How to Qualify and Apply for a Business Credit Card

small business florist shopping online with business credit card

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Whether you’re freelancing from your living room or managing a brick-and-mortar store, you qualify as a small-business owner—and that opens the door to the benefits of a business credit card. 

Applying for a business credit card is simpler than you may think. These cards offer perks beyond convenience, from rewarding points and miles to interest-free financing options. 

Read on to discover how to qualify, apply, and maximize the advantages of a business credit card.

Key Takeaways

  • You don’t necessarily need to own a traditional business to qualify for a business credit card; independent earnings from freelance activities to babysitting can also make you eligible.
  • When filling out your business card application, you can generally identify yourself as a sole proprietor and use your Social Security number instead of a business tax identification number.
  • Some card issuers might ask you to provide additional information, like proof of personal and business income

How Do Business Credit Cards Work?

small business owner shopping online with business credit card

A business credit card is a type of credit card designed for small-business owners to use for their work-related expenses. 

Business credit cards are issued based on your personal credit score and income as a business owner or authorized officer, as well as your business’s financial information. To qualify, you must demonstrate strong creditworthiness and the ability to repay the borrowed funds.

One of the main benefits of using a business credit card is separating your personal and business finances. This helps avoid confusion and simplifies accounting. Additionally, a business credit card provides you with a line of credit to fund the start-up or growth of your business, manage cash flow, and cover variable or unexpected costs.

Compared to a personal card, business credit cards can often offer more rewards and perks relevant to your business needs. They also usually offer higher credit limits, rewards, and perks tailored to the small-business owner.

However, it’s important to be aware of the personal guarantee requirement for business credit cards. As a cardholder, you are liable for paying off the balance if your business fails or defaults on the debt.

How to Qualify for a Small Business Credit Card

There is no strict definition of what constitutes a small business. As long as you operate a business with the intent to make a profit, you can qualify for a business credit card. Qualifying for a small business credit card is not very difficult and usually does not require a lot of paperwork. Still, it does require having a legitimate business.

There are three main ways to qualify for a small business credit card, depending on the type and status of your business:

  1. Owning a legal business with an Employer Identification Number (EIN) and a business credit history
  2. Starting a new business with a clear business plan and potential for growth
  3. Operating a business as a sole proprietor that earns income from providing a service, working as an independent contractor, or selling goods for profit

Owning a Legal Business

For owning a legal business, you need to provide your EIN and your Social Security number when applying for a small business credit card. It’s essential to have a good personal credit score and history, as they will be used to determine your approval and credit limit.

Starting a New Business

If you’re starting a new business, you must demonstrate a viable business idea and realistic financial projections. You may also need to provide some personal or business assets as collateral or a security deposit. Keep track of your expenses and separate them from your personal spending.

Operating a Business as a Sole Proprietor

Operating a business as a sole proprietor allows you to use your name as the business name and your Social Security number as the EIN when applying for a small business credit card. You should also keep records of your income and expenses related to your business. Even with low or moderate income, you may qualify for some of the best small business credit cards.

Common Small Businesses That Qualify for a Business Credit Card

rideshare driver picking up a customer

If you’re a freelancer or sole proprietor, you might be wondering if your type of business is eligible for a business credit card. The good news is that many small businesses across various industries can qualify, including those with non-traditional business structures. Here are some common small businesses that frequently qualify for a business credit card:

  • Freelancers and independent contractors: If you offer services like writing, graphic design, photography, or consulting, you’re in good company. Many freelancers successfully apply for business credit cards to help manage their finances and expenses.
  • Gig workers: If you use platforms like Uber, Lyft, Airbnb, or Etsy to earn income, you’re part of the growing gig economy. These workers can also apply for business credit cards to separate their gig income from their personal finances.
  • Online sellers: If you sell products through e-commerce sites like Amazon, eBay, or Shopify, you can benefit from having a business credit card to track your expenses and even earn rewards on your purchases.
  • Bloggers and influencers: If you generate revenue from advertising, sponsorships, or affiliate marketing, a business credit card can help you manage your expenses and cash flow more efficiently.
  • Home-based businesses: Operating from a residential address or a virtual office doesn’t exclude you from qualifying for a business credit card. Many home-based businesses successfully apply for and benefit from the advantages of credit cards tailored for businesses.
  • Hobbyists and side hustlers: If you have a passion project or a secondary source of income, you can also benefit from a business credit card to separate your financials and streamline your bookkeeping process.

To increase your chances of qualifying for a business credit card, consider the following tips to prove the legitimacy and profitability of your small business:

  • Open a separate business bank account and obtain a tax identification number (EIN) for your business.
  • Keep track of all income and expenses related to your business to show a history of financial transactions.
  • Create a professional website or online portfolio to showcase your work and improve your business’s credibility.
  • Develop a business plan or financial projection to demonstrate your business’s potential for future growth.

Why You Should Get a Small Business Credit Card

small business owner working from home desk with laptop

A small business credit card can provide numerous benefits to both the business and the owner. For starters, it increases your business’s financial flexibility and cash flow. This allows you to better manage your expenses and invest in your business’s growth.

Separate Your Personal and Business Finances

One significant advantage of a business credit card is that it helps separate your personal and business finances. Keeping these two separate makes accounting and tax filing much more straightforward. Also, by streamlining your business expenses, you can gain valuable insights into your spending habits and identify areas for improvement.

Another benefit is that using a business credit card doesn’t affect your personal credit report or score, except when applying for the card. This distinction is essential for maintaining a healthy credit profile while building your business credit.

Maximize Your Rewards Earnings and Perks

When it comes to rewards, small business credit cards often offer competitive rewards points on common business expenses such as travel, office supplies, and gas. This means you can maximize your rewards by using your business credit card for these types of purchases.

Small business credit cards also have various perks and benefits that can save you money and provide added convenience. These may include travel insurance, purchase protection, extended warranty, etc. Be sure to review the terms and conditions of your specific card to fully understand and utilize these features.

If you’re mindful of the 5/24 rule by Chase, which limits the number of new accounts you can open within 24 months, most small business credit cards don’t count against that limit. This means you can continue pursuing attractive personal credit card offers without compromising your chances with Chase.

Small business credit cards often have access to the same rewards programs as personal cards, allowing you to combine or transfer rewards points between your personal and business accounts.

Improve the Financial Health of Your Business

Lastly, having a strong business credit profile can open up financing opportunities, such as loans and lines of credit, which can help fuel your business’s growth. By using your small business credit card responsibly and paying off balances on time, you’ll strengthen your credit and potentially access better financing options in the future.

How to Apply for a Small Business Credit Card

Applying for a small business credit card is quite straightforward, and it involves several easy steps.

1. Gather Personal and Business Information: 

You’ll need to have your basic personal and business details ready. This includes:

  • Business name
  • Business address
  • Type of business or company structure (Sole proprietorship, LLC, etc.)
  • Business category or industry
  • Federal tax ID number, Employer Identification Number (EIN) or just Social Security Number
  • Years in business
  • Annual business revenue
  • Number of employees

For your personal information, provide:

  • Social Security Number
  • Total annual income
  • Your position in the business

2. Complete the Card Issuer’s Application 

After selecting the appropriate business credit card, fill out the issuer’s application form with the required personal and business details. This information helps the issuer assess your creditworthiness based on your personal credit score and your business’s financial standing.

3. Add Employee Cards (optional)

If you have employees who need access to the company card, you can add additional cards during the application process or request them later. Be prepared to provide the employees’ personal information. Keep in mind that you, as the business owner, are responsible for all charges made on these cards.

4. Review and Submit the Application

Double-check your application form for accuracy before submitting it. Read and accept the card issuer’s terms and conditions to complete the process. You may receive an immediate approval decision; otherwise, you might have to wait a few days for a manual review.

If your application is not instantly approved, wait for the issuer to review your information. Most issuers offer the option of checking your application status online or by phone. Additionally, be prepared to receive a call from the issuer for further questions or clarification about your business.

I recommend calling the bank’s reconsideration line as soon as possible. Often, the bank just wants to verify some information, and talking to a human can tip the approval process in your favor.

By following these steps, you can successfully apply for a small business credit card that suits your needs and helps boost your business’s financial growth.

Bottom Line

Qualifying for a business credit card offers advantages like rewards, bonuses, and efficient expense management. Regardless of your business structure, be it a sole proprietorship, partnership, corporation, or limited liability company, you’re eligible to apply for a business credit card. Approval is largely based on your personal credit score. 

When choosing a card, consider rates, fees, and welcome bonuses. Secured cards are an option for those with limited or poor credit. To maximize benefits, ensure you meet eligibility criteria and choose a card that fits your financial goals. 

Frequently Asked Questions

Who is eligible to apply for a business credit card?

Anyone who is operating a business, either as a sole proprietor, freelancer, or as part of a larger company like a partnership, corporation, or LLC, is generally eligible to apply for a business credit card. The criteria for approval may vary by card issuer and may include factors like your personal credit score, business revenue, and the length of time your business has been operational.

Can I get a business credit card without a business?

In many cases, you don’t need a traditional “business” to qualify for a business credit card. If you have any form of independent income generation, such as freelancing, consulting, or gig work (e.g., rideshare driving), you can often qualify as a sole proprietor.

Can I use a business credit card for personal expenses?

Technically, you can use a business credit card for personal expenses, but it’s not advisable. Mixing personal and business expenses can make accounting more complicated, potentially violate the terms and conditions of your card, and cause issues with the IRS during tax audits.

Do I need an employer identification number (EIN) to get a business credit card?

Having an Employer Identification Number (EIN) is generally recommended but not strictly required for getting a business credit card. Many sole proprietors use their Social Security Number (SSN) instead when applying for a business credit card.

What is the role of my personal credit score in qualifying for a business credit card?

Your personal credit score plays a significant role in determining your eligibility for a business credit card, especially for new or small businesses that don’t have an established business credit history. A good personal credit score can help you get approved and may also affect the credit limit, interest rate, and other terms of the card.

What happens if my application for a business credit card is not instantly approved?

If your application isn’t instantly approved, it generally goes into a manual review process, where the issuer will scrutinize the information you’ve provided more closely. You might be asked to submit additional documentation, such as proof of income or business records. You can often check the status of your application online or by calling customer service. The manual review process can take from a few days to a couple of weeks.

How can a business credit card impact my personal credit history?

Many business credit card issuers report card activity to personal credit bureaus. Therefore, responsible usage can positively impact your personal credit score. However, if you miss payments or exceed your credit limit, it can negatively affect your personal credit as well. Always check with the card issuer to understand their reporting policies.

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Joe Morelli

Joe Morelli, an avid travel enthusiast and founder of Modern Miles, has mastered the art of earning and redeeming millions of points and miles annually. Accompanied by his wife and two children, he explores the world's wonders, inspiring others with his expertise and unquenchable thirst for adventure.

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