Do You Need to Own a Business to Get a Business Credit Card?

Many individuals earning income through various ventures often wonder if they qualify for a business credit card, mistakenly believing only formally established corporations or LLCs are eligible. The definition of a “business” for credit card eligibility is broader than many realize, opening opportunities for a wider range of entrepreneurs.

Defining “Business” for Credit Card Eligibility

For business credit card eligibility, the definition of a “business” extends beyond traditional corporate structures. Issuers recognize various income-generating activities as qualifying, meaning formal incorporation like an LLC or corporation is not always a prerequisite.

Sole proprietorships, freelancers, independent contractors, or those with significant side hustles and gig economy activities can qualify. Examples include selling goods online, providing consulting services, or driving for a rideshare application. Many credit card companies consider any profit-generating venture a business, regardless of its formal registration status or current profitability.

Applicant Eligibility and Personal Guarantees

The individual applicant’s financial standing plays a significant role in the approval process. For most small business credit cards, approval relies on the applicant’s personal credit score and financial history, rather than solely on the business’s financials. A FICO score of 690 or higher is often required for qualification, especially for newer businesses or startups without an established business credit history.

A common requirement for business credit cards is a “personal guarantee.” This means the individual applicant is personally responsible for the debt if the business cannot pay. This links the business credit card to the individual’s personal credit history, as the issuer can pursue the cardholder’s personal assets to recover unpaid balances. While some business credit cards do not require a personal guarantee, these are typically more challenging to qualify for and are usually reserved for established companies with significant revenue.

Essential Information for Application

When applying for a business credit card, applicants must provide specific information to the issuer. This typically includes the business’s legal name (for sole proprietors, often the applicant’s personal name) and details about the business type or structure, such as sole proprietorship, LLC, or corporation.

Applicants must provide a Tax Identification Number. Sole proprietors often use their Social Security Number (SSN), while established entities like LLCs or corporations typically use an Employer Identification Number (EIN). Also required are estimated annual business revenue (which can be $0 for new businesses), the industry type or North American Industry Classification System (NAICS) code, business address, and phone number. For home-based businesses, a residential address can be used.