How to Get a Business Credit Card for an LLC

A business credit card offers a distinct financial tool for Limited Liability Companies (LLCs). It helps maintain a clear separation between personal and business finances, a fundamental aspect of operating an LLC, simplifying accounting and tax reporting by delineating business expenses.

This financial tool assists in managing cash flow, providing a buffer for day-to-day operations and unexpected costs. It also contributes to establishing a credit history for the LLC. Building this credit profile can lead to more favorable financing options and higher credit limits, supporting the company’s growth and stability.

Preparing Your LLC’s Information

Before applying for a business credit card, an LLC should gather specific information and understand the criteria lenders evaluate. Lenders assess an LLC’s financial health, including its time in business and revenue, to determine eligibility. Newer LLCs often face more scrutiny due to limited operational history or significant revenue.

For most business credit card applications, especially for newer or smaller LLCs, the principal owner’s personal credit score plays a significant role. A FICO score of 670 or higher is generally considered good, though some issuers may prefer scores of 690 or above for better terms. This personal credit assessment helps lenders gauge the owner’s financial responsibility when the business has limited credit history.

Applicants must provide various LLC details, including its full legal name, registered business address, industry type, and Employer Identification Number (EIN). The EIN identifies the business for tax purposes. If the LLC is very new and an EIN has not yet been obtained, some applications may allow the use of the owner’s Social Security Number (SSN), but securing an EIN is recommended for an LLC.

Personal details of the primary owner or guarantor are also required, such as their Social Security Number, date of birth, and personal income. Lenders may request documentation like business registration, LLC formation documents, recent business bank statements, or tax returns to verify financial information. Having these documents prepared in advance can streamline the application process.

A personal guarantee is almost universally required for business credit cards, especially for new or small LLCs. This means the individual owner promises to repay the business debt if the LLC cannot. This guarantee reduces lender risk by providing personal recourse in case of default, linking the owner’s personal assets to the business’s financial obligations. While some corporate or charge cards may not require a personal guarantee, these often have higher requirements, such as substantial revenue or large bank balances.

Selecting the Right Business Card

Choosing a business credit card involves understanding available types and comparing features against the LLC’s needs. Unsecured business credit cards offer a revolving line of credit without a security deposit, often providing rewards and higher limits. Secured business credit cards, requiring a cash deposit as the credit limit, are an option for new businesses or those with limited credit history, helping build business credit. Charge cards require full monthly payment but often have no preset spending limit, beneficial for fluctuating expenses.

When evaluating card offerings, consider annual fees, which vary widely. Assess if the card’s benefits and rewards justify the cost. Interest rates (APR) for purchases and cash advances are also important, though many cards offer introductory 0% APR periods. Credit limits depend on the LLC’s financial health and the owner’s personal credit, often higher than personal cards to accommodate business spending.

Rewards programs are a significant draw, with options like cash back, travel points, or specialized rewards for business spending categories. How a card reports to business credit bureaus is important for building the LLC’s credit profile, leading to better future financing terms. Additional features like employee cards with spending controls, accounting software integration, and purchase protection can also provide value. Cards are offered by various financial institutions, including national banks, local credit unions, and online lenders.

Completing the Application Process

After preparing information and selecting a business credit card, submit the application. Most issuers offer convenient online portals, typically the quickest submission method. Some financial institutions also provide in-branch or phone application options.

The application process involves inputting gathered business and personal details. This includes the LLC’s legal name, EIN, address, annual revenue, and the principal owner’s personal identification and financial information. Review all entered data for accuracy before finalizing and submitting, ensuring consistency with supporting documents.

Upon submission, outcomes vary: instant approval or denial, or a pending review. If pending, the issuer might contact the applicant for further verification, requesting additional documentation like articles of organization or bank statements. Decision timeframes range from hours to weeks. Once approved, the physical card is usually mailed within 7 to 10 business days, requiring activation before use.