Who Is Eligible for a Business Credit Card?

A business credit card helps entrepreneurs manage company expenditures. It separates business and personal finances, simplifying accounting and tax preparation. It also builds business credit history, distinct from personal credit. This distinct profile aids future financing, providing capital for growth.

General Eligibility for Business Credit Cards

Lenders assess several criteria for business credit card eligibility. A key factor, especially for small businesses and startups, is the applicant’s personal credit score. Most issuers seek a good to excellent personal FICO score, generally at least 670. Scores in the 700-750 range offer more favorable terms and rewards. A strong personal credit history indicates responsible financial management, predicting how business credit will be handled.

Most business credit cards require a personal guarantee from the business owner. A personal guarantee makes the individual personally responsible for the business’s credit obligations if the company fails to make payments. Personal assets, such as savings or property, could be at risk if the business defaults. This mitigates risk for lenders, especially when a business has limited or no established credit history.

Personal guarantees can be either limited or unlimited. An unlimited guarantee means the individual is responsible for the full outstanding balance and fees. A limited guarantee caps liability at a specific dollar amount, sometimes used with multiple owners. While most business credit cards include a personal guarantee, some corporate cards for well-established businesses with substantial revenue may not require one.

Lenders also consider business age and annual revenue, though thresholds vary. Even a side hustle or new venture with limited revenue may qualify, provided the applicant has sufficient personal income and credit history. More established businesses, often with annual revenues exceeding $1 million and operating for at least two years, may secure higher credit limits or cards without a personal guarantee.

Applicants must be U.S. residents or resident aliens with a U.S. address. This requires providing a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN) for identity verification and credit checks. Non-U.S. citizens with a valid SSN or ITIN and appropriate visa status can apply.

Key Information for Your Application

Preparing necessary documentation before applying can streamline the process. Applicants need their business’s full legal name and physical address. This includes street address, city, state, and zip code.

The Employer Identification Number (EIN), a federal tax ID assigned by the IRS, is crucial. Corporations, partnerships, or businesses with employees typically need an EIN. Sole proprietors without employees may use their Social Security Number (SSN) instead of an EIN.

Applicants must specify their legal business structure: sole proprietorship, limited liability company (LLC), corporation (S-Corp or C-Corp), or partnership. Identifying the business’s industry type or category is another common requirement. This helps issuers understand the business’s nature and risks.

Estimated annual business revenue is consistently requested. New businesses with no revenue can input $0. This helps lenders gauge the business’s financial capacity and potential spending.

Personal identifying information for the primary applicant is required. This includes full legal name, Social Security Number, date of birth, home address, phone number, and email. This data is used for credit checks and identity verification.

Eligibility Based on Business Structure

Eligibility and application vary by business legal structure. Each structure presents unique considerations for lenders, impacting creditworthiness assessment and information prioritization.

Sole proprietorships, owned and run by one individual without legal distinction from the owner, commonly apply using their Social Security Number (SSN). For these entities, personal and business finances are often intertwined. A personal guarantee is almost always required, making the owner personally liable for any business debt incurred.

Limited Liability Companies (LLCs) are legally separate from their owners, offering personal asset protection. While an EIN is important for an LLC to establish its separate identity and build business credit, lenders frequently require a personal guarantee from the owner. This is because many LLCs, especially newer ones, may lack sufficient business credit history for lenders to assess risk solely on the entity’s standing. Using a business credit card helps LLCs maintain financial separation and build their own credit profile.

Corporations, including S-Corporations and C-Corporations, are distinct legal entities from shareholders. Similar to LLCs, newer corporations often need a personal guarantee from a principal due to a lack of established corporate credit. However, well-established corporations with significant annual revenues, often $1 million to $4 million or more, may qualify for corporate credit cards that do not require a personal guarantee. These cards rely on the corporation’s financial health and credit history.

Partnerships, formed by two or more individuals or entities sharing profits or losses, typically use the partnership’s EIN for credit card applications. Lenders evaluate the partnership’s financial standing, but similar to other smaller or newer business structures, they likely require personal guarantees from the partners. This ensures joint responsibility for the debt, and individual partners’ personal credit history plays a role in approval.