What Is Required for a Business Credit Card?

A business credit card serves as a dedicated financial tool designed to help entrepreneurs manage their company’s expenditures. This type of card facilitates the separation of business and personal finances, which is beneficial for accounting and tax purposes. It also provides a revolving line of credit specifically for business operations, potentially offering rewards tailored to business spending categories. Establishing a business credit card can contribute to building a distinct credit history for the company, which is valuable for future financing needs.

Eligibility Requirements

Securing a business credit card involves meeting specific criteria set by lenders, encompassing both the business entity itself and the individual applicant. Lenders evaluate several factors to assess the risk associated with extending credit. Understanding these fundamental requirements is a prerequisite before initiating an application.

Business criteria often include the legal structure of the entity. While corporations, LLCs, and partnerships commonly apply, sole proprietors and freelancers can also be eligible, often using their Social Security Number (SSN) if they do not have an EIN. The time a business has been in operation is another factor, with some card providers requiring a minimum operating history, such as six months or one year. Some premium products may require two or more years in business.

Annual revenue is a significant consideration for lenders. Applicants typically report their gross annual business revenue, which is the total income from sales or services before expenses and taxes. Even new businesses with no prior revenue may apply, in which case lenders often rely on the applicant’s personal income and credit history for approval. Industry type can also play a role, as some industries might face specific lending criteria or restrictions due to perceived risk levels.

For the individual applying on behalf of the business, personal financial standing is usually a primary determinant, especially for small businesses or startups without established business credit histories. A strong personal credit score is generally required, with most issuers looking for a FICO score of at least 670. Higher scores, typically 700 or above, can lead to better terms and higher credit limits. Personal financial history, including factors like debt-to-income ratio and the absence of recent bankruptcies, also influences the approval decision.

A personal guarantee is frequently required for small business credit cards, making the individual applicant personally responsible for the business debt if the company cannot repay it. While some corporate cards for larger, established businesses might not require a personal guarantee, most small business cards do.

Preparing Your Application Information

Successfully applying for a business credit card necessitates a thorough collection and accurate preparation of specific information and documents before beginning the formal submission process.

Businesses need to have their complete legal name, along with any “Doing Business As” (DBA) names under which they operate. The full business address and phone number are also required. A crucial identifier for most business structures is the Employer Identification Number (EIN), issued by the IRS for tax purposes. Sole proprietors, however, may use their Social Security Number (SSN) if they do not have an EIN.

The specific business structure, such as a Limited Liability Company (LLC), C-Corporation, S-Corporation, or partnership, must be identified. The industry type in which the business operates is also requested, often accompanied by a North American Industry Classification System (NAICS) code, which categorizes the business for statistical and lending assessment purposes. Applicants must report their annual business revenue. An estimate of monthly business expenses is often requested.

Details of the business bank account are needed for verification. If the card issuer requires information for other owners or officers, such as their ownership percentage or personal details, these should also be prepared. For the individual applicant, full legal name, home address, Social Security Number (SSN), date of birth, phone number, and email address are required for identity verification and credit checks.

Several documents should be on hand. These include:
Business formation documents, such as Articles of Incorporation for corporations or Articles of Organization for LLCs.
Any relevant business licenses or permits.
Recent business bank statements or financial statements, like profit and loss statements or balance sheets, which may be requested for higher credit limits or certain card types.
Personal identification, such as a driver’s license or passport, necessary for identity verification.
All information provided should be accurate and consistent.

Submitting Your Application

Once all necessary information has been gathered and prepared, the next phase involves the formal submission of the business credit card application. The application forms are found on the credit card issuer’s website.

Online application portals are the most common method for submission. After inputting all the prepared data, applicants review a summary page to ensure accuracy. This review is followed by providing an electronic signature. The final step involves clicking a “submit” button. For those preferring a physical submission, mail-in applications involve printing the completed form, signing it manually, and then sending it through postal services.

After an application is submitted, the process involves review and verification by the issuer. This includes identity verification of the applicant and a credit check, which involves a hard inquiry on the personal credit report. Some issuers may also check the business’s credit history if it is established. The timeline for a decision can vary; some applicants may receive an instant approval or denial, while others might wait several days or up to 7-10 business days. In more complex cases, or if additional information is needed, the process could extend to a few weeks.

The decision is communicated through various channels, including email, postal mail, or a notification within the online application portal. If approved, the applicant can expect the physical card to arrive by mail, within 7-10 business days, though some issuers may offer a virtual card for immediate use. Information regarding card activation and setting up online account access is provided.

In the event of a denial, the issuer is required to provide reasons for the decision, such as not meeting eligibility criteria or an incomplete application. Common reasons for denial include a low personal credit score, insufficient revenue, or a short time in business. Applicants may have the option to pursue a reconsideration process by contacting the issuer to provide additional context or rectify any misunderstandings. Occasionally, the issuer might request more information or documents after initial submission; promptly responding to these requests is important.