Business Credit Card Requirements And How You Can Qualify

Key takeaways

• Confirm your personal FICO score is around 670 before you apply.
• Gather your business name, address, and EIN or SSN ahead of time.
• Choose a card that fits your credit, including a secured card if your score is low.
• Improve your odds by paying bills on time and keeping credit utilization under 30%.

What is a business credit card?

A business credit card is a card tied to your business bank account and used only for business expenses. It works much like a personal card, letting you make purchases and track spending.

And yes, you need a separate bank account for your business. It simplifies bookkeeping and, in certain business types and legal situations, helps protect your personal assets.

But are business credit cards worth it? Let’s explore.

Why a business credit card matters for your business

A business credit card keeps your business spending separate and helps you build business credit. Just like a separate business account, it’s important to pay your business bills with a credit card that’s dedicated to business expenses. Some of the benefits include:

• Higher spending limits, because businesses sometimes require a higher credit than individuals.
• Bigger and more relevant rewards. Besides the usual consumer rewards, like travel, you can get rewards for business-related expenses, like advertising.
• Complimentary credit cards for employees, with the option to set and track their spending.

Factors to consider when choosing a business credit card

The right business credit card depends on your spending needs, credit history, fees, and interest rate. Take these factors into consideration before signing up to one of them.

Business credit card requirements: what you need to qualify

To qualify for a business credit card, you generally need an eligible business type, solid personal credit, proof of income, and a few key documents. Here is a quick checklist:

• Business type: sole proprietor, LLC, partnership, corporation, or nonprofit.
• Credit score: a personal FICO score of around 670 or higher.
• Income: proof of business or personal income.
• Documents: your EIN or SSN, plus your business name and address.

Types of business credit cards

Business credit cards come in several types, from prepaid and charge cards to secured and unsecured options. Here are the key options:

• Prepaid business cards: Business owners can add money to a credit card in advance, and only this sum can be used for purchases.
• Charge cards: You pay the balance in full each time, so there are less fees.
• Rewards or cash back cards: Credit cards that put a bigger emphasis on letting you accumulate rewards, or flat out give you money back, the more you buy.
• Secured business credit cards: Meant for businesses with no, or low, credit score. You make a deposit, whose amount impacts how much credit you get. Deposits typically range from $200 to $5,000.
• Unsecured business credit cards: Regular credit card, like a consumer one, where your credit limits are influenced by your credit history and revenue, among other factors.
• No personal guarantee (PG) business credit cards: A card that only requires your Employer Identification Number (EIN) instead of your social security number (SSN), so you’re not personally liable for paying (or not paying) the credit card’s balance. Instead, your business entity is. Unfortunately, no PG cards are usually not a small business card, but rather meant for large companies.

Tips for improving your eligibility

Improve your approval odds with these steps:

• Open a business account. Make it the account where customers transfer payments, and the one you pay your expenses out of. This shows you have a working business and helps you build business credit.
• Start with an easier card first. If you can’t get the card you want, get another from the list above. Make payments on time to prove you manage money well, then apply again to the one you want.
• Keep credit utilization under 30%. Pay all your bills on time and work to reduce your debt. Look for ways to lower your credit utilization rate, keeping it under 30%. For example, if your overall credit across all cards is $21,000, 30% is $6,300, so try to keep expenses under $6,300.
• Step up your cash flow. Cash flow is the money moving in and out of your account. Aim to keep more in your account than you plan to spend, so you can cover bills and unexpected costs. Build it by reducing expenses and increasing revenue, and consider a cash flow management app to help.
• Use debt to your benefit. If you need a loan, make it as small as possible and pay it on time. It turns something that looks negative, needing to borrow, into proof you can be trusted to pay on time.

How personal credit affects business credit card approval

Your personal credit score has a significant impact on business credit card eligibility and conditions. When you set out to get your first business credit card, all issuers have to assess their risk is your personal credit history.

Your personal credit could impact the type of business card you can get, if you can get one at all, and your interest rates. The better your personal score, the better the terms your small business can obtain.

Simplify credit card payments and credit building (even when vendors prefer other payment forms)

One of the ways to build your credit score is to use your credit card responsibly. However, to use it at all, you need vendors and contractors that accept credit cards, and not everyone does.

This is where managing a credit card for B2B needs gets complicated for some. Instead of worrying about it, use a platform like Melio, where you pay via credit card and get rewards, but your vendors get the money whichever way they want, instantly, by single-use virtual card, by bank transfer or by check. Ready to simplify how you pay? Sign up for Melio and set your business up for success.

Business credit card requirements FAQs