Every business needs funding.
If you don’t have an extra stash of cash lying around, you’ll have to choose another option to fund your business. But you need to be smart with your financing options — 30% of businesses continually lose money.
This is why many business owners sign up for a business credit card. Business credit card approval is easier than business loan approval. There are also multiple credit card options and they come with decent rewards and perks.
Here’s the million dollar question — what are the business credit card requirements? Continue reading to know what you need when applying.
Breaking down the Business Credit Card Requirements
When signing up for a business credit card, every bank will look for these minimum requirements.
Your Employer Identification Number
Unlike personal credit cards, the bank needs your, or EIN. This number was assigned by the IRS and is a unique identifier for your business. It helps report taxes and other financial needs.
What if you’re a sole proprietor without incorporation? You can still receive a business credit card. Instead of entering your EIN, enter your Social Security Number or Tax ID Number.
Your Business Legal Name
Another unique business identifier is your legal business name.
This is the name of your business under your state’s business registry. When you’re approved for your credit card, your business’ name will appear on the card where the legal name is usually found.
Keep in mind, your legal business name is not your “doing business as” identifier, or your DBA.
What if you didn’t register a business name with your state? If you’re a sole proprietor, use your legal name.
Your Business Structure and Filing Type
Speaking of your business structure, you’ll need to identify the type of business you’re running. Most businesses are separated into these categories:
- Sole proprietorship
Unsure of which business classification you fall under? Check your business registry in your state. It will state the legal business entity type.
A sole proprietorship is the only exception. If you didn’t register your business and are a freelancer, you’re a sole proprietor. That’s because this business classification doesn’t require a legal business identifier.
Identifying your industry and business nature helps the credit card companies.
They will have a general idea of why you need a credit card and what you’re using the credit card to buy. It may give the bank an idea of how much you need to spend.
On the application, the bank will provide a general list of industries. Choose the one that best relates to your business.
What if you can’t find your industry? Either find the one that’s closest to your business or ask the bank for a more specific industry option.
Your bank will need to find a way to contact you. List the address and phone number associated with the business.
This is commonly your business address and the phone number under your business. You can also list your personal phone number and address if you haven’t set up a business address and phone number yet.
Your Role in the Business
Since you’re the one setting up a credit card, you’re likely the business owner.
Either way, the bank will want to know who you are in relation to the company.
Not sure how to label your role? If you’re the business owner, here are common business owner titles:
- General manager
If you haven’t chosen a label, all of these labels appropriately spell out your role in the business.
The Number of Employees
Since all business credit cards are different, some tailor their benefits to businesses of certain sizes. A good way to gauge your business size is by identifying the number of employees you have.
For example, a bank can tell you’re a freelancer if you only have one employee (which is likely yourself). If you have 500 employees, this tells the bank you’re a much larger business.
How Long You’ve Been in Business
Like the last point, this tells the bank what kind of business you have, your success, and your experience. This will help them assign the best credit card for your needs.
If you’ve only been in business for one year, this tells the bank you’re a startup. If you’ve been in business for five years, this shows the bank your business is more experienced and profitable.
Estimated Monthly Spending
Like a personal credit card, a business credit card will have a monthly limit. So the banks know how much to assign, it’s best to estimate your monthly spending and use that information to develop the best limit.
Your spending doesn’t have to be the amount you spend each month in total. It can be a comparison of how much you want to spend on a credit card versus another form of business financing.
Make sure this estimate is the amount you spend on business purposes — not personal expenses.
For example, use business-related costs such as new supplies, shipping, and your office rental costs toward your monthly estimate. Your morning coffee spending is considered personal spending.
Keep in mind that not all banks require or ask for this information. But it’s best to know how much you spend or how much you’re planning on spending.
If you’re a sole proprietor, some of your monthly spending can be considered business spending. This includes home office expenses, software, and other expenses that are vital to your daily business uses.
One of the most important pieces of information a bank needs to know is your annual revenue. This tells the bank how much you can afford and how much you’ll need on your credit card.
What if your business hasn’t received any revenue? Don’t be scared to tell the bank.
You should be as honest as possible. While it’ll be harder to gain approval for a credit card, there’s still a chance — especially if you tell the bank you’ll pay off the credit card with your personal funds.
More Advice on Business Credit Card Approval
Now that you know the minimum requirements, there are additional steps you can take to ensure the bank approves your application.
Sign a Personal Guarantee
This is a clause that states you will pay for the business debt, even if you have to use your personal funds. This tells the bank that you’re personally responsible for the debt — not just your business entity.
Businesses are risky. What if your business shuts down or you have a lousy revenue quarter? Signing a personal guarantee tells the business you’ll handle the debt, regardless of your business financial health.
Have a Strong Personal Credit Score
The bank won’t only look at your business credit score. They will also look at your personal score.
This is especially true if you own a startup or haven’t built business credit. If you have a high personal credit score, it’s easier to qualify for a business credit card.
Sign up for a Business Credit Card on the Bank You Already Use
Whether you have a personal or business account with a specific bank, using that same bank helps increase your chance of approval.
The bank already knows how much money you have, the revenue you’re generating, and your spending habits. This helps them get a better idea of your trust with a line of credit.
Additionally, you’re already a customer for them. They will want to reward you with the card you need.
This piece of advice should be a given, but always be honest on the application. It’s easy to want to appear more successful and financially stable, but the banks can easily detect this lie and will reject your application.
You’ll be surprised how many banks are accustomed to handling businesses who are in the startup phase.
There are plenty of credit card options for businesses of all financial health. If you don’t qualify for the card you want or the line of credit you need, the bank can recommend a way to receive more perks.
If you’re concerned your business is too new or not financially healthy enough to receive a credit card, discuss your options with the bank before filling out an application.
The bank will likely be happy to answer your questions and can suggest different actions to take.
Sign up for a Business Credit Card Today
No matter what kind of business you own, a business credit card offers a convenient financing structure with plenty of rewards. Before you receive your credit card, you need to meet the minimum business credit card requirements.
Can’t get approved for a traditional credit card? Try a business line of credit. Sign up here!