April 4, 2023

What you should know about business credit cards with easy pre-approval

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Most consumers aren’t strangers to credit cards. In fact, about 84% of adults in the United States have one. These aren’t just tools for your personal finances. If you’re a business owner, they may be tools that help you build your business to the enterprise level you dream of.

Startups, small businesses, and enterprise-level companies alike use credit cards for various reasons.

So, when you see the term "pre-approval" or "instant approval" related to a credit card application, it may be exciting. However, pre-approval may not mean what you think it does. And credit cards that are easy to get are often riddled with issues that could be detrimental to your business.

Find out what exactly pre-approval means, why you should be careful with pre-approval and instant-approval credit cards, and another option that you may want to strongly consider.

What does pre-approval mean for a business credit card?

If you’ve ever looked into getting a credit card for your business, you know there are several different types of cards offered. You’ll find ones offering cash back, miles, balance transfers, and other benefits. For those who have a difficult time qualifying for a prime credit card, the term "pre-approval" is an exciting one, but it’s likely not exactly what you think.

When you receive a pre-approval for a credit card, you may believe that you’re approved for the card, and all you need to do is sign up. However, that’s not the case.

When considering your pre-approval, credit card companies use information about you and your company that’s available to the public. They may also do a soft credit pull. However, the hard credit inquiry and underwriting process don't start until you complete the application process.

So even though you've received pre-approval, you may be declined for a credit card. However, being pre-approved typically does mean your chances of approval are higher.  

Credit card pre-approval, guaranteed, and instant approval

As you shop for credit card options that fit your needs, there are three credit card descriptors that describe the approval process: pre-approval, guaranteed, and instant approval. Find out what these terms mean and how the options differ below.

  • Pre-approval: Pre-approval credit cards use public data and soft credit pulls to tell you if you’re pre-approved. While a pre-approval isn’t a guaranteed approval, it means you have a strong chance of approval once you complete the application.
  • Guaranteed: Guaranteed credit cards are designed for consumers with limited credit history, fair credit, or bad credit who experience challenges with approval. These are typically secured business credit card options and require a security deposit that becomes your credit limit. They’re also notorious for high interest rates and unreasonable fee structures, but they’re also a way to build your company's credit score.
  • Instant approval: As you'd imagine, instant approval indicates that you’re likely to receive a credit decision instantly. In most cases, you’ll know if you got these cards within a minute or two, although there’s no guarantee of approval. That is, unless you apply for a guaranteed instant-approval credit card. Nonetheless, many prime offers have instant approval capabilities but are difficult to qualify for.

Beyond instant and pre-approval: What else to look for when choosing a business credit card

When you’re looking for a credit card, your first concern may be finding one you qualify for. However, before you apply for any credit card, there are several factors you should strongly consider that have nothing to do with the approval process:

  • Interest rates and fees: Some business credit cards come with exorbitantly high interest rates, annual fees, and other fees. Be sure to read all fee disclosures and ask questions if you don’t understand something before you apply.
  • Rewards: Many credit card lenders offer rewards when you use your card. However, some rewards programs are complex and difficult to navigate, while others are simple. To get the most bang for your buck in the rewards category, look for a cashback business credit card with a fixed rate. This way, you’ll know exactly what you’re earning on an ongoing basis and won’t need to navigate various spending categories.
  • Spend management features: The best credit card options come with spend management software that give you better control over your company’s cash flow.
  • Employee cards: Some credit card options, like Ramp, give you the ability to empower your employees with unlimited spending cards. At the same time, you can incorporate spend controls to limit employee spending and restrict certain types of purchases.
  • Underwriting: If you’re concerned about your ability to be approved for a business credit card, consider Ramp’s sales-based underwriting. You may be approved even if you don’t have extensive credit history.

Drawbacks to traditional credit card companies that offer easy approval

At first glance, easy-approval credit cards may seem like just what your business needs. After all, you want to be able to track your spending in your credit card statements, access rewards, and take advantage of other perks of credit card membership.

Unfortunately, easy-approval credit cards just aren’t all they’re cracked up to be. Sure, they may be easy to qualify for, but they’re typically coupled with high interest rates, high fees, limited credit limits, and potential damage to your personal credit score. The biggest drawbacks associated with easy-approval credit cards are explained below.

High interest rates

If the balance on your credit card carries over from month to month, your lender will charge you interest. In this case, interest immediately becomes the biggest fee associated with your credit card debt.

The best interest rates are typically reserved for credit cards that are the most difficult to get, which makes sense. After all, lenders accept less risk when they lend money to those with the best credit scores, credit utilization rates, incomes, and financial stability.

On the other hand, when a lender makes a credit card easy to get, they accept a significant risk of loss. As a result, they increase interest rates to ensure they’re compensated for this additional risk.

High fees

Fees are another way credit card companies balance risk and reward. Since easy-approval credit cards represent a higher risk to lenders, those offering them typically charge higher fees than others. Before you apply for one of these cards, look for:

  • Annual fees: The vast majority of easy-approval credit cards come with annual fees. In some cases, these fees are extremely high.
  • Cash-advance fees: Most credit card companies charge cash-advance fees. However, these fees are typically higher with easy-approval credit cards. Also, cash advances are usually billed at a higher interest rate. When it comes to easy-approval credit cards, cash-advance interest rates are nearly double what would be considered usury rates in other circumstances.
  • Other fees: Credit cards typically come with other fees too. For example, you can expect to see foreign transaction fees, balance-transfer fees, late-payment fees, returned-check fees, and more. Be sure you understand and agree to the fees you’ll be charged before you apply for any credit card.

Damage to credit

In some cases, easy-approval credit cards can lead to damage to your credit score. That’s especially the case if you have to use your personal credit score in conjunction with your business credit. If your business becomes insolvent and can’t cover its obligations, you’ll personally be on the hook for any debt that’s owed.

It’s common for small business owners and entrepreneurs to put their personal finances on the line to realize their dream of growing their business. On the other hand, there are no guarantees in business. Always be careful when it comes to risking your personal financial stability in order to access working capital for your company.

Limited credit limits

If you’re looking for a credit card for your business, you’re likely looking for more than a decent rewards program and a couple hundred bucks of available credit. Businesses often use credit cards for working capital and day-to-day purchases. For many businesses, a couple hundred bucks of spending power wouldn’t last more than a few hours.

Limited credit limits also often lead to damaged credit scores. That’s because your credit utilization rate plays a role in your credit limit. When you use more than 30% of the credit available to you, your credit score may be impacted. Therefore, it’s best to avoid easy-approval credit cards with low credit limits.

A hassle-free corporate card application

If you’re looking for business credit, look no further than Ramp and our hassle-free application process. We also offer sales-based underwriting. That means we put more emphasis on your company’s revenue than other factors, like credit history, making meaningful credit limits easier to access.

Ramp is more than just a business card. It's an all-in-one finance automation platform that makes it dramatically easier to manage your accounting, bill payments, and expense processes. When you use our platform, you’ll enjoy:

  • Unlimited cardholders: Get free access to all the employee cards you need.
  • Spend controls: You give each employee their own spending limit. You can also decide what types of purchases they’re able to make and with what vendors.
  • Automatic receipt matching: Ramp automatically tracks receipts and categorizes purchases, saving companies hours of accounting time each week.
  • Cashback: Ramp offers 1.5% unlimited cashback on all purchases when you or your employees swipe the card.
  • Real-time insights. Ramp's platform gives you the insights you need to save more money and make more strategic bets on your business.

Looking for a business card that gives you all the finance tools you need to take your business to the next level? Find out how Ramp can help your business today.

Content Marketing Manager, Ramp

Richard Moy is an experienced freelance Content Marketing Manager supporting Ramp. Prior to joining Ramp, he served as a content marketer and editor at BetterCloud and Stack Overflow.


How long does it take to get a business credit card?

The length of time it takes to get a business credit card depends on a wide range of factors. For example, instant-approval credit cards can be obtained more quickly than other types of cards. However, with some lenders, the approval process can take weeks or even a month to complete.

Once the application process is complete and you’ve been approved for the new credit card, you’ll typically see it in the mail within two weeks. Some credit card companies are far faster than others, and you may receive your new card in as little as a couple of days.

Can you use an EIN to get a credit card?

There are some business credit cards you can get with only an EIN. However, these credit cards are notoriously difficult to obtain. In most cases, you’ll need the following to qualify:

  • At least two years in business
  • Significant annual revenues and meaningful monthly profits
  • A positive business credit history

If your business doesn’t qualify based on these factors., that’s OK. Consider working with Ramp. We don't require a personal guarantee, and with sales-based underwriting, you don’t need perfect credit to qualify.

Does Ramp offer instant approval for business credit cards?

No. You won’t automatically be approved for a Ramp account, but that’s not a bad thing. Ramp takes part in sales-based underwriting. Our underwriters will need time, typically a few days, to get a better understanding of your business’s financial stability.

Although this means you won’t get approved instantly, it also typically means you’ll end up with a higher credit limit offered by a company that takes the time to get to know the customers we serve.

What credit score is needed for a business credit card?

In most cases, you’ll need at least a 670 credit score to qualify for a business credit card. If your business doesn’t have credit history, you can use your personal credit score instead. But be aware that this opens you up to personal risk. Also, some business cards, like Ramp, make it possible to access credit with a lower credit score through sales-based underwriting.

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