How to apply for a business credit card

As a small business owner, you’re probably in need of credit to finance your ongoing expenses. A business credit card is a great way to separate your personal and business finances and start building business credit.

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In this article, we’ll go over why you might want a credit card for your business, the requirements to get one, and how to apply for a business credit card. So, let’s get started.

Why get a business credit card?

You might want a business credit card for several reasons, regardless of your area of business. These accounts can help you build your business's credit score while allowing you to access the capital you need when you need it.

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You can also use your credit card to pay off high-interest debts with 0% intro APR promotions for the first calendar year or longer. Here’s a list of some of the main benefits of business credit cards.

Build business credit

As an individual, you may have a great credit score. On the other hand, if you’re like most startups, your business doesn’t have any credit history at all. Just like with personal credit, if you want to build business credit, you’ll need to show a strong payment history.

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That’s impossible to do without some type of loan, and revolving loans like credit cards allow you to start building your credit history.

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The best small business credit card providers report to all major credit bureaus. As you use your card responsibly, you’ll improve your business credit report over time. This can help you increase your business credit card limit or even get loans your business didn’t qualify for in the past.

Get access to the money you need

Whether you’re a sole proprietor or a fledgling small business, one of the biggest challenges for new businesses is financing expenses. Early-stage businesses often spend all of their cash flow developing products, marketing, and fulfilling orders. Unfortunately, that leaves most companies cash-strapped, which can pose significant challenges, like:

• An inability to fill purchase orders. If you get a large purchase order, you may not have the funds necessary to fulfill it.
• A lack of office supplies. You need office supplies to keep your business afloat, but this can also become a major expense for cash-strapped businesses.
• Travel. As a new business owner, you may travel quite a bit. You might be meeting manufacturers, selling your product at trade shows, or negotiating with investors—all of which costs money.

The good news is that business credit cards typically have higher credit limits than their personal counterparts. A meaningful line of credit can help you get through the growing pains your business will likely experience in the early days.

Track and manage business expenses

A wise business owner pays close attention to every dollar that comes into and leaves their business. However, expense tracking can quickly become a full-time job if you use a mix of cash and multiple business spending accounts.

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On the other hand, you could use your business credit card for purchases and use your cash to pay off the card regularly. In doing so, your credit card becomes a ledger of every expense your business pays, making expense tracking and management a more straightforward process. Some options, like Ramp, even have built-in expense tracking and analytics to streamline the expense management process.

Benefit from rewards programs

Chances are, you have a rewards credit card in your pocket, but did you know rewards credit cards aren’t just for personal use? Many business accounts also come with credit card rewards, among other perks after account opening.

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In most cases, these rewards will fall into one of two categories:

1. Cashback rewards. You earn a set percentage of your purchase total back in cashback rewards every time you use your credit card.
2. Travel rewards. You earn travel rewards points or bonus miles every time you use your credit card. You can save these bonus points and use them to pay for travel accommodations.

Although these are the two most popular rewards credit card options, they’re not the only ones. Other programs may offer gift cards or statement credits, for example.

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Also, make sure to read the fine print. While most rewards programs apply to every dollar you spend, some will only apply to “eligible purchases,” and your rewards may be capped after a set maximum.

Pay off other high-interest credit cards

It’s normal for a small business to have debts. In some cases, the interest on those debts can be exorbitantly high. A business credit card may help you reduce expenses by lowering the interest you pay on these accounts.

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Several credit card companies offer balance transfer credit cards with 0% intro annual percentage rates (APRs) for a year or longer. You can use these cards to pay off high-interest debt and make a plan to aggressively pay down the balance during the 0% introductory APR promotional period. You don’t want to overdo it, though. If you don’t pay the balance off in the promotional period, any remaining debt will be charged at the standard interest rate for the card—which is usually much higher.

‍What do you need to open a business credit card?

Opening a business credit card should be a simple process. You'll be required to submit much of the same information as you would for a personal credit card, along with some extra information about your business.

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To apply for a business credit card, you'll need the following:

• Business name, location, and contact information.
• Yearly revenue, employee count, and length of business operations.
• Nature of the business, its industry, and its legal framework.
• Projected monthly expenditures.
• An Employer Identification Number (EIN), if you have one.

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You’ll also have to supply personal details, including your full name, date of birth, Social Security number, residential address, email address, contact number, annual earnings, and home ownership status.

Can I use an EIN instead of an SSN to get a credit card?

Some cards allow you to use only your EIN number to open a credit card. However, in that case, you’ll usually be required to show either a business credit history or proof that your business is generating monthly revenue. Otherwise, you’ll have to use your SSN, making you personally liable if your business can’t pay its debts.

How to open a business credit card in 6 easy steps

Chances are you’ve applied for a credit card in the past. You simply pick the card you want, give the lender your name, birthday, social security number, address, and income information, and the provider decides whether you qualify.

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Businesses come with more risk, though. If your business closes its doors, the lender may not be able to collect any debts you owe. So, the application process is a bit more involved for a business credit card than a personal one. Here’s how to open a business credit card:

1. Assess your needs

Before you start comparing your options, consider your business’s needs. Some things you should think about include:

• Credit limit. Are you using a credit card to fund purchase orders that cost you over $10,000? If so, you’ll want to apply for a card with high credit limits.
• Employee cards. Are you the only person who will use the credit card, or will you let some of your employees spend on your account? If you need multiple authorized users, your credit card company should support this option.
• Intentions. How do you intend to use your credit card? If you plan on using it for balance transfers, you’ll likely need a different type of credit card than if you plan on using it for day-to-day expenses.

2. Consider your eligibility and creditworthiness

Business credit card requirements are typically more strict for business credit cards than personal ones. Your business needs to generate meaningful, regular revenue, and it’s good to have a solid business credit score.

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If your business has no credit history, some lenders will make their decisions based on your personal credit history, so long as you’re willing to make a personal guarantee to pay the debt off. Of course, you’ll need a solid personal credit score to take advantage of this option.

3. Gather the information you need to apply

Business credit card applications typically require quite a bit of information. Credit card companies will usually ask for your business name, employer identification number or tax ID, business address, proof of annual business revenue, and your number of employees. Be sure to have this information handy when you apply to streamline the process.

4. Choose the right credit card

As mentioned above, there are many business credit card offers to choose from. Each offer comes with a different rewards structure, fee structure, credit line, and perks. Different types of organizations will have different needs or requirements. For example, a small nonprofit looking for a credit card has different needs than an enterprise company.

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Here’s what you should pay attention to as you compare:

• Annual fees. Some business credit card annual fees are exorbitantly high. On the other hand, some come with no annual fee at all.
• Interest rates. For credit cards, interest is usually stated as a yearly rate, called the annual percentage rate (APR). The lower your rate, the better.
• Foreign transaction fees. If business travel is a norm for you, look for a credit card that doesn’t charge foreign transaction fees.
• Rewards. Consider the rewards you’ll use the most. For example, travel rewards could help reduce your business’s travel expenses.
• Capabilities. Some business accounts have special capabilities, such as improved expense management and the ability to give cards to your employees. Think of the features you need as you compare your options.

5. Apply for the credit card

Now that you’ve completed your paperwork and chosen the card you want, it’s time to fill out the application. As you do, make sure to answer every question as accurately as possible. That way, you’ll speed up the process without your provider having to reach out for accurate information.

Best practices for getting a business card

Finding the credit card you want for your business is one thing; getting approved is another. These cards are usually more challenging to get your hands on than personal credit cards, but there are some things you can do to improve your odds.

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Follow the 4 best practices below for your best chances of getting approved for a business credit card.

1. Optimizing personal and business credit scores

There are several things you can do to improve your credit score. For example, you can pay more than the minimum payment on your monthly debts, keep your balances low, and take care not to have too many hard inquiries on your credit report.

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Start by pulling your personal and business credit reports to see where you stand. Next, consider what you can do to improve your credit and increase your chances of approval.

Also, check your personal and business credit reports for inaccuracies, as these could also lead to declines.

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Additionally, avoid using a personal credit card for business expenses. This will protect your personal finances and credit score from being affected by business activities.

2. Avoiding maxing out credit lines

When you max out your credit lines, you show lenders that you need more revolving credit. That’s not a good sign, so doing so can negatively affect your credit score and your ability to get new loans in the future.

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A general rule of thumb is to keep your balances below one-third of your credit line. So, if you have a $3,000 credit line on a credit card, you should never have more than a $1,000 balance.

3. Maintaining financial records

The credit card company you choose will likely require you to provide financial records to prove your business revenue and your personal income. If you can’t, there’s a good chance the lender will decline your application.

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You can avoid this headache altogether by maintaining your financial records. Keep a running tally of your income, both business and personal, as well as your expenses. 

4. Following good business practices

Following sound business practices may not seem like it will help you get approved for a credit card, but that’s a false notion. Good business practices include sound financial practices, which can lead to credit card approvals.

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For example, the following will help you get approved:

• Solid record keeping. Keeping solid financial records is helpful for any business and simplifies the credit card application process.
• Increasing revenues. Good business practices typically lead to increasing revenues, which lenders like to see.
• Increasing earnings. As with revenues, lenders like to see growth in your bottom line. Following good business practices can help you demonstrate this.

What is the easiest business credit card to get?

Secured credit cards are the easiest business credit cards to get if your business doesn’t have a strong credit history. These cards don’t have strict credit score or revenue requirements like most credit cards. That’s because with a secured card, you pay cash upfront which functions as your credit line. If you don’t have a strong credit score, secured credit cards offer another avenue for building business credit.

Getting a business charge card with Ramp

If you’re looking for card for your business, Ramp is a great place to start. Ramp uses your sales to determine credit eligibility, which can lead to higher credit limits on average.

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There are other card benefits too:

• Unlimited purchase cards for unlimited cardholders
• Unlimited virtual credit cards
• Detailed expense tracking and analytics
• Quality accounting tools
• No foreign transaction fees
• Automated financial management that scales with your business

Learn more about Ramp’s corporate cards.