New business owners seldom have enough credit or collateral available to them to qualify for an unsecured line of credit; however, there are some ways for them to find appropriate credit cards. Agencies such as the Small Business Administration have resources available for small business owners. Online forums dedicated to commerce also have credit card information for entrepreneurs.
Use our credit card chaser tool to see a comprehensive list of business credit cards for consumers of all walks of life.
Without a business credit card, new business owners may have difficulties when attempting to purchase equipment or supplies, but many major banks do not extend credit to businesses that are not yet established. Secured business credit cards can usually be obtained by any business owner that has proof of income, and they can help you to qualify for a larger line of credit in the future.
What requirements do business credit cards have?
Almost anyone can apply for a business credit card, but the minimum requirements must be met in order to get a favorable decision. Sole proprietors are business owners that do business in their legal names. Therefore, you don’t have to operate a physical business in order to be qualified for a business credit card. Some requirements for business credit cards income proof of income, being 18 years of age or older and having valid proof of address.
The Federal Reserve reports that the majority of small businesses actually are able to pay down their balances each billing cycle. Because payments from customers come in fluctuating volumes, having a business credit card helps business owners to have a more consistent cash flow. If you are able to show that you have a profitable business, you will likely be able to qualify for a secured business credit card at a minimum.
How do you apply for a business credit card?
Each individual credit card company has its own unique credit card application process. Many of the most well known credit card issuers feature an online credit card application system. Standard paper applications and pre-approval letters are sent to qualified consumers, including business owners. You might find out about a business credit card offered by your bank or credit union at your next visit as you have likely authorized the financial institution to run a soft pull on your credit report.
While finding out that you are pre-approved for a business credit card will increase your chances of having your application, you also have the option of finding a good credit card on your own. You can use the JD Power listing of consumer picked credit cards, or you can talk to other business owners about their personal experiences.
Applying for a business credit card is no different from applying for any credit card, expect for a few minor details. You may be required to submit tax returns or a financial statement in order to establish how much money is coming into your business. All you are required to do is fill in the business credit card application in its entirety and include any required documents.
What if your business credit card application is denied?
Even business owners that have been in business for a long time can have their business credit card applications denied. Sometimes having a business credit card application denied is related to making a factual or typographical error, and other times the credit card company simply views the applicant as being too much of a risk. Having a long-time relationship with the company that you apply for a business credit card through will only help you to be considered more favorably, but there are no guarantees.
If your business credit card application was not accepted, you can reapply or request a copy of your credit report. If you have any recent or major delinquencies on your credit report, it is in your best interest to make a payment as soon as possible. Not only do credit card companies look at your overall credit score, they also consider your payment history when reviewing credit card applications.
Business owners can also apply with a co-applicant. The co-applicant can be a co-owner of your business, an employee, or even your spouse. You should not reapply for a business credit card with a co-applicant if that person does not have a longer credit history or better credit score. Sometimes business owners just need to become more profitable before they can be approved for an unsecured line of credit.
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