Business Credit Card Requirements Before You Apply


Apply for a Business Credit Card

Regardless of how big or small your company may be, having a business credit card is a great way to add value to your operations. Establishing business credit provides you with the ability to do everything from separating your personal and business expenses to easily keeping records of your finances when tax season comes around. Along with this, certain cards even open the door to perks such as travel rewards and cashback incentives that can contribute to the ultimate growth of your business. 

Despite this, the application process and requirements for a business credit card can often be confusing. There is a specific process that must first be completed to acquire one and many options to choose from once you have been approved. Understanding the specifics of the procedure and if you qualify are crucial to ensuring that your business can reap these benefits with ease. 

How does a business credit card work?

With a business credit card, purchases specifically for the purpose of the business can be completed. One major difference between this and a personal credit card is the higher cap when it comes to spending. Business credit cards have higher limits which allow for bigger purchases to be made. This also contributes to an easier accumulation of perks, such as points that can be used for travel-related expenses for the business and its employees.

Along with this, another difference between business and personal credit cards can be seen in how purchases are tracked. With a business credit card, the issuer is able to report the account to both commercial and credit consumer bureaus. This is unlike personal credit cards, where the issuer only reports to the latter on a monthly basis. 

Business Credit Card Requirements

Figuring out the requirements beforehand that are necessary for you to be eligible — and eventually approved — for a business credit card is essential to save you time and trouble in the long run. Many business owners often hold concerns that their organization may not be large enough or have the qualifications to acquire one of these cards, but the good news is that a substantial number of small to midsize companies are qualified. Regardless, even looking aside from the issuer you choose to go with, you’ll need to meet most, if not all, of these following requirements:

Basic info

One of the easiest requirements to meet for a business credit card is simply knowing the basic aspects of your organization. The legal name for your business will need to be supplied as part of your application. Those registered under an S-corp, C-corp, or LLC can provide their registered name, while others can provide their own independent legal name. The time you have been in the business, the number of employees you currently have on board, the type of industry you are in, and the federal tax ID are other basic information that will need to be identified and supplied. Many issuers have broad, wide-ranging definitions of what they consider a business, so any concerns in this area are not likely to be a problem. For example, even entrepreneurs who work freelancing are applicable for many business credit cards. 

Annual Revenue

The primary reason that your organization’s annual revenue must be reported to your potential business credit provider is so that they can make sure that your business can handle the monthly credit card payments. This allows them to measure how responsible a company can be in terms of credit card expenses along with determining the credit line size that you will receive.

Credit card issuers view businesses with higher revenues as less risky which makes it easier for these applicants. However, this does not bar organizations with smaller annual revenue reports from applying. Applicants who are with startup companies are usually required to submit their personal income as a supplement to this. 

Credit History

One of the main requirements that an applicant must meet when attempting to get a business credit card is submitting their personal information (such as their social security number) for the issuer to perform a credit check. This is mainly done to view the credit score of the applicant and to determine their individual debt-to-income ratio. The ratio is a way for them to compare your income to the total debt you have. 

Because of this, issues such as tax liens, collections, or judgments, among other things, are likely to prevent an organization from receiving business credit. Keeping up a clean slate when it comes to your finances — having a low debt-to-income ratio, having a low credit utilization ratio, etc. — can improve your chances of getting approved for a card with the issuer that you want. 

Business Credit Card Benefits

Aside from having consistent cash flow that can be used to support your business endeavors and further the growth of your business, a business credit card is important because it offers these benefits:

Financial Back-up 

There are often many abrupt and unexpected costs that come with running a business. Having a business credit card that provides financial resources can be a great way to maintain the stability of your organization if any unexpected expenses happen to arise. It can also keep your business afloat during times of struggle until operations return to normal.

Record keeping

Most business credit cards provide their clients with both a monthly report of their transactions and online bookkeeping tools that can optimize the record-keeping process. This is especially advantageous when it comes time to due taxes because a detailed account of the year’s expenses can be viewed with ease. 

Credit score opportunities

Having a business credit card can provide you with the opportunity to increase your organization’s credit score as a whole by keeping up with monthly payments and being responsible for the provided cash flow. This can, in turn, aid in making it easier to qualify for a line of credit and loan payments with lower interest rates.

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