How to Apply for your First Business Credit Card

I recently wrote about why business credit cards are the next frontier–and I think they are an absolute great way to earn more cash back and other rewards. Seriously, you might be leaving thousands of dollars on the table by not using business cards, so this is worth a closer look.

A few folks have asked us questions about the specifics of how business cards work. I wanted to address these questions and cover exactly how you can apply for your first business card in this post.

Why should you get a business card?

The short answer is that a business card may help you save (make) thousands more in a single year. This can be earned through a combination of signup bonuses and category bonuses not available on other cards (such as high cash back earnings on mobile phones). In my last article, I covered these reasons in more detail, but here’s a summary of the main benefits:

• High signup bonuses
• Unique category bonuses
• Emphasis on cash back instead of travel points (though you can earn both)
• Business benefits (ie keeping business transactions separate form personal transactions, getting extra cards for employees, etc.)

What are the best business card deals currently?

There are three current offers that I’m really fond of. Those are the Capital One Spark Cash for Business, the Starwood Preferred Guest® Business Credit Card from American Express, and the SimplyCash® Plus Business Credit Card from American Express. In that lineup, I’d say there’s something for everyone–a card without an annual fee (SimplyCash® Plus), a card with a huge cash bonus (Spark Cash), and a card that earns travel points (Starwood Preferred Guest®).

But there are other great options, too. I recommend looking at our list of the best business credit cards to find the deal that’s best for you.

Who can qualify for a business card?

To get a card you do need a business. However, that business doesn’t have to be huge. As I’ve written before, any small, side-gig type of business is fine. Banks obviously want to know that businesses have revenue and expenses to put on the card, but it seems that the threshold is relatively low. If you host an airbnb, or sell things online frequently (which millions of people do), then chances are you have a business and would be eligible to apply.

Is an EIN or TIN required?

Not for sole proprietorships. You can simply enter your SSN in lieu of an EIN or TIN when applying as a sole proprietor. It’s super simple.

Can I put personal expenses on a business card?

Yes. You will lose the benefit of keeping business and personal expenses separate, but it’s fine to put personal expenses on the card. What some folks will do, is open multiple business cards over time but keep one to use exclusively for business expenses. That’s a good strategy that can keep your business finances better organized.

How do business cards affect your credit?

This is a great question with a complicated answer. Here’s the thing–at the end of the day you need to be smart with your card. Be smart, and leverage it to make/save thousands of dollars. Do that and chances are you won’t need to sweat a few FICO points here and there. But still, it’s good to be informed, so here’s the scoop…

Business cards typically involve a hard inquiry on your report, which can ding your score a few points (just like with personal cards). But from there it varies by bank. Some card companies report your business card activity to the consumer bureaus (impacting your personal credit report). Others don’t report to the consumer bureaus at all. And some report to the bureaus only when you’re seriously delinquent on the business account.

So if this is important to you, be sure to research the bank before you apply. Lots of sites update this information regularly, so simply Google “which business cards report to personal bureaus” and you should find up-to-date information.

But the basic gist, like always, is that you need to pay your balance in full every month. Do that and in almost all circumstances you’ll be able to minimize any negative impact to your credit. If the bank does report, then a new card will lower your “average age of accounts,” which all things equal can lower your FICO score. But again paying off your balances over time is the really crucial part like always.

Oh, and there’s one final complication–you will also develop a business credit report, and almost all banks will report information to it. I could go on and on about business reports and scores, but I’m not going to. The thing is, those reports are much more relevant for larger business and there isn’t the same level of transparency and access as with personal credit reports. You should definitely read up to be informed, but my guess is that many, many folks (especially with sole proprietorships) can use business cards without getting too caught up in these details.

What risks are associated with business credit cards?

Because these cards are, at the end of the day, different than personal cards, they do pose a few unique risks. We already talked about the credit reporting, but here are three more things to be aware of.

First, you’ll likely be personally responsible for any outstanding debt, should the business fail and be unable to pay. Even if you’ve structured your business to limit liability (like with an LLC), you’ll likely be liable for the credit card debt, because cards use a personal guarantee.

Second, employee cards can open the door to spending that you haven’t authorized. So be careful if you pursue additional cards for employees.

Third, most of the CARD Act–full of consumer protections–doesn’t automatically apply to business cards. This is likely a non-issue for folks who use their credit responsibly (pay in full every month), but would be a big consideration if you were borrowing with the card.

Can you walk me through how to apply for my first business card?

Yes, of course! In most respects it’s not much different than applying for a personal card. But there are some questions that are much different.

For starters, you’ll still answer a few personal questions. These will be things like your name, address, etc. along with questions about your income, housing costs, etc.

You’ll also provide the basics for your business (address, phone, name, etc.)

And then there’s really the core of the application. It seems to trip people up but it’s very simple.

You’ll typically provide your EIN or SSN, the legal structure, industry type, revenue, and expenses. If the app asks for revenue, be sure to use your revenue figure (not your profit). And also be sure to exclude any personal income/income from other businesses you may have, etc. It’s important that this section only represent the business for which you are applying.

It really is simple. Just double check your app, be honest throughout, and submit!

Bottom Line

Business cards can be an important financial strategy. Don’t avoid them just because they are a new concept, or seem intimidating for some reason. But at the same time, don’t get one if you feel like it’s not a good fit for you. That said, I think many people can benefit from the unique perks of these cards, and I hope that I’ve put your mind at ease by covering some of the finer details.

If you’re looking for a business card, be sure to try one of the three we recommend, or check out our full list of business cards.

Enjoy!