Understanding Business Credit Card Requirements

A business credit card is a type of credit card issued specifically to businesses. They offer several advantages over personal cards, such as lower interest rates and no annual fees. In addition, they provide special perks for companies, such as discounts on travel, entertainment, and other services.

Business credit cards are different from personal credit cards in many ways. Before you apply for one, it’s important that you understand the differences between them. Here are some things you need to know about getting a business credit card:

How Do Business Credit Cards Work

Business credit cards are designed to provide small businesses with competitive financing options to help grow their companies. They’re generally offered by banks and financial institutions, and can come in different forms. Some offer higher spending limits and better rewards for specific business categories. Others allow you to set up automatic payments or bill splitting to make budgeting easier. Still others offer special tools such as mobile apps and online account access.

Business cards are becoming increasingly popular among small businesses looking to improve cash flow, boost customer loyalty and increase sales. While there are plenty of benefits, choosing the right one for you depends largely on what type of business you run and how much money you plan to spend.

Credit cards for businesses typically come with higher spending limits than those offered to individuals, and many include additional perks like free shipping, discounts on purchases, travel insurance and even access to special financing programs. But just because a business credit card offers more perks doesn’t mean it’s necessarily better for your bottom line.

With most business cards, expense data remains accessible for downloading into the accounting system you use. If you’re interested in tracking expenses by category or individual cardholder, you’ll want to make sure the business card you choose includes such reporting options.

Why Use a Business Credit Card?

A business credit card can be an excellent way to get financing for your company. It allows you to take advantage of low-interest rates offered by banks and other lenders. These rates are typically much lower than those charged to individuals. This means that if you use a business credit card wisely, you could save money on your monthly payments.

If your business grows, you’ll also find that bookkeeping becomes easier. Most businesses keep their books in spreadsheets rather than on paper. Having a business credit card helps streamline things because you no longer have to manually enter transactions into your computer.

Business credit cards can also help your business build its own credit history. In today’s world, many companies rely heavily on credit to finance their operations. As long as you’re making regular payments on your business credit card, you’ll earn points toward your next purchase. These points can be used to offset interest charges or applied toward your next purchase.

How to Get a Business Credit Card

If you’re starting a new business, getting approved for a business credit card can be critical to managing startup costs and tracking expenses. Plus, earning a welcome offer and rewards on your business purchases can be a great way to offset some of those costs. But if your business isn’t well established, you may wonder how to best prepare so you don’t end up being denied a credit card. Here are three things to consider when applying for a business credit card for a startup.

1. Determine Your Needs & Priorities First

Before you apply for a business credit card, it helps to determine what type of card you want and why. Do you want one to cover your general operating needs? Or do you want one to pay for specific items like travel or equipment?

2. Understand How You’ll Use the Card

Once you’ve determined what you need, think about how you plan to use it. Will you spend most of your money on business expenses? Or will you use it primarily for personal purposes? This will help you know whether you need a single card or multiple cards.

3. Make Sure You Have Good FICO Scores

When you apply for a business card, make sure you have strong FICO scores. While there are many factors that go into determining your score, having a high score can mean the difference between approval and rejection.

4. Apply for Business Credit Cards Online or at Your Local Bank

The easiest way to apply for business credit cards is online. Many banks and credit unions now offer this option. If you prefer to apply in person, check with your local bank to see if they offer this service.

What is a Business Credit Score?

To get approved for a business credit card, you may need to ensure that you have a strong business credit score.

A business credit score is exactly how it sounds: a credit score that is calculated specifically for businesses. These scores are used to determine whether a business qualifies for certain types of loans, such as small business loans, or even if a business can obtain financing at all.

Business credit scores use different criteria than consumer credit scores, which can make it hard to compare them. For example, business credit scores typically look at a business’s financial health over a longer period of time, whereas personal credit scores consider a person’s current financial status.

Most business credit scores are ranked using a scale of 0 to 100, while those using the FICO SBSS range from 0 to 300 points.

Reasons to Maintain a Strong Business Credit Score

Businesses often struggle to obtain loans because of poor credit scores. A good business credit score can make obtaining financing much easier. There are many benefits to having a healthy business credit score including:

  • Easier access to financing
  • More favorable terms on existing debt
  • Lower interest rates on future loans
  • Better chances of getting approved for a loan

A business credit score can provide insight into how a business operates financially. This information helps lenders determine whether or not a borrower is likely to pay back debts. Lenders use this data to decide whether to approve a loan application.

How Business Credit Scores are Calculated

Businesses are scored based on how much money they owe, what types of loans they use, and whether they pay off those loans on time. Some businesses even receive a separate score for each department within the organization. For instance, a restaurant chain might receive a score based on the performance of each individual location.

The three main components of a business credit score include:

Payment History

This component looks at the frequency and amount of payments you make on your bills. A high number of late or missed payments could negatively impact your score. According to the IRS, a business credit card can help or hurt your business credit score depending on how you use it.

Industry Experience

How long you’ve been in business is another major factor. If you haven’t been operating for very long, it’ll take longer for your business to build a solid reputation and establish itself.

Debt Usage

Finally, the total amount of debt you carry is a key consideration. As you increase the amount of debt you carry, your ability to repay increases.

Who Can Qualify for a Business Credit Card?

Most business owners can qualify for one as long as the owner has good to excellent personal credit. This includes avoiding things like missed payments, bankruptcy, tax liens, judgments, foreclosures, etc. If you do have issues with your personal finances, make sure to work with a reputable business lender to help you get approved.

Qualifying business owners include sole proprietors, freelancers, small business owners, self-employed individuals, independent contractors, consultants, and others.

Understand Your Credit Card’s Rates and Fees

Business credit cards can be a great way to build your business’s credit history. However, there are many factors to consider when choosing one, including the APR, annual fee, and whether it offers rewards programs.


APR stands for Annual Percentage Rate, which is how much interest you pay on a loan per year. This number varies based on different terms and conditions. For example, most business credit cards offer lower rates than personal credit cards because businesses typically have better credit histories, while personal credit cards tend to attract people with less-than-stellar credit.

Annual Fee

Many business credit cards require an annual fee of $0-$100. Some cards even waive the fee completely. Fees help cover costs associated with managing the card, such as processing transactions and customer support.

Rewards Programs

Rewards programs often come with perks like airline miles or cash back. You can earn points by making purchases with the business credit card, and redeem those points later for free travel, merchandise, or gift certificates.

Payment Options

Most business credit cards allow you to pay online via credit card or bank account transfer. Others allow you to use debit cards, check, money order, or wire transfers.

Business Credit Cards are One Aspect of Business Ownership

If you’re looking for ways to improve your business’ credit rating, then a business credit card may be just what you need. But before applying for one, make sure that you understand all the details about the card, so you know exactly what you’re getting into.

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