee-almost-always-required-

business-card-1585.php) the card with your �nances.

If your business goes bust, you’ll still be on the hook for any balances on the card. Some

issuers report all payments to credit bureaus, while others only report missed payments or

defaults.

Once you have the card, making regular payments on it will allow you to start building up your

business credit pro�le. Once that’s established, you’ll be able to open cards and take out loans

separate from your personal �nances. It can also make it less expensive to access money for

your business.

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“When you’re applying for a loan, having a good business credit pro�le can be the di�erence

between a low interest rate and a high interest rate,” says Krista Tuomi, a professor at

American University and an expert on entrepreneurial �nance.

See related: How to multiply rewards on everything you buy for your business

(https://www.creditcards.com/credit-card-news/multiply-card-rewards-business-

expenses.php)

A business card’s rewards can be lucrative

Getting a business credit card is fairly easy, but there are things to consider when choosing

the best one for your needs.

Business credit cards typically have higher limits than personal credit cards and may o�er

rewards that cater speci�cally to business owners, such as deals or bonuses on business cell

phone plans or o�ce supplies. If you or your employees travel often for business, look for a

card that o�ers rich travel-based rewards.

Some business cards come with an annual fee, so it’s worth doing the math to make sure that

your typical spending would net rewards worth more than the cost of the fee. That’s worked

out well for Dawn-Marie Joseph, who runs several businesses in Williamston, Michigan,

including a �oral shop and an estate-planning �rm.

For each business, she evaluates the value of the potential rewards and how she’ll use them.

She’s also a landlord, and she has had luck using the rewards on business cards from her local

bank to help recoup some of the expenses associated with upkeep on her properties.

“I don’t think I’ve paid for an appliance in 15 years,” she says.

Of course, if you think there’s a chance you’ll carry a balance on the card, ignore the rewards

completely and look for the card that o�ers the lowest interest rate without a fee.

"WHEN YOU'RE APPLYING FOR A LOAN,

HAVING A GOOD BUSINESS PROFILE CAN

BE THE DIFFERENCE BETWEEN A LOW

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Business cards help keep personal, business spending separate

Most business cards also allow you to add multiple employees as authorized users on your

card, making expense-reporting and reimbursement easier as the business grows. Many

business cards also come with online tools that let you monitor your company’s spending as a

whole and by employee.

One of the biggest bene�ts of business cards is that they make it much easier to keep your

business and personal expenses separate.

“It’s just so much easier to keep track of taxes and expenses for my business,” Schultz says.

“It’s great to have when I go away for a course or am out for a networking lunch.”

See related: Is my small-business payment history re�ected on my credit reports, scores?

(https://www.creditcards.com/credit-card-news/business-credit-reports-scores.php)

Business cards have fewer protections for cardholders

While business credit cards do o�er protection against fraudulent use, they are not covered

by the Credit Card Accountability and Disclosure Act of 2009, which covers most personal

credit cards.

See related: 10 ways business credit cards are di�erent (https://www.creditcards.com/credit-

card-news/business-credit-cards-10-di�erences-1269.php)

“From the standpoint of federal law, there’s nothing that could prevent the credit card issuer

from raising the rate on a business card at any time for any reason,” Detweiler says.

Unlike with consumer cards, issuers are not required to send your business credit card bill 21

days before it's due, nor do they have to bill you on the same date every month.

Business credit cards also have no limits on late fees or over-limit fees. The CARD Act caps

consumer card late fees at $25 or the cost of the minimum payment (whichever is less) and

forbids over-the-limit fees greater than the amount that the balance exceeds the limit.

You may not need a business card at all

INTEREST RATE AND A HIGH INTEREST

RATE." (/)

If you’re a sole proprietor or a gig economy worker and record-keeping is the primary reason

for getting a business card, you may be able to achieve that without even opening a business

card. Instead, open a new personal credit card, or designate an existing one, as being for

business use only. That way you’ll get all of the bene�ts of separate accounting without the

risk of lower consumer protections.

But if you feel a business credit card would help you save on operating expenses, organize

your accounting and strengthen your company’s credit, applying for one can be a cinch.

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