Curious about how to get a business credit card? It isn’t as difficult as you might think. In this article, we take you through the process step by step.
Key Takeaways
- Takeaway #1: A business credit card is a purchasing and payment solution that gives companies the tools they need to manage expenses and build a good credit score.
- Takeaway #2: Applying for a business credit card typically requires that you report your business’s legal structure, time in operation, personal credit score, sustainable revenue, and some financial history.
- Takeaway #3: Once you choose the card that’s right for your operation, you’ll gather the necessary documents, fill out the application in full, submit it, and wait for approval. Once you’re approved, build a good financial reputation to boost your business’s credit score.
Requirements For A Business Credit Card
Business Legal Structure
One of the first things you’ll need to provide when you apply for a business credit card is your company’s legal structure. You may have set up your business as a limited liability company (LLC), a C-Corp, an S-Corp, or a partnership.
Just keep in mind that some business credit cards have different terms and levels of acceptance for different types of businesses. Read the credit card agreement in full to make sure that the type of business you run will get the terms you want and need.
Time Your Business Has Been Running
Brand-new businesses that have only been running for a few days may have a harder time getting approved for a credit card than established businesses.
Why is that? Because established businesses have a proven track record of responsible purchasing and payment. A brand-new business has no history other than the owner’s personal credit score.
If you need a line of credit right away, consider applying for a corporate card, which usually only requires an employer identification number (EIN) to get started.
Personal Credit Score Or Employer Identification Number
Depending on the card you apply for, you’ll need to provide your personal credit score. This serves to give the credit card company an idea of how you, personally, spend money and how you pay your bills.
They then extrapolate your personal financial behavior into your business financial behavior, so that, if you always pay your personal bills on time, they assume you will also pay your business bills on time.
Some credit card companies ask for your employer identification number instead of your personal credit score during the application process. This is beneficial for new businesses because it doesn’t require a personal guarantee that you’ll be responsible for business charges.
Financial Records
In many cases, financial records are necessary to demonstrate a business’s fiscal responsibility.
The credit card company may ask for information about physical assets, liquid capital, income, expenses, and payroll (just to name a few) in order to get an idea of your spending and payment behavior.
Industry
Some business credit cards focus on specific industries. If your business isn’t part of that industry, you may not qualify for the card.
Avoid wasting your time on a card that is only for specific industries by thoroughly reading the terms of service before starting the application process.
Steps To Apply For A Business Credit Card
1) Choose The Right Card For Your Business
One of the best things you can do before applying for a business credit card is to research the different options out there.
Every card offers something different, so be sure to take into account things such as the annual fees, interest rates, rewards, integrations, and even the customer service.
Finding the right fit for your business may take some time, but the rewards are well worth the effort.
2) Gather Necessary Information
Most credit card companies will tell you what they need for the application process before you begin.
Common requirements include:
- Business tax returns
- Profit/loss statements
- Recent bank statements
- Business legal documents
- Government ID for all whose names will be on the application
Keep in mind that this is not an exhaustive list.
And, even if the credit card company doesn’t need all of the above items, you can save time by having them nearby. If you don’t need a certain document specifically, it might contain a piece of information that you do need to fill out the application.
3) Fill Out The Application
Once you’ve settled on the card you want and gathered the necessary information, it’s time to fill out the application.
A good practice to get into when filling out applications is to fill in all the blanks even if the question doesn’t apply to your business.
For example, if you’re a brand-new business that’s only been in operation for a few weeks and the application asks for the last six months of income and expenses, don’t leave the space blank.
Instead, put Not Applicable or N/A so that the credit card company knows you didn’t skip or miss the question. You may also choose to add a qualifier such as “Only been open for three weeks” in order to explain why the question doesn’t apply to your business.
4) Wait For Approval
After you submit the application, the next step is to wait for approval. Approval processes vary from provider to provider and can take as little as a few hours or as long as two weeks or more.
Keep in mind that the average approval time is seven to 10 business days.
If you haven’t heard from the company after two weeks, consider contacting customer service to verify that they received your application and to find out if there’s any more information you can provide to speed up the process.
5) Build A Good Financial Reputation
Building a good financial reputation is one of the best things you can do to make it easier to apply for additional credit cards in the future.
Do your best to pay your balance every month and on time, stay below your credit limit, reconcile credit card and bank statements, and monitor your credit report for discrepancies.
All of these things show the credit card companies that your business exhibits good spending and payment habits.
Smart Spending With Coast
If you’re wondering how to get a business credit card, look no further than Coast. Coast is a smart corporate card solution for businesses that have anywhere from a single vehicle to hundreds of vehicles on the road.
Apply for a Coast business credit card and you get more than just a simple way to fuel up.
Coast comes with a long list of benefits, including:
- The ability to bring your fuel card and corporate card programs “under one roof” with one centralized solution
- Savings of up to 10% at the pump
- Customizable controls down to location, time, day, vehicle, dollar amount, and more
- Savings-focused reporting and integrations with all fleet tools
- Streamlined expense management with controls by merchant category, digital receipt and job code capture, and accounting integrations
The process of applying only takes a few minutes, does not require a personal guarantee, and won’t affect your credit. All you need to get started is your mobile phone and work email address.
Take the first step toward control of your fuel and business spending with the Coast smart corporate card! To learn more about how Coast can help your company, visit CoastPay.com today.
Frequently Asked Questions
Can a newly formed small company get a business credit card?
Yes, a newly formed small company can get a business credit card under the right circumstances. Because your business is brand new, you may have to provide a personal guarantee (via your own credit score) to get a business credit card.
Another option is to apply for a corporate card. Corporate cards typically don’t require a personal guarantee, and the only thing you need to get started is contact information and your employer identification number (EIN).
With a corporate card, the business is legally responsible for paying the bills, rather than a specific individual within the company itself.
What credit score do you need to get a business credit card?
If you’re providing a personal guarantee, a credit score of 690 or higher may be necessary to get a business credit card.
Alternatively, you can apply for a corporate card. Corporate cards don’t ask for your personal credit score but, instead, use your EIN as the foundation for building credit.If your business is just starting out, it won’t have any credit history and no credit score. With good spending habits, your business will eventually develop a credit rating with agencies such as Paydex, Dun & Bradstreet, FICO SBSS, Experian, and/or Equifax.
What is the fastest way to build business credit?
The fastest way to build business credit is with good spending and payment behavior. Focus on establishing a strong foundation by registering your business, obtaining an EIN, and opening a business bank account.
Once you’ve done that, work on securing net-30 accounts with vendors, paying bills on time as much as possible, and monitoring your business credit reports.
You can also boost your business rating by keeping any credit card balances below 30% of your available credit if you can’t pay the bill in full every month.
It may take some time to build good business credit, but the key is to exhibit responsible spending and payment behavior with everyone your business interacts with — from the smallest vendor to the largest credit card company.
