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Small Business Credit Card. How to Qualify.

Every small business incurs expenses such as office supplies, professional memberships, inventory, and entertaining clients. However, using your personal credit card to pay for company expenses can create confusion between personal and business expenses. Opting for a small business credit card can streamline your bookkeeping and provide easy access to the necessary funds to run your business smoothly. To qualify for a small business credit card, business owners must provide their business and personal information and undergo a credit check for approval.

Who Can Qualify for a Business Credit Card ?

Small business credit cards are not limited to corporate businesses with employees. Individuals who work freelance, do gig work (such as driving for rideshare services), or run a business from home can also apply for a small business credit card. Sole proprietorships, limited liability corporations (LLCs), home-based businesses, and part-time businesses can all qualify for a small business credit card.

Using a small business credit card for business purchases helps separate personal and business finances. This separation makes it easier to file taxes and prove that the business is operating as a for-profit entity rather than a hobby. Many business credit cards offer the added benefit of sorting expenses into different categories like travel, entertainment, or services, which simplifies bookkeeping and tax filings.

Additionally, having a business credit card can help establish a credit score for your company. Just like a personal credit score, this number, which ranges from zero to 100, reflects how well you manage debt issued in your business's name. Paying your business credit card bills on time and maintaining a low balance (or no balance at all) can significantly boost your business credit score.

How to Apply?

When applying for a small business credit card, you will need to provide information about both yourself and your business, similar to the requirements for a personal credit card application. You should be prepared to supply the following details:

  • Business name, address, and phone number

  • Industry and number of years your business has been operating

  • Number of employees in your business

  • Annual revenue

  • Federal Tax ID

  • Personal information such as your name, address, SSN, and annual income

It's important to note that while some credit card issuers only report your account activity to commercial credit bureaus, others also report to consumer credit bureaus, which could negatively impact your personal credit score. If you want to minimize this impact, you can choose a card issuer that only reports to commercial credit bureaus. Keep in mind that since you are personally responsible for repayment of your debt, including any purchases made by authorized cardholders or employees, failure to make payments on time could still affect your personal credit.

Check Your Business and Personal Credit Scores

When you apply for a small business credit card, the credit card issuer will typically consider both your personal and business credit history, as well as your credit score. It's important to keep in mind that applying for a credit card will result in a hard inquiry on your credit report, which can temporarily lower your credit score.

To minimize the impact of a hard inquiry on your credit score, it's a good idea to be selective and apply for a card that is designed for your credit score range. This way, you're more likely to get approved, and you can avoid unnecessary inquiries on your credit report.

Small business credit cards are typically designed for individuals with good or excellent credit scores, which generally means a FICO® Score☉ of 700 or higher. However, there are some cards available for those with lower credit scores, but these cards usually come with higher annual percentage rates (APR) and offer fewer rewards or perks.

By being strategic and mindful about your credit card applications and credit score, you can improve your chances of getting approved for a small business credit card and help ensure that your credit score remains healthy over time.


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