With a quality business credit card, you’ll have access to capital, without having to wait for customer sales. Still, you should consider interest rates, benefits, and other financial services being offered prior to applying for a business credit card.
In this post, we’ll discuss some of the most common business credit card requirements that you should be aware of. By being proactive and organized, you should be able to successfully get approved for a business credit card.
Are You Aware of These Business Credit Card Requirements?
1. Business Name and Contact Information
Regardless of your business’s industry, there is some basic information that all credit card companies will require. Although it may seem obvious, your business will need to have an official name. Even if you decide to change your company name in the future, having a working name is still a universal necessity.
You’ll also need to provide your business address, a phone number, and company email address. It's important to note that you shouldn't leave any sections of a credit card application blank. This could disqualify you immediately.
2. Business Structure
To keep your
personal and business finances separate, you should declare your business as a distinctive legal entity. It's important that providers can differentiate between your business's business and personal expenses.
Even if you’re currently the only employee, declaring a sole proprietorship can still help you manage your financial liabilities. If you’re not the sole employee, you may want to consider establishing a legal partnership or a limited liability corporation.
By establishing your business as a legal entity, your business will appear much more legitimate to credit card companies. Plus, they’ll have a better understanding of who they are lending which could enable you to qualify for better cards.
3. Credit Score
As is the case with individual credit cards, your credit score matters when applying for a credit card. If your business is new with a limited financial history, your personal credit scores (Equifax, Experian, Transunion) will probably be considered. However, the longer your business has been a distinctive legal entity, the less likely your personal credit history will be considered.
To find out what your credit score is, we suggest requesting a credit report. This way, you won't apply for a card that you won't be approved for.
4. Financial History
Have you received a business loan in the past? If you can prove that you've repaid lenders on-time, you should be able to secure a good credit card. Fortunately, there are numerous ways for your business to defend your lendability.
In addition, past
income statements and current balance sheets will probably be considered during the lending process. Having detailed tax returns, expense reports, and revenue reports will also make it easier for you to prove your financial legitimacy. The provider will want to see the amount of money in your bank account, so that they can ensure that you'll be able to repay debts.
5. Projections of Future Cash Flows
In addition to past and current financial information, your business may also be asked to provide future projections of cash flows. Ultimately, qualifying for a business credit card will depend on if the provider thinks you'll repay your debts.
Even if your business has an excellent credit score, you should try to provide other financial projections to the lender. If your business has poor credit, you should be honest about this. If a credit card issuer finds out that you've lied, you'll probably be disqualified immediately.
Conclusion: Understand the Credit Card Application Process
There's no magic formula that guarantees you’ll be approved for a business credit card. However, if you provide detailed financial information, qualifying for a business card will be easier.
By gathering the information mentioned, you’ll be able to qualify for a credit card. As a small business owner, having this financing can be extremely beneficial. Still, you should also make sure to research your options. Compare credit card companies' terms and conditions, annual fees, and reward programs, just to name a few examples. By doing this, you can select the card that's best for your business!
Editor’s Note: This post was updated for accuracy and comprehensiveness in May 2019.