How Do I Qualify for a Small Business Credit Card?

How Do I Qualify for a Small Business Credit Card? loading="lazy"

Office supplies, professional memberships, inventory or entertaining clients—every small business has expenses. But using your personal credit card to purchase company supplies or services can make it hard to keep personal and business expenses straight. Using a small business credit card can simplify your bookkeeping and give you access to the funds you need to keep your business humming. Business owners can qualify for a small business credit card by providing their business and personal information and undergoing a credit check to get approved.

Who Can Qualify for a Small Business Credit Card?

You don't need to have employees or even a corporate business structure to qualify for a small business credit card. People who freelance, do gig work (such as driving for rideshare services) or run a business from home can apply for small business credit cards. Sole proprietorships, limited liability corporations (LLCs) and other types of businesses can qualify, as can home-based and part-time businesses.

Making business purchases with a small business credit card helps separate your business and personal finances. When you file taxes, having your business expenses on a separate business credit card helps prove you are operating a for-profit business, not a hobby. Many business credit cards also sort your spending into different categories, such as travel, entertainment or services, which can simplify your bookkeeping and taxes.

A business credit card can also help your company establish a business credit score. Like your personal credit score, this number, ranging from zero to 100, indicates the amount of debt your business has and how well you manage it. Making your business credit card payments on time and maintaining a low balance (or no balance at all) will help boost your business credit score.

How to Apply for a Small Business Credit Card

Applying for a small business credit card is similar to applying for a personal credit card, but in addition to your personal information, the application will also ask for information about your business. Be prepared to provide the following:

  • Business name, address and phone number
  • Industry
  • Years in business
  • Number of employees
  • Annual business revenue
  • Federal Tax ID: This could be your employer identification number (EIN) or, if you don't have an EIN, your Social Security number (SSN).
  • Personal information such as name, address, SSN and annual income

Some business credit card issuers report your account activity only to commercial credit bureaus; others report to consumer credit bureaus as well. Accounts that are reported to consumer credit bureaus will affect your personal credit score. To minimize the card's impact on your personal credit, you can look for a card issuer that reports only to commercial credit bureaus. However, keep in mind that business credit cards generally require you to personally guarantee repayment of your debt—including any purchases by employees or other authorized cardholders—so falling behind on your payments could still affect your personal credit.

How to Check Your Business and Personal Credit Scores

Credit card issuers consider both your business and personal credit history and credit score when they evaluate your application for a small business credit card. Applying for a credit card will cause a hard inquiry on your credit report, which can have a slight, short-term negative effect on your credit score. To help minimize this impact, be selective and apply for a card designed for your credit score range so you're more likely to get approved.

Most small business credit cards are targeted to people whose credit scores are good or excellent, which translates to a FICO® Score of 670 or higher. There are some cards for those with lower credit scores, but they tend to have higher annual percentage rates (APR) and offer fewer rewards or perks.

Checking your business and personal credit scores will help you identify business credit cards for which you're likely to qualify. You can buy a one-time copy of your Experian business credit report and credit score or sign up for Experian's business credit monitoring services to access your report and score any time. You should also get a free copy of your personal credit report, review it for accuracy and check your personal credit score.

If your scores aren't where you want them to be, improving them before you apply for a business credit card could help you qualify for a card with lower interest rates and better rewards. Paying down credit card debt, making payments on time and reducing your credit utilization ratio (the amount of available credit you're using) can all help to improve your credit.

Give Your Business Credit

By letting you make necessary purchases without dipping into your cash, a small business credit card can make it easier to manage your business's spending and cash flow. Qualifying for a small business credit card is simple to do if you have good credit.

Once you receive a business credit card, practicing good credit habits such as making on-time payments will help maintain a good credit score. If employees are authorized to use the card, keep an eye on their spending as well; remember, you're ultimately responsible for making the payments.

Your business credit score affects how vendors, suppliers and lenders see your business. Signing up for Experian's business credit monitoring services is an easy way to keep tabs on this vital number.