Business Credit Cards for New Businesses

You can check your business credit via three main business credit reporting agencies: Experian, Equifax and Dun & Bradstreet. They track essentially the same information which they get from banks, credit unions and other lenders (even retailers that offer financing), as well as public court documents and business registries.

Practically speaking, there are two different types of business credit scores: business-specific scores and personal credit scores that are used for business lending purposes. The two most popular business credit scores come from Experian and Dun & Bradstreet – Equifax offers business credit reports, but not scores. You can obtain your business credit report and score from these bureaus online, in exchange for payment.

On the other hand, personal credit scores can also be used for business lending purposes. WalletHub can be of help in this aspect, since you can check your personal credit score for free by signing up for an account.

You can also learn more about business credit reports and find some tips on how to build business credit right here on WalletHub. Hope this helps!

To get a business credit card, you must provide your Tax ID Number (TIN) or Employer ID Number (EIN) along with your Social Security number on the business credit card application. To qualify, a business credit card applicant must also be an owner, officer or partner of a business, which may include sole proprietorships, independent contractors and non-profits, in addition to corporations, partnerships and LLCs. Then, if you get approved for a business credit card, your card will list your company’s name in addition to your own.

Other than those things, the process of getting a business credit card is pretty much the same as applying and getting approved for a credit card for personal use. For instance, the issuer will still check your personal credit history when you apply for a business credit card, and you’ll be held personally liable for any unpaid balance. With that in mind, it’s also worth noting that there’s no rule against using a consumer credit card for business spending, so getting any credit card could count as getting a credit card for your business.

Below, we’ll you guide you through how to get a business credit card, step by step, then highlight the various requirements that small business owners typically have to meet in order to get a credit card in their business’s name.

How to get a business credit card:

1. Own or operate a business. Most major credit card issuers have broad definitions of what constitutes a “business.” Owners of traditional businesses obviously count, like LLCs, non-profits, corporations, and so on. Independent contractors and freelancers can also qualify for business credit cards from some issuers. Even sellers on eBay, Airbnb hosts, etc., may be able to get one. Essentially, if you provide goods or services and make income from them, you could qualify for a business credit card. If you’re one of these non-traditional “business owners,” you’ll list “sole proprietorship” under business type on your application.
2. Check your personal credit score. Your personal credit standing is much more important to your business credit card approval odds than your business’s credit standing. Checking your credit score for free is an easy way to get a sense of what business credit cards you’re likely to qualify for, allowing you to focus on relevant offers.
3. Determine whether you need cards for employees. Business credit cards typically allow you to add more authorized users than consumer cards. You can also customize spending privileges for each employee.
4. Choose between rewards and 0% rates. Rewards are best when you always pay in full, and you can find great rewards deals from both business and consumer credit cards. But if you want a card for financing purposes, get a consumer card with a 0% rate, as consumer cards have more predictable regular APRs than business credit cards.
5. Compare cards based on your intended usage. Calculating how much each credit card offer will save or cost you in terms of your business’s spending and payment plans is the best way to find the right card.
6. Apply for the best credit card for your business. You can apply for a business credit card online and, in some cases, by phone, by mail or in person.

Those are the basic steps for finding and applying for the right business credit card. But it’s not always that easy to actually get approved. Below, we’ll cover the biggest requirements you’ll likely need to meet in order to get approved for whichever business credit card you decide to apply for.

Business Credit Card Requirements: What You Need to Qualify

The most important business credit card requirements are a good credit score and a low debt-to-income ratio. These are the requirements weighed most heavily by business credit card issuers. Your personal credit score lets them know how you’ve handled your finances in the past, and your personal debt-to-income ratio lets them know how able you’ll be to pay off what you borrow each month.

When it comes to determining whether or not to approve you for a business credit card, issuers want to feel confident that you’ll be able to pay your bill each month. Personal financial records are the best way to judge that because they usually go back much further than business records, and business credit card owners are personally liable for balances, anyway. That helps to explain some of the boxes you’ll need to check in order to qualify for business credit card approval.

Business Credit Card Requirements:

• Owner, officer or partner of a business, which may include sole proprietorships, independent contractors and non-profits, in addition to corporations, partnerships and LLCs.
• Employer Identification Number (EIN) - assigned by the IRS when you register your business. If you’re a sole proprietor who doesn’t have an EIN, you’ll just fill in your SSN.
• U.S. resident
• 18+ years old
• Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN)
• Ability to make monthly bill payments

In addition to these requirements, there’ll be other information you should have on hand. You’ll need to provide your annual income, which will help the issuer determine your debt-to-income ratio. On top of that, you’ll need to list business information such as the number of employees you have, how long you’ve been in business, your annual business revenue, and your business contact information. Even if you’re a one-man startup operation that hasn’t opened yet, you’ll still need to provide all of that information.

If you haven’t made any business revenue, be honest about it. Trying to stretch the truth on any kind of credit card application is not a good idea. There are plenty of business credit card options out there for new businesses, so don’t worry.

Once you’ve covered the above requirements, you’re just about ready to apply for a business credit card. Just remember that each issuer has its own specific standards. So make sure to read your chosen card’s terms and conditions before submitting an application.

There are three major business credit bureaus, Dun & Bradstreet, Equifax and Experian, that provide business credit scores.

Dun & Bradstreet measures a company’s risk using a Paydex score, which ranges from 0 to 100, and mirrors a company’s payment data. Experian offers a CreditScore report, also ranging from 0 to 100, which includes a business credit score, payment trends, public records and account histories. Equifax assigns three different scores to a company. The first is a credit risk score, ranging from 100 to 992, which analyzes your company’s credit history.

The second is a “payment index,” ranging from 0 to 100, which determines the likelihood of your business becoming delinquent on payments. The third is a “business failure score,” ranging from 1,000 to 1,880, which assesses the risk of a company going bankrupt.

As you can see, all of these credit scores rely on the payment history a company has with its previous suppliers, creditors, and lenders. Therefore, having records of timely payments will help establish a good score.

Business credit card credit score requirements vary by issuer and by card. The top business credit cards usually require good credit or better, but there are still options for small business owners with fair credit or bad credit. By the way, it’s your personal credit rating that really matters, even though you’re applying for a business credit card.

That means you need a credit score of at least 700, personally, to get the best business credit cards in most cases. The higher your score is, and the more income you have relative to your debt, the better your chances of approval will be.

Popular Business Credit Cards by Credit Score Requirement:

Excellent Credit: Chase Ink Business Preferred&Business Platinum Card from American Express

Good Credit: Chase Ink Business Cash&Capital One Spark Cash for Business

Fair Credit: Capital One Spark Classic for Business

Bad Credit: Wells Fargo Business Secured Credit Card

In general, good-to-excellent credit gets you access to the biggest sign-up bonuses, the highest ongoing rewards rates, and lots of options with no annual fee. People with lower scores are more likely to have to choose between low fees and other perks.

If you’re wondering why credit card companies rely on personal credit to evaluate business credit card applications, a lot has to do with personal credit histories usually being longer than the business version. Since they’re longer, they tend to be more predictive. Most credit card companies also consider a business owner’s personal finances to be intertwined with the business. That’s often true, since personal savings are the top source of start-up capital for new businesses.

The best business credit card for startups is the Chase Ink Business Preferred card because it offers 80,000 bonus points for spending $5,000 in the first 3 months. There’s also 3 points per $1 spent on travel and common business expenses. These points are worth 1.25 cents each toward travel through Chase Ultimate Rewards. And the card has a fairly cheap $95 annual fee.

The best business credit cards for startups are the same as the best business credit cards for any company. Approval for a business credit card does not depend on how long the company has been around. Rather, it rests on the owner’s personal credit history. The best cards require good credit (700+ score) or excellent credit (750+).

5 Best Business Credit Cards for Startups:

1. Chase Ink Business Preferred – Best Signup Bonus
2. Capital One Spark Cash for Business – Best Cash Back Rate
3. U.S. Bank Visa Platinum Card – Best 0% Intro APR
4. Wells Fargo Business Secured – Best for Bad Credit
5. Capital One Spark Classic for Business – Best for Limited Credit

Choosing the best business credit card for a startup comes down to finding a card that rewards the business’s biggest spending categories. Focus on purchases that will be paid off within a single billing period. Business credit cards are bad for carrying a balance from month to month because the interest rate can change at any time.

With that background out of the way, let’s take a more in-depth look at some of the top offers in categories popular among entrepreneurs.

Compare the best business credit cards for startups:

• Best Signup Bonus: Ink Business Preferred. This card, issued by Chase, offers 80,000 bonus points for spending $5,000 in the first 3 months. That’s worth $1,000 in travel. There’s also 3 points per $1 on travel and select business categories and 1 on everything else. The only drawbacks are the $95 annual fee and excellent credit requirement. 
• Best Cash Back Rate: Capital One Spark Cash for Business. Spark Cash offers unlimited 2% cash back on all purchases, which can build up quickly for a business. There’s also a $500 initial bonus for spending $5,000 in the first 3 months and another $1,500 for spending $50,000 in the first 6 months. There’s a $95 annual fee, but it’s waived the first year. The card requires good credit.
• Best 0% Intro APR: U.S. Bank Visa Platinum Card. This is technically a personal credit card. But it’s good for startups because entrepreneurs can take advantage of its 0% for 20 months on purchases to buy and pay off everything needed to start a business. And although there are no rewards, there’s also no annual fee. The card requires excellent credit.
• Best for Bad Credit: Wells Fargo Business Secured. For people who want to start a business but whose finances aren’t in the greatest shape, there’s still hope. This card requires a refundable deposit of $500-$25,000, which will serve as the credit line. The card offers 1.5% cash back on all purchases and has a $0 annual fee.
• Best for Limited Credit: Capital One Spark Classic for Business. Spark Classic is available to business owners who have little or no existing credit. It has a $0 annual fee and even gives 1% cash back on all purchases.

There are a lot of great incentives to get a business credit card for a startup. Shop around to see which card fits the needs of the business best. Good luck!

Your personal credit standing is always going to be far more important than your business credit standing, even when you apply for a card branded for business use because credit card companies hold business credit card users personally liable for any debt they incur. It is therefore important to maintain a responsible use by paying your debt on time and staying under your credit limit, as this will improve both your personal and business credit scores.

As for your second question, you can open a personal account in your name and use it for business purposes. Personal credit cards are particularly well suited for financing, as they are covered by the CARD Act and thus benefit from its protection against arbitrary interest rate increases on existing balances. With most business credit cards on the other hand, issuers do not have to wait for an account to become 60 days delinquent before increasing the cost of existing balances held on it. That in turn fosters debt instability, which is problematic when you consider that you’ll be held personally liable even for business credit card debt.

With that being said, we still recommend business-branded credit cards for everyday company purchases given their business-specific rewards and accounting features, not to mention the freedom they give you to customize spending limits for employees and then benefit from their spending. You can compare our favorite offers here. Hope this helps.

Your business credit and personal credit are not all that different. Business credit is based on your business's financial history and is tied to your business's EIN number, while personal credit is based on your personal spending history and is tied to your Social Security number.

Even though creditors today tend to move away from relying on personal credit alone when judging the financial health of a business, your personal credit history will still factor into your approval and credit limit when you apply for business credit.

That is because most business credit cards require the business owner to personally guarantee the debt, so if the balance isn’t paid off the owner will be liable.

This also means that the business account activity may show up on the owner’s personal credit reports. Depending on each card issuer’s policy, it may show up only if the owner defaults, or all activity may be reported.

You can learn more from WalletHub’s latest Business Credit Card Study.

To build corporate credit, you need a track record of responsible financial management, only spending what you can afford to repay and always paying your bills on time.

A couple of tips that can help you build a positive credit history include pulling your business and personal credit reports to check and dispute errors and get a qualitative sense of your credit standing; always paying your bills on time; minimizing credit utilization and paying your taxes to avoid lawsuits.

Another important consideration is vendor-reported payment information. Just like a bank would, many large companies report vendor payment and financing data to the major credit bureaus, so be careful when you owe big companies.

You can find some additional tips from WalletHub’s guide on how to build business credit.

The first thing to ask yourself is whether you need your head examined.  After you answer this question, you can now get more serious Let's start out with whether this is going to be a capital-intensive or labor intensive business.  In other words, are you going to manufacture widgets that will need substantial capital to get started or will you be a consultant where capital may not be the primary consideration but instead the source of where new clients will come from. You need a plan and the plan does not have to be perfect but what it does need is budgetary considerations, goals to be achieved adn a time frame for reaching these goals. Next, assuming you can afford it is some professional advisors. At the start of the business I think the most important advisors probably is the CPA who can help you decide whether the business should be an LLC, an S corporation or C corporation. Regardless, one of these should be selected in order to protect your private assets from claims of business creditors. Once the CPAs is in place, and don't be afraid to ask if they have experience in dealing with new business owners, your next step would be to retain a fee-only financial advisor to help put forth the future in the form of projections of cash flow and tax planning with the advisor working closely with the CPA. These services are not free but in my professional judgment and based on many years of experience without them, it may be difficult to succeed. On the assumption that you may be married, you may need the support of an understanding wife and possibly children as self-employment is not a five day week with eight hour days. Very often it begins with seven working days per week and long hours. One of the early considerations is the preparation of proposed budget and recognizing that it will never be perfect, it will serve as a guideline to measure actual performance against. Your question is incredibly broad and we could probably go on for paragraph after paragraph but hopefully this is enough to get you started. Except my best wishes and hopefully you have the financial resources or can obtain them to get into the business until profits can be generated. Good luck.

The pros of business credit cards are the rewards, initial bonuses, the expense-tracking tools and the free cards for employees.

However, when it comes to the cons of business credit cards, I feel that a credit card is not useful to new business owners. I find that a business, when it is first starting, should be interested in accumulating profits, instead of accumulating debt. In addition, should the business fail, the business owner is still liable for the debt, even if the business is closed. 

Realistically, it would behoove a business owner to research other options for funding, such as government grants, as well as business assistance. However, if an emergency does come about with the business, I would suggest a business loan from a bank as a much better route than a credit card.