When it comes to being a business owner, at some point you are going to need a credit card to make purchases for your business no matter if it is a new car for your business or supplies and equipment. However, when it comes to applying for a credit card, you should know the process works the same way as it does as if you were applying for a personal credit card.
The first thing to know when it comes to applying for a business credit card is that you are going to need a separate tax number (EIN: Employer Identification Number) in order to get credit in your business’s name. It is free to get an EIN and you can apply for one online for a quicker response at the IRS official website. The EIN is basically a social security number for your business, and once you receive your business number it will be like starting from scratch: your company will have no credit and you’ll have to build it up.
The second thing to know when applying for a credit card for your business is that there will be some applications that will want you-an owner or partner-to include your personal information on the application. Although your business will have its own EIN , lenders will want to know about the business owner or partner’s financial history which will be included in their decision to approve or deny you a credit card. Therefore, if you have a few things on your credit report and they are relatively small the lender will probably give you a pass; however, if you have a checklist of things on your credit report and they have high balances, then you should be aware there will be a chance of your business getting declined for a credit card. Lenders-banks or credit card companies-want to know their investment will be returned and that both the owners and business itself is capable of doing so.
The third thing to know is that when applying for a credit card for your business, there will be some credit card companies that will want your business to be established and bringing in a certain amount in sales per year. For example, Staples requires your business to bring in five million dollars in annual sales before even considering your application. Therefore, I would highly suggest that you be in business for a least six months to one year and have generated a few sales before applying because business credit works the same way as personal credit: a lot of credit inquiries can hurt your business credit score. I would also suggest that you know what the credit card lender’s requirements are of your business before applying because it will save you a lot of time and your business credit score will not suffer because of you applying for a lot of credit cards your business had no chance of getting in the first place. Know the requirements.
Lastly, before you apply for credit cards for your business know what types of credit cards will benefit your business. For example, if your business requires you to travel a lot then apply for a credit card with frequent flier miles rewards. Every business needs office supplies, so apply for a credit card at either Office Depot or Staples. Look over the credit card’s fees and customer agreement to see if they help or hinder the success of your business because it does not make sense to get a credit card with high fees that you are unable to pay.
Overall, applying for a credit card for your business can be a little difficult especially if you are a new business; however, the search gets easier once you learn what credit cards your business needs and can benefit from. Take your business credit as seriously as you do your personal credit because they both work the same way, and your business can either fail or succeed because of it. Don’t take out too many credit cards and make sure you are making the same on time payments as you would with your personal credit cards.