Getting approved for the best small business credit cards can be easy. Here’s how to get a business credit card in four steps.
1. Look Up Your Credit Score
The first step in how to apply for a business credit card is to make sure you know how to qualify for a business credit card. Lenders will look first to your personal credit score, but they may also consider your company’s revenue, industry and monthly expenses in judging your ability to repay. You do not have to have established business credit to qualify for a business credit card.
To get approved for a business credit card, you’ll need to have a minimum credit score of 640. The best rates and rewards are reserved for owners with a credit score of 750 or higher.
Small business owners with excellent credit of 750 or higher may qualify for cards that charge APRs as low as around 14%, introductory rewards worth $500 or more, and ongoing rewards of up to 5%. Small business owners with fair credit of 640 or higher may qualify for cards that charge APRs of 20% or higher, offer small or no introductory rewards and ongoing rewards of around 1%.
Determine Your Business Credit Card Eligibility
Personal credit scores range from 300 to 850, but you generally must have a credit score of at least 640 to get approved for a credit card. If your score is below 640, you may need to improve your credit score before applying by paying bills on your existing credit cards on time and paying down existing credit card debt.
Payment history and the amount you owe account for 65% of your FICO score. You can improve your credit score by always paying your bills on time and by managing the amount of available credit you use. Your credit utilization ratio — how much credit you use in relation to your credit limit — should be below 30%. If you have a card with a $1,000 credit limit, that means keeping balances below $300.
You may be eligible to apply for a business credit card even if you don’t operate a full-time business. Issuers may approve you even if you sell items on eBay or run a side business in addition to your full-time job. The key is to tell the truth on your application and be prepared to provide documentation about your business if asked.
2. Research Your Credit Card Options
Before you apply for a credit card. You should research the best rewards business credit cards to find the one that best fits your business’ needs. The three most important features that differentiate business credit cards are introductory and ongoing rewards introductory and ongoing APRs annual fees. Each of these could save or cost your business hundreds or thousands of dollars annually.
When you’re considering how to get a business credit card, your research should several items.
Introductory and Ongoing Rewards
Business credit cards offer either cash back or points or miles as rewards. You may be offered introductory rewards as an enticement to apply for the card and ongoing rewards as an enticement to continue using the card.
To entice you to apply for a small business credit card, issuers may offer:Introductory rewards worth $100 to $500 or more after you put $500 to $3,000 or more on the card within the first three months or so of card ownershipOngoing rewards of up to 5%
Ongoing rewards programs typically pay cardholders either a flat rate on all purchases or tiered rewards on specific spending categories. Like office supplies or travel. The best flat-rate cards pay 2% or two times the points on all spending while tiered rewards programs pay 3% to 5% on one or more rewards categories and 1% on all other spending.
When examining rewards programs, you’ll need to decide: Whether you want cash back or points. If you can afford the spending requirement to earn introductory rewards. If a fixed-rate card is best for you.If a tiered-bonus card is best for you.
A handy way to decide whether a fixed-rate or tiered-bonus card is best for you is to look at your company’s spending. If the bulk of your monthly business expenses fall into a few categories like travel or office supplies, pick a card that offers 5% rewards on that spending. If your spending is spread out over many categories, choose the fixed-rate card to ensure 2% rewards across the board.
Introductory and Ongoing APRs
The introductory and ongoing APRs a business credit card charges could have a big impact on your total credit card costs.
To entice you to apply for a small business credit card, issuers may offer:Introductory 0% APR on purchases and balance transfer for nine to 15 months or more. Ongoing APRs of between 13% and 25%
While introductory offers are generally available to any business owner approved for a credit card. The best ongoing APRs typically are reserved for owners with a 750 or higher credit score. Issuers usually express ongoing APRs in a range (13.24% to 21.24%). You won’t know your APR until you’re approved. But you can judge where in the range you might fall based on your credit score.
Look for a card with an introductory 0% APR offer. If you need to finance a large purchase for your business. Or you have other high-interest credit card debt you’d like to consolidate. The best 0% interest business cardsoffer intro periods of nine to 15 months or more.
Be sure to look at charge cards, as well. They do not have APRs like small business credit cards. Because you have to pay off your entire balance each month. Charge cards often offer no preset spending limits — meaning you don’t have a defined credit limit — and come with annual fees of $200 or higher. This type of card is best for businesses with thousands of dollars of monthly card expenses. They can pay off with cash on hand.
Annual Fees
The third factor to consider is whether a card charges an annual fee. Annual fees range from $0 to $450. Some cards may waive them the first year as an incentive to apply for a small business credit card.
Generally, the larger the annual fee.The better the rewards and free benefits like airport lounge access and annual travel credits. Lock yourself into an annual fee only if the rewards and benefits. You can take advantage of are worth at least two times the annual fee.