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A Complete Guide to Business Credit Cards

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People have the mindset that being a small business owner is easy because you get to be your own boss and set your own tasks. But the reality is that most small business owners have to wear many hats – they have to work hard day and night to convert their business dream into reality. Starting a small business is not a piece of cake, and to be successful you want to have the right tools at your disposal.

One of the best tools that can help your business grow is a business credit card. Whether you are a startup or an SME, getting a business credit card is an ideal solution to your business’ financing problems. From building your business’ financial history to boosting credit rating, getting higher credit limits, mitigating cash flow issues and more, a business credit card is a true companion in your business’ financial journey.

If you want to use a business credit card for financing your small business and wondering how you can bring out the best of it, we’re making it easier for you by sharing everything you need to know about this amazing small business financing tool.

What is Business Credit Cards?

A business credit card is similar to a personal credit card but is designed especially for activities related to business. Though both personal and business credit cards function almost the same way, but vary in their credit limits, reporting policies, protections, rates & fees, category bonuses, and recordkeeping benefits.

Need to buy office supplies for your business? Want to take clients out to lunch? Or need to cover monthly costs? Use your business credit card.

Small business owners can use a business credit card to cover different business expenses and streamline their transactions, so make it easy for you to separate your business and personal expenses.

How To Apply And Qualify for a Business Credit Card?

Wondering what types of businesses are eligible for business credit cards?

Business credit cards aren’t just limited to corporations. Even if you’re running a small business, working as a sole proprietor or as a business owner with an LLC, have no office or a freelance gig or side hustle, you can likely apply for a business credit card.

Basically, if you’re operating a business with the intent of making a profit, you’re eligible for a business credit card.

Moreover, if you’ve just started your business and it doesn’t have a credit history yet, you can still apply. Many lenders review your personal credit report in this condition.

Besides that, applying for a business credit card is easier than you might think. It doesn’t require a lot of paperwork and complicated approval process. You may qualify for it and not realize it.

But the question is, how can you apply as a small business? Filling out an application form for a business credit card is fast and easy. Nevertheless, depending on the specific card and application, you’ll likely need some, if not all of the following:

Business Name

Whether your business set up as a C-corp, S-corp, or LLC, you’ll need to enter the full legal business name that you registered with your state government. If you are a freelancer or have a sole proprietorship, enter your name.

Business address and Phone Number

Next, you’ll need to provide contact information for your business such as the business address, phone number and mailing address. If you run your business from home, just provide your home address.

Business History

You’ll need to provide the number of years you’ve been in the business. If you’re still in the early startup phase, you can enter “0” in the application form.

Type of Business and Your Role

Select the category that best fits your business type from a drop-down menu, and write a title that describes your role (Founder, CEO, Manager, etc.)

Business Entity or Legal Structure

Financial institutions also want to know what kind of business you’re associating with. You’ll have a list of industries to choose from – either a corporation, partnership, non-profit, LLC, government or sole proprietorship.

Number of Employees

Enter the number of employees in the application form who are part of your business. If you’re a freelancer, enter one.

Federal Tax Identification Number

You’ll need to provide either your Employer Indemnification Number (EIN) or Social Security Number (SSN), and sometimes both.

Annual Business Revenue

If you’re in the small business for a while, you have to let the bank or Credit Card Company know how much revenue your business is bringing each year. You can put “0” if you’re a novice entrepreneur.

Estimated Monthly Spend

Credit card companies want to know if your business’ revenue can handle monthly credit card payments. Providing the limit of spending on the credit card each month will help lenders to determine the size of your credit line.

Personal Credit History and Guarantee

You’ll need to provide your personal credit history which credit card issuer will use to review your credit score and current debts. Also, you may need to provide personal guarantee for getting a business card.

Why You Should Get a Business Credit Card?

There are several benefits of business credit cards that can add up to increased savings and streamline business expenses. Business credit cards not only help you enjoy financial flexibility in your small business but take advantage of various attractive perks not offered by personal credit cards.
Have a look at the top reasons why you should consider adding a business credit card to your wallet:

  • Almost any type of small business can get a business credit card
  • It helps you keep your business and personal expenses separate and allows you to track your business spending
  • It is a good first step towards building your business’ credit
  • Business credit cards don’t affect your personal credit report
  • It provides you the flexibility to use the money for a variety of expenses such as equipment, supplies, inventory and more.
  • Credit cards often offer points, cash-back, or other attractive perks
  • It offers business-related rewards such as discounts on business travel, shipping, and business supplies.
  • It can help you keep better control of employee spending.
  • Having a business credit card can also make for easier record keeping
  • It provides you the ability to make a larger purchase that you can’t purchase with your personal credit card.

Things to Consider When Choosing a Business Credit Card?

Since there are a variety of business cards available on the market, deciding which one is perfect for your business is always a challenging and time-consuming endeavor. If you want to get the most out of your business credit card, you’ll need to consider different factors to determine which card is best for your business.

How do you know which credit card is best for your small business?

Here are a few important things to watch out for with small business cards before selecting one.

  • Is it a good value in terms of its annual fee?
  • What is your business’ payment habits?
  • How large is the signup bonus?
  • Is your business credit card pay you cashback or other rewards on your purchase?
  • Is your business credit card offers you any hidden perks that could save you money
  • Does your card charge for foreign transactions?
  • What is the fee and interest rate of your business credit card?
  • How the card provider does provides customer support?

How does a business credit card Work?

Ultimately, business credit cards are just a perfect lending solution for any small business owner. However, as compare to other options in our list, they rank at the top funding options for those who want the ease of having regular access to cash flow and financial flexibility in the form of credit.
These cards typically carry limits of $50,000 or more. While you don’t require any collateral for small business credit cards, some issuers may ask for a personal guarantee.

A business credit card is like a short-term loan from a credit card company. You can use it the way you use your personal credit card. You use the money for business expenses and then pay it later (usually every month). If you have a $10,000 credit limit and you make a $2,500 purchase, you’ll have $7,500 available credit remaining. You’ll owe $2,500 to the credit card issuer. If you borrow another $5,000 before paying back the $2,500 you borrowed, you would owe the bank a total of $7,500 and have $2,500 in available credit.


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