How to apply for a business credit card
Businesses large and small could benefit from business credit cards when company employees use business credit cards, whether to purchase supplies, equipment, meals, or travel, making it easier to Company expense tracking and payments are made directly to the credit card company instead of individual employees.
When employees use personal cards and have to submit expense claims, it becomes more difficult to track and categorize business expenses. And, instead of making a single credit card payment, the business needs to make multiple payments if multiple people have business expenses.
In addition to expense tracking, businesses can enjoy rewards through points or cash back programs, as well as, potentially, travel miles and other travel benefits.
How do I apply for a business credit card?
The process for applying for a business credit card is similar to applying for a personal card. Additionally, the types of cards available to businesses reflect what is available for personal cards.
You can get the following types of business credit cards:
- · Cash back: in which you can earn a set percentage of money based on the total amount of your fees
- · Points: where you can get a set number of points for every dollar spent on qualifying purchases
- · Kilometers: where you can earn a certain number of miles for money spent on qualifying purchases
- · 0% introductory APR: on balance transfers and / or purchases for a defined period of time
There are three steps you need to take to apply for a business credit card: check your credit score, research your options, and submit your application.
How to check your credit score?
Even if your application is for your business, credit card issuers will also check your personal credit score. Typically, you will need a personal FICO score of 670 or higher. Since your application will trigger a serious investigation on your credit, which could cause it to drop a few points, you want to know in advance if your score is high enough.
Companies that issue business credit cards typically use one or more of three reporting agencies – Equifax, Experian, or TransUnion – to check personal credit scores. Each of these agencies allows you to view your score for free every 12 months. While each agency may have a different score for you, these scores are often relatively close. With their online banking services, many banks will also show you your credit score for free. These scores usually come from one of the three rating agencies. You can also use independent companies like Credit Karma or Credit Sesame, which have programs where you can check your score at no cost. However, scores reported by third-party companies may not be as accurate as agency scores.
In addition to your personal score, you should check your business’ business credit score if it has one. Unlike personal credit scores, the credit scoring process for businesses is not standardized. Several companies provide scores to companies, such as Dun & Bradstreet, Nav, Equifax, and Experian, and each has different calculation methods. So, you will want to know which company the card issuer you are applying to is using and check your score with them before submitting your application.
How do you go about researching your business credit card options?
There are several factors to consider when choosing a business credit card. These include the issue of the card, what type of card you want, interest rates if there are annual fees, and financial features.
The card issuing company: A good place to start your research is the bank where you have your business account. If you already have a relationship with a banker there, they can help you determine the best card for your needs. If you don’t have a business checking account yet, you might want to turn to the bank that manages your personal accounts because, again, you have a pre-existing relationship with them. After that, you can check out major national banks like JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, US Bank, Truist, PNC, and TD Bank. However, don’t overlook regional banks, such as Bank of the West, BBVA Compass Bank, BMO Harris Bank, California Bank & Trust, Comerica Bank, HSBC, Huntington National Bank, M&T Bank, etc. However, not all credit card issuers report your trade credit activity to the trade credit bureaus. While developing a business credit score and history is important, you’ll want to choose a card issuer who will do these reports. Finally, you’ll want to find a credit card issuer that supports your type of business. Some do not offer cards to solopreneurs or associations, for example.
Type of business credit card: As mentioned earlier, you can choose a business credit card with points, cash back, miles, or a lower interest rate. Knowing how you and your employees will use the card will help you make this decision. For example, if you make a lot of business trips, you can opt for a card that allows you to accumulate miles. If you want additional items, you may want a card with points that you can redeem for a variety of items in the card issuer’s redemption catalog. Or, you may just want a direct cash back card so you can decide how you want to use the money you earn using the card.
Interest rate: If you don’t carry a balance from month to month, the interest rate may not be important. But, if there is a possibility that you are carrying a balance, you might prefer a card with a lower interest rate. Some business credit cards have an introductory APR of 0%, which can be beneficial if you have a large purchase coming up.
Annual fees: There are annual fees associated with some business credit cards, while other cards don’t charge you every year to use them. Cards with an annual fee often have additional benefits, so you will need to decide whether those benefits are worth the additional fees.
Financial characteristics: Many business credit card issuers include account management tools. Among the features may be the ability to upload your card information into your accounting program. These features can make it easier to manage your finances.
While it might not be possible to get everything you want out of a business credit card, by researching your options carefully, you can apply for the card and card issuer that caters to the majority of your needs. needs.
What are the necessary criteria for submitting a business credit card application?
Once you’ve figured out your personal and business credit score, decided what type of card you want and which credit card issuer you want to use, it’s time to submit your application. However, to make this process easier, you want to gather all of your information in advance.
Each business credit card issuing company has its own criteria and material demands. Typical information they will want to know is:
- Company name: legal name of the company and DBA if there is one
- Professional address: physical and postal (if different)
- Business phone number
- Tax Identification Number
- Type of business: corporation, partnership, LLC, sole proprietorship
- Industry: retail, technology, manufacturing, construction, etc.
- Age: how long has the company been in existence
- Revenue: current revenue and revenue projections or expectations
- Expenses: monthly and / or annual
- Personal Credit Score: Usually looks for points of 670 or higher
- Personal guarantee: from the business manager and / or his associates to cover the debt
- Social security number, date of birth and personal income: from the person applying for the business credit card
Once you have gathered your information, you can apply for a credit card. Most card issuers have a secure online portal for the application. For some banks, you can also apply in person. It can take anywhere from a few minutes to two weeks to find out if you’ve been approved. Then, if approved, it may take up to two weeks for your card to be received.
Why do you need a business credit card?
Business credit cards make it easier to separate your business and personal expenses. They usually come with financial tools that are compatible with your accounting software, saving you time when manually processing this information.
You will have a single monthly payment to the credit card issuer instead of multiple payments to staff members. You may be able to take advantage of incentives such as cash back, points or miles.
How do I get a business credit card approved?
If your business has one, business credit card issuers can review both your personal credit score and your business credit score. As a general rule, your personal credit score should be at least 670. Card issuers will look at other factors such as the age of your business, current and projected income and business expenses, as well as your personal income. .
Which business credit card is right for you?
Like personal credit cards, there are several types of business credit cards. You can choose from cash back, points, miles, 0% introductory APR, and more. Your choice depends on your business needs and how you use the card. For example, if you travel a lot for business, you might want a card that offers miles.
Which bank should you use for a business credit card?
Each credit card issuer has different requirements and offers for their business credit cards. You will want to research what is available from several different banks. This could include large banks that serve the whole country or local regional banks in your area.
You may want to start your research with the bank that holds your business checking account.