How Hard Is It to Get a Business Credit Card?
Wondering how hard it is to get a business credit card? Learn the clear steps and requirements to successfully obtain one for your business.
Obtaining a business credit card is often more straightforward than many anticipate. These cards offer a dedicated financial tool for business expenses, helping to separate personal and company finances and establish a credit history for the business. Understanding lender criteria and the information needed can significantly demystify the process.
Understanding Key Approval Criteria
Lenders evaluate several factors to determine eligibility for a business credit card, focusing on both the business’s and the owner’s financial health. A personal credit score plays a significant role, especially for new or small businesses that have not yet established their own business credit history. Most business credit cards require a personal FICO score of 670 or higher, with some seeking 690 or above for better terms. This score indicates how responsibly an individual manages their personal debts, serving as a proxy for how they might handle business credit.
Beyond personal credit, lenders consider the business’s own credit history, if available. A business credit score, also known as a commercial credit score, assesses a company’s creditworthiness based on factors like payment history, size, age, and public records such as liens or bankruptcies. Major reporting agencies like Dun & Bradstreet, Experian, and Equifax provide these scores. Establishing business credit involves steps like forming a legal entity, obtaining an Employer Identification Number (EIN), and opening business bank accounts.
The age and legal structure of the business also influence eligibility. While a newly formed business can qualify, older businesses with an established track record may have an easier time securing credit. Lenders consider structures such as sole proprietorships, LLCs, corporations, and partnerships, each with potentially different documentation requirements. Annual business revenue is another important metric, demonstrating the business’s capacity to repay debt. Applicants typically report their gross annual revenue from the previous year, which includes all income before taxes and expenses.
Some industries might be subject to additional scrutiny due to perceived risk, affecting approval chances. A personal guarantee is frequently required, particularly for newer or smaller businesses. This commitment holds the business owner personally responsible for the business’s credit card debts if the company cannot repay them, providing assurance to the lender since most business credit cards are unsecured.
Gathering Required Information
Preparing all necessary information and documentation can streamline the business credit card application process. Applicants will need to provide personal details for the business owner(s), including their full legal name, Social Security Number (SSN), personal address, and date of birth.
Comprehensive business information is also essential. This includes the legal business name, any “Doing Business As” (DBA) name, the Employer Identification Number (EIN), and the business’s physical address and phone number. The EIN is a unique nine-digit number assigned by the IRS for tax purposes, though sole proprietors may use their SSN. The industry type, legal structure, and the date the business was established are also commonly requested.
Financial information provides lenders with insight into the business’s economic viability. This involves reporting the estimated annual business revenue and average monthly expenses. Lenders may also inquire about existing business debt. Applicants should be prepared to provide documentation such as articles of incorporation or organization, business licenses, recent business bank statements, and business or personal tax returns if requested for verification. Having these items organized ensures accuracy and can prevent delays during the application review.
Navigating the Application Process
Once all required information is gathered, the business credit card application involves several steps. The process often begins with selecting a suitable card and lender, which can be done through online platforms or in-branch visits. Most applications can be completed online, providing a convenient submission method.
Completing the application form requires careful attention to detail, accurately inputting the personal and business information. After filling out the form, the application is submitted, initiating a waiting period for a decision. Processing times can vary significantly, ranging from a few minutes for automated approvals to several weeks for manual reviews.
During the review phase, lenders might request additional information or documentation; prompt responses are important. Once a decision is made, applicants are notified via email or mail. If approved, the physical card usually arrives within 7 to 10 business days, though some issuers may provide virtual card numbers for immediate use. If denied, the issuer is required to provide an adverse action notice explaining the reasons for the denial.