How to Obtain a Business Credit Card

Editor's note: This post is updated regularly with the latest information and offers.

A business credit card offers numerous benefits. Small-business owners can tap into a line of credit to handle everyday expenses while keeping business and personal spending separate—making tax season a lot simpler.

In addition, business credit cards often come with valuable perks such as sign-up bonuses, the ability to earn rewards in specific business categories, and even access to management tools that can streamline your operations as a business owner.

Read on to discover more and learn how you can apply for a business credit card.

Who is eligible to apply for a business credit card?

When considering a business credit card, many people question what qualifies as a 'business.' Some wonder whether you need to establish a limited liability company or formally incorporate to apply for one.

The good news is that the answer is no. Even solo entrepreneurs can apply for and use a business credit card. Your occupation doesn't have to be formal—whether you're a freelance writer, a gig economy worker, or a small business owner with employees, you can still apply for a business credit card to help manage your business finances.

Before you apply, take some time to research business credit cards for freelancers. Keep in mind that while side hustles can qualify for a business credit card, a hobby you're trying to turn into income may not. If you're unsure whether your side gig qualifies, it's a good idea to seek advice from a financial expert.

Business Credit Card Categories

Before applying for a business credit card, it's important to do your homework and find the card that best suits your needs. The card offering you the greatest value will depend on factors such as your credit score and spending habits. Understanding the type of card you're looking for can help you narrow down your options.

Here are some common categories of business credit cards:

Secured Business Credit Cards

If you're new to credit or have a personal credit score that needs improvement, securing a line of credit for your business can be challenging. A secured business credit card can help you get started and build your credit.

While secured business credit cards offer fewer perks and require a security deposit compared to cards for those with good or excellent credit, they are a valuable tool for building credit. With time and responsible credit management, you can upgrade to unsecured cards that offer better terms and rewards, all while enjoying some business-related benefits along the way.

Cash-Back Business Credit Cards

Cash-back business credit cards reward you for everyday business spending. Some offer a straightforward cash-back percentage on all purchases, making them an ideal choice for businesses that don't have heavy spending in specific categories.

One example is the Capital One Spark Cash Plus, which offers 2% cash back on all purchases with no spending limits. However, it comes with a $150 annual fee. If you prefer a no-annual-fee option, the Ink Business Unlimited® Credit Card offers 1.5% cash back on all business purchases, with no limit on how much you can earn.

Some business credit cards offer higher cash-back rates in specific categories, such as office supplies or travel, while providing a standard cash-back rate (typically 1%) on all other purchases. These cards are ideal for businesses with substantial spending in certain areas.

For example, the Ink Business Cash® Credit Card offers 5% cash back on office supply purchases and on internet, cable, and phone services (on the first $25,000 spent each anniversary year). It also gives 2% cash back on the first $25,000 spent each year at gas stations and restaurants, with all other purchases earning 1% cash back—no cap on earnings.

Travel Business Credit Cards

If your business incurs significant travel expenses, a travel rewards credit card could be a valuable tool. Most travel business cards offer points or miles for every purchase, with bonus rewards for travel-related expenses such as flights, hotels, and dining, depending on the card you choose.

For small-business owners who prefer flying with one airline or staying at a particular hotel chain, cobranded travel credit cards offer extra perks. Airline cards like the Delta SkyMiles® Platinum Business American Express Card and hotel cards like The Hilton Honors American Express Business Card let you earn rewards for all spending, with higher rewards for purchases made with their specific brands. These cards also come with additional brand-specific benefits.

General-purpose travel cards provide flexibility, allowing you to choose any airline or hotel. For example, with The Business Platinum Card® from American Express, you’ll earn 5 points per dollar on flights and prepaid hotels booked through amextravel.com, and 1.5 points per dollar on eligible purchases in select business categories or for purchases over $5,000 (up to $2 million annually). All other eligible purchases earn 1 point per dollar.

What Credit Score is Needed to Apply for a Business Credit Card?

Most business credit cards require a credit score in the good-to-excellent range, typically between 670 and 850 on the FICO scale.

If your credit score is below that range, you may still qualify for a business credit card designed for those with less-than-ideal credit. However, these cards are more focused on helping you build credit, so they often offer fewer rewards and features than cards for those with higher credit scores.

How to Compare Business Credit Cards

Once you’ve identified the type of business credit card you're interested in, it's time to compare the options available in that category. Here are some key factors to consider when comparing small-business credit cards:

Credit Score Requirements

Before applying for a business credit card, it's important to know your credit score, as it must meet the requirements of the card you're interested in. Most cards require good to excellent credit, but some, like the Bank of America® Business Advantage Unlimited Cash Rewards Mastercard® credit card, may require excellent credit.

If you have fair credit and apply for a card that requires good or excellent credit, be aware that you're more likely to face rejection. Additionally, the hard credit inquiry from your application can negatively affect your credit score, as it does with most loan and credit card applications.

Sign-Up Bonus or Welcome Offer

Credit card issuers often provide incentives to attract new customers, and one of the most attractive offers is the sign-up bonus. Typically, after spending a certain amount within a set period, you'll receive a bonus credited to your account. Some top business credit cards offer sign-up bonuses worth $1,000 or more.

APR

The annual percentage rate (APR) of a credit card is the interest you’ll pay on any balance that remains unpaid when your billing cycle ends. By paying off your balance in full before the due date each month, you can avoid incurring interest charges on your purchases.

Introductory 0% APR Offer

Some business credit cards offer new cardholders an introductory 0% APR for a set period, which can last for 12 months or longer. This interest-free period may apply to purchases, balance transfers, or both. After the introductory period ends, the remaining balance and future purchases will be charged at the regular APR.

Rewards Program

Rewards programs can be straightforward, particularly if you choose a business credit card with a flat-rate reward system. However, if you aim to maximize your earnings through cash back, points, or miles, things may get more complex. You’ll need to track which categories offer the highest rewards and stay on top of various terms and conditions.

It’s also important to understand how you can redeem your rewards. For example, airline or hotel loyalty program points may expire if there’s no activity in your account. Some credit cards offer flexible redemption options, such as statement credits, travel, cash back, or gift cards, but be aware that certain cards may impose limits on how you redeem rewards, and the value of your points or miles could vary depending on your choice.

Business Card Benefits

Pay attention to the benefits that matter most to you. Some cards offer free employee cards, either with a set or unlimited limit. The best small-business credit cards also allow you to set spending limits for individual employees and provide tools for tracking and managing your business expenses.

Annual Fee

It's easy to find business credit cards that don't charge an annual fee, and many of these come with great perks and rewards that may align with your spending patterns. However, if you're after a card with higher rewards rates and extra features, like complimentary airport lounge access or anniversary credits, you’ll probably face an annual fee. But if the card suits your spending habits, the rewards and benefits could offset the cost of the fee.

Other Credit Card Fees

Before signing up for a business credit card, be sure you're aware of any extra fees. These can include charges for late payments, cash advances, foreign transactions, balance transfers, and even a penalty APR for missed payments.

How to Apply for a Business Credit Card

Before applying for a business credit card, it's important to have some basic information ready to streamline the process. Once you've chosen the card you'd like, gather the following details to make your application as efficient as possible:

• Business Name: Not every business has a formal name. As a sole proprietor, you can simply use your personal name if you don't have a "doing business as" (DBA) name.
• Business Address: This is where your business operates, which could be your home address.
• Type of Business: Common options are sole proprietorship, LLC, or corporation.
• Tax Identification Number: Depending on your business, this could be your employer identification number (EIN) or your Social Security Number (SSN).
• Annual Revenue: The total revenue your business generates in a year.
• Business Age: How long your business has been operating.
• Employee Count: You'll count as an employee, so even if you're the only one in your business, you'll list yourself as an employee.

What is the difference between SSN and EIN?

When applying for a business credit card, you'll need to provide details about your business. If your business is registered, you'll typically use your Employer Identification Number (EIN) as your tax ID. For sole proprietors, you may use your Social Security Number (SSN) instead.

If you're a sole proprietor applying for a business credit card and don't have an EIN, you can simply use your personal name as your business name. In this case, your tax ID will be your Social Security Number (SSN).

What happens after you submit your business credit card application?

Once you submit your application, the card issuer will review your personal credit report to assess your ability to repay any debts. This is considered a hard inquiry, and as a result, your credit score may temporarily dip. The major credit bureaus will be notified of the inquiry.

The approval process can be fast — sometimes under a minute if your details are easily verified. If you're denied, don't be discouraged. You can take steps to improve your application, or apply for a different card that may be better suited to your credit profile.

If instant approval isn't possible, the issuer may request additional information to verify your identity or income. This can extend the process, and you may need to wait several days or even a week or more for a final decision.

Final Thoughts

If your application is approved, congratulations! Your business credit card should arrive by mail within 10 to 12 business days. Some issuers may offer expedited shipping for premium cards.

As long as you manage your new card responsibly by paying on time and maintaining low credit usage, you'll soon enjoy the perks of your business card while building your business credit.