Small businesses looking to establish lines of credit with cards for business can find application online, through their local banks, and through business trade groups. There are other forms of credit for businesses including:
- Bank loans
- Private equity
- Trade credit
However, if you definitely need business credit cards, they are widely available.
If you’re looking for a competitive business credit card, our online credit card finder can get you pointed in the right direction.
It’s interesting to note that a 2010 survey released by the U.S. Small Business Administration, reveals that:
- 20% of small businesses in the United States don’t use credit of any form
- Another 20% use credit only in the form of trade with other businesses
- The remaining 60% use a combination of trade and bank credit to operate their businesses
The study’s results clearly show that are many small business credit and credit card options.
How do I fill out a business credit card application?
Business credit cards are similar to consumer cards in terms of what’s required of an application, albeit it more involved. You’ll have to include information about your business such as:
- Your mailing address
- Your legal address
- Names and contact information of authorized officers
- Personal information on individuals who will be issued cards
The application process is a little lengthier but it is by no means complicated.
Just like a consumer credit card, the bank will take your completed application and verify the information. They will also check the credit history and score of the business in question. An explanation offered by Experian regarding how a business credit score is determined shows the process is very similar to that of consumer credit.
The bank will look at several things including:
- The company’s history of paying its bills
- Its outstanding debt obligations in relation to its total credit lines
- The frequency with which negative items appear on a credit report
If a credit score comes out high enough the company should have no trouble securing a business credit card. However, keep in mind that credit score determines interest rates and other terms of a credit card agreement.
In terms of brand new business just getting started, credit cards may be a bit more difficult to come by due to a lack of credit history. New businesses may have to get by with bank loans and other forms of credit until they establish a verifiable record.
Can I get multiple cards for my employees?
Almost all business credit card companies allow multiple cards to be issued so that more than one employee can carry them. How many employees are issued cards will be up to the agreement each business makes with the card issuer. However, it’s not uncommon for card issuers to only allow two or three cards free of charge; after that they typically assess a minimum fee for additional cards.
Keep in mind that company credit cards are open doors for credit card fraud if too many employees are allowed to utilize them. Your best bet is to have the lowest number of cards issued as possible and restrict their use to individuals who would have access to company funds by other means as well.
Examples would include:
- Senior company officers
- Department heads
- Procurement officers
When it comes to sales staff and other workers, you’re better off establishing a reimbursement policy so as to lower the risk of expense account fraud.
Will my business credit card activity have any effect on my personal finances?
Small-business owners who utilize business credit cards need to be aware of how business credit can affect personal finances. If a company is organized as a corporation, partnership, or limited liability corporation, the company’s finances have no bearing on those of the individual officers. That’s because the law recognizes such business entities as legal “persons” within the framework of debt obligations. That’s also why a corporation that goes bankrupt has no affect on the personal finances of its officers.
On the other hand, a business organized as a sole proprietorship is considered merely an extension of its owner’s personal finances. That means a sole proprietor who establishes credit using a business credit card is also extending his personal finances. If that credit goes sour, the results will appear on the business owner’s personal credit history. Likewise, if the business owner uses his business credit properly it will reflect positively on his personal credit history.
A good way to start your search for business credit cards is by using our online credit card chaser.
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