How to get a business credit card + what you need to know before applying
Managing finances as a business owner is a hefty feat. From compensating your employees to investing in new opportunities, there’s always something to pay for, and keeping those payments organized is key. That’s why getting a business credit card can be a huge asset to your business.
Think of corporate cards as your financial Swiss Army knife. They make it easier to track spending, separate business and personal finances, and invest in new opportunities. Plus, with added cardholder perks, every transaction moves beyond just spending to becoming another way to invest in your business.
Let’s break down the steps to applying for a business credit card below.
1. Define your business
Before beginning the application process, you need to determine your business structure. The most common forms of business are the:
Sole proprietorship: A sole proprietorship is a business owned and operated by a single individual with no legal distinction between the owner and the business.
Think: a freelance graphic designer who runs their own business from home, handling all aspects of the operation without any formal business structure.
Partnership: A partnership is a business arrangement where two or more individuals share ownership, responsibilities, profits, and losses of the business.
This could be a law firm founded by a group of lawyers who share the profits, losses, and management responsibilities of the firm.
Corporation: A corporation is its own legal entity that's separate from the people who own it. This means that the owners (called shareholders) aren't personally responsible for the company's debts or legal problems. These owners choose a group of people (a board of directors) to make big decisions and set the company's rules.
An example of a corporation would be a large technology company like Apple or Microsoft, which is owned by shareholders and operated by a board of directors.
S Corporation: An S Corporation is a special kind of company that the IRS recognizes. It allows the company's profits (and sometimes losses) to go directly to the owners' personal income instead of being taxed separately as a company's earnings. This way, the owners can report the company's profits or losses on their personal tax returns, often leading to tax benefits.
An example of this would be a small family-owned business that has elected for S Corporation status to benefit from pass-through taxation while enjoying liability protection.
Limited Liability Company (LLC): An LLC is a mix of a partnership and a corporation. It protects its owners (called members) from being personally responsible for the company's debts or legal issues. At the same time, it's flexible in how it runs and can be more efficient for taxes, similar to a partnership.
This could be a local coffee shop that's owned by a few partners who want to protect their personal assets while enjoying the flexibility of partnership-style management.
Classifying your business not only helps in choosing the appropriate card but also determines the application process and the liabilities involved — plus, it’s essential to understanding your business and how it functions.
2. Determine your eligibility
While you do need to keep your business and personal finances separate, you’ll need to run a personal credit check before you can apply for a business credit card. Why? Because card issuers use your personal credit score to estimate how responsible your business will be with credit.
Without a high credit score, it can be difficult to qualify for an unsecured card — but that doesn’t mean you’re out of luck. An option is a secured credit card, which requires you to put down a cash deposit if you take that route.
Knowing your credit score puts you in a position to better target the cards that are within reach, setting yourself up for a successful application.
3. Compare company credit cards
With a plethora of business credit cards available, finding the perfect one for your business takes some research and careful consideration.
Focus on comparing essential features like fees, rewards, and interest rates, as each card brings different things to the table. For instance, if frequent business travel is part of your routine, an airline-specific business credit card offering travel rewards and perks could be ideal.
On the other hand, you could opt for a card like the Expensify Card for business travel and day-to-day spending. The Expensify Card gives you 1% cash back on every US purchase and 2% back if you spend $250K+/month across cards. Plus, it automates expense tracking and reporting, which might suit daily needs better than an airline card. Remember, it’s all about what will suit your business best.
It's not just about perks and rewards, though. Interest rates and fees play a crucial role in your choice. Look for cards offering introductory 0% APRs, which can be incredibly helpful for short-term financing. Remember to be mindful of the regular interest rate that applies post-introductory period and any annual fees. These costs should be weighed against the benefits the card provides.
By balancing these factors, you can pinpoint a business credit card that enhances your financial management without adding unnecessary financial stress.
4. Apply for your card
Okay, you’ve made it to the fun part! Now that you’ve classified your business, determined your eligibility, and selected your card of choice, it’s time to sit down and actually apply.
Applying for a business credit card typically involves submitting various documents. The process might vary slightly depending on the card issuer, but coming prepared with these documents can streamline your application:
Business license
Tax identification numbers
Personal identification documents
Be sure to come prepared with other information about your business, like your business name, your role in the company, your annual business income, and other general business information. Basically, the more you come prepared with, the easier it will be to apply.
What you need to know before applying for a company credit card
Before you fill out that application form, it’s important that you understand how a business credit card functions, why it’s important to your business, and the potential downfalls you may face. We’ll break this down below.
How a company credit card works
A business credit card, much like a personal one, works by offering a line of credit with the added perk of business-centric rewards and benefits. It's a valuable asset for managing company expenses, keeping business and personal expenses separate, offering insights into spending patterns, and providing opportunities to leverage rewards for business growth.
Benefits of opening a business credit card
Between building a credit history and maximizing your savings, there’s really no shortage of benefits to opening a business credit card — as long as it’s used responsibly. Some of the key benefits include:
Improved cash flow management
Higher credit limits
Easier expense tracking and reporting
Rewards and cash back on business purchases
Building a credit history for your business
Want to see exactly how much you'll save when you use the Expensify Card? Check out our credit card savings calculator.
Potential challenges for business owners
Securing a business credit card is a strategic move. But it's also important to be aware of potential challenges that business owners might face — especially since the balance on the credit card is ultimately your responsibility. The issues include:
Potential for high interest rates and fees
Risk of overspending and debt accumulation
Personal liability in some business structures
Common questions about how to get a business credit card
Still have questions about how to score a business credit card? We have answers. Explore our FAQs below.
How hard is it to get a business credit card?
It is typically not hard to get a business credit card, depending on factors like your personal credit history, your business's financial stability, and the specific requirements of the card issuer. Stronger credit profiles and well-established businesses usually find it easier to get approved for a business credit card.
Can you use an EIN to get a credit card?
Yes, you can use an EIN (Employer Identification Number) to apply for a business credit card. It’s particularly useful for separating your personal and business finances, as it keeps your Social Security number for personal use. Using an EIN helps establish and build your business's credit history, which can be beneficial for future financial endeavors and credit applications.
Can my LLC get a credit card?
Yes, your LLC can get a credit card by using your LLC name and EIN to apply. Getting a credit card for your LLC is a smart way to separate personal and business expenses, potentially build your business’s credit history, and manage your company's finances more efficiently. It also helps in maintaining the limited liability aspect of the LLC, as it distinguishes business expenses from personal ones.
Keep cash flowing with the Expensify Card
For small businesses and corporations alike, the Expensify Card is tailored to streamline expense management while offering the flexibility and benefits crucial for growing companies.
So, what are you waiting for? Get your paperwork in order and apply today.
