Qualifying for a Business Credit Card – The Process

Qualifying for a Business Credit Card – The Process

What You Need to Know

A great resource for small business owners, business credit cards really do serve a multitude of purposes. From giving you the flexibility to purchase what you need, when you need it, to help you boost your business's credit score, to simply giving you extensive purchasing power, a business credit card might just be the tool you're currently lacking in terms of helping your business grow.

Different Types of Business Credit Cards

Primarily there are three principal types of business cards with which you'll be concerned. Each addresses somewhat different needs and so it is important to understand what they do and how they might be beneficial.

Business Credit Cards

Much like a personal credit card, this most common type of business card will have a pre-set limit. It also helps with building your FICO score and some even come with certain perks that could fit well within the scheme of your company. For instance, some cards will offer air miles, some give cashback, and still, with others, you can take advantage of hotel and rental car discounts.

Business Charge Cards

With a business charge card, you're responsible for paying off the balance every month—in full. This way there are no interest payments, however, you do need to be able to make that complete payment on a monthly basis. If for some reason, you cannot do so, there may be fee and penalties associated.

Secured Business Credit Cards

A secured card is a good option if you have not yet established any business credentials. Essentially, you put money down and this serves as the collateral on the card—generally, the spending limit is whatever amount you deposit. It still gets reported back to the credit bureaus and thus allows you to build credit.

How to Go About Getting Your Business Card

The lender and the card issuer will, of course, have to weigh the risks associated with extending you credit. Knowing what they want to see going in, will help you better prepare yourself and thereby give you the best chance at having your application accepted.

First off, you want to figure out if a business credit card is even right for your company in the first place, some things to consider:


Understand the requirements. Each card will be slightly different, and each lender will have their own set of criteria that they want to see. That said, do your homework first and gain some insight into which cardlender may be more suited to your particular situation.


Of course, you're going to want to shop around as far as the interest rates are concerned. Some may actually offer fairly low introductory APRs—with some going so far as to say zero percent APR for the first year. While this is certainly attractive, remember to understand moving forward where that APR is ultimately going to be. This is usually somewhere between 13 and 27 percent.


What incentives are being offered? You can almost always find a card that will offer various rewards upon signing up. Some have a points program, some will do airline miles, others will do cash back. Pay attention to how you operate—if for example you travel a lot then perhaps go with the miles. If rather, you'd like monthly cash back, then go that route.


Some cards will have annual fees—especially so if they have a great rewards program in place. Be sure to pay attention to what exactly those fees are, as some can be fairly high. Many companies will waive the annual fee for the first year, which is great, but again, you want to know going forward what you'll be expected to pay on an annual basis.
Secondly, you want to have a good understanding of your business's FICO as well as your own personal score. Particularly if your company is fairly new, they are going to want your personal score factored into the application. A general breakdown of how credit scores rate is as follows:

  • Poor: 300-580
  • Satisfactory: 581-670
  • Good: 671-740
  • Excellent: 741-800
  • Outstanding: 801-850

You can find out your score by requesting it through one of the three major companies: Equifax, Experian, and Transunion. Knowing where your score stands and consequently what appears on the report can help you to start addressing any discrepancies and work on fixing issues that you might see.

Ideally, you want your personal credit score to fall somewhere in the Good to Excellent range. And keep in mind that anything below satisfactory puts you into a high-risk category, making it more difficult to get approved by any card company other than the ones that will do a secured option.

You also definitely want to have a handle on your financials. Again, as a newer company, they are going to want to gather as much information as they can on your business. A complete application will include such things as tax returns, annual revenue, personal income, drivers license, tax ID among other pieces of information.

Once you've gathered the necessary paperwork, you will go ahead and actually apply for the credit card. Online applications tend to be prevalent nowadays so odds are you won't have to go to the actual bank in question. Usually many can have a decision for you within a few hours, if not a few minutes. If it takes longer, that could mean that there were some red flags and they subsequently need more time to weigh all variables.

What if You Have Been Denied

So what happens if you are in fact denied for a card? Are there any options left open? What can you do to potentially rectify the situation? Below are a few steps you can take to try and make your business more credit-worthy.

Work on that Credit Score

Again, if your score is satisfactory or below this may have hindered you from getting approved. It is time to build that score back up. The goal should be to get to at least that "Good" mark. The best way to do this is to pay all bills on time. Exercise any existing cards you do have and then pay them off monthly. However, don't go overboard. Your credit utilization should be right around 30% of all credit you have.

Reduce Your Expenses

Cutting back on expenses can certainly help in a number of ways. In applying for the card you may have supplied a list of monthly expenses—if this decreases and you can show the lender that, then this changes your financial picture a bit. Are there ways you can decrease spending on materials and labor?

Increase Your Business Revenue

Find ways to increase revenue. The more money your company brings in, obviously the more attractive an applicant that makes you. You may seek out more or bigger clients. Look into increasing your product line—think creatively about ways that you can make more money.

When You Get That Card

Once you get the business credit card, use it responsibly. Don't spend more than you know you can pay off as this will ultimately hurt your creditworthiness in the long run. Do use it to help build more credit and of course to allow your company room for growth. Here at First Union, we want to see businesses grow.

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