The Ultimate Guide to Business Credit Cards for New Businesses

Being a small business owner is more than just setting your own hours and being your own boss. It involves juggling many responsibilities and working tirelessly to turn your business dream into reality. One tool that can significantly aid your journey is a business credit card. Whether you’re launching a startup or managing an SME, a business credit card can be an invaluable asset for managing your finances. 

From building your financial history to boosting your credit rating and alleviating cash flow challenges, a business credit card offers numerous benefits. If you’re curious about how to make the most of this powerful tool, you’re in the right place. Here’s everything you need to know about business credit cards and how they can help your new business thrive. 

What are business credit cards? 

It works similarly to a personal credit card but is tailored for business-related expenses. While both types of cards function in much the same way, business credit cards offer higher credit limits, different reporting policies, and specialized benefits for business needs. They can be used for a variety of expenses, like buying office supplies, entertaining clients, or covering monthly costs, and they help keep your personal and business expenses separate.  

Also read: How to Use Business Credit Card Strategically

How to apply?

You might be surprised at how easy it is to apply for a business credit card. Whether you’re a sole proprietor, run an LLC, or even have a side hustle, you can likely qualify for one. Even if your business is just starting and doesn’t have a credit history yet, many lenders will look at your personal credit report to determine eligibility. Here’s a quick rundown of what you’ll need to apply: 

• Business name: Provide the full legal name of your business, or your name if you’re a freelancer. 
• Business address and phone number: Your business contact information, which could be your home address if you’re working from there. 
• Business history: Mention how long you’ve been in business. If you’re new, just put “0.” 
• Type of business and role: Select the category that fits your business and state your role (e.g., Founder, CEO). 
• Business entity: Choose from options like corporation, LLC, or sole proprietorship. 
• Number of employees: Indicate how many people work for your business. Freelancers should put “1.” 
• Federal tax ID number: Provide your EIN or SSN. 
• Annual business revenue: State your business’s annual revenue. If you’re new, “0” is fine. 
• Estimated monthly spend: This helps determine your credit limit. 
• Personal credit history: Lenders will review your personal credit score and may require a personal guarantee.

Why get a business credit card? 

If you’re running a business, you might be wondering if a business credit card is worth it. Spoiler alert: it usually is! A business credit card isn’t just a plastic card; it’s a financial tool that can help streamline your business operations, from managing expenses to building credit. Here’s why you might want to consider adding one to your financial toolkit:  

• Separation of expenses: It helps keep your business and personal expenses separate. 
• Build credit: It’s a great way to start building your business’s credit history. 
• Flexibility: Use it for a range of business expenses, from equipment to supplies. 
• Rewards and perks: Enjoy benefits like cash back, points, or discounts on business-related expenses. 
• Control employee spending: Manage and monitor employee expenses more effectively. 
• Simplified record keeping: Easier to track and manage business expenses. 

Also read: How Credit Card Interest Works & Impacts Your Business

What to look for when choosing a business credit card?

With so many factors to consider, it’s crucial to focus on the features that will best suit your business needs. From annual fees to rewards and customer support, here’s a guide to help you find a card that aligns with your financial goals and business operations:  

• Annual fees: Assess whether the card’s benefits outweigh the cost. 
• Rewards and bonuses: Look for cards that offer cash back or points on purchases. 
• Foreign transaction fees: Check if the card charges fees for international transactions. 
• Interest rates: Compare interest rates and fees to find the best deal. 
• Customer support: Choose a card issuer known for good customer service.  

Making the right decision 

A business credit card can be a powerful ally in your entrepreneurial journey, offering benefits that go far beyond just making purchases. By understanding what to look for and how to choose the right card, you can leverage this tool to manage expenses, build credit, and manage finances effectively. Take the time to research and select the card that best fits your business needs, and you’ll be on your way to making smarter financial decisions.