What Is a Business Credit Card? Here’s How to Qualify and Apply in 2020

Small business owners and freelancers alike can save money, earn rewards and keep expenses separate with these popular cards.

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If you’ve ever wondered how the best business credit cards work, and you’re a freelancer, sole proprietor or small business owner, then understanding the benefits of business cards could result in scaling your side hustle or company.

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How Do Business Credit Cards Work?

A business credit card is one that’s specifically used for business purposes instead of personal ones. These types of credit cards work pretty much like personal credit cards — you get access to revolving credit and other perks like rewards earnings. But there are some differences between the two.

First, some business credit card issuers will report your credit activity to both commercial and consumer credit bureaus. Don’t think that just because it’s a business card you’re off the hook for missed payments — most issuers require that the business owner personally guarantees the debt. In other words, if you’re late or miss a payment, you, the business owner, could be liable.

When it comes to your business credit, it’s very much like your personal credit history except that it’s a credit profile for your business. Having an established score — especially a higher one — might mean your business can qualify for loans with competitive interest rates. It could even mean lower insurance premiums. To check your business credit score, you can sign up for a free service called CreditSignal (offered by Dun & Bradstreet), which provides alerts when your credit report changes.

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Credit: Twenty20

What Is the Difference Between a Personal and Business Credit Card?

Business credit cards don’t come with as many protections compared to personal credit cards. They’re unfortunately not as heavily monitored and regulated compared to consumer ones. This means business credit cards don’t fall under the Credit CARD Act of 2009. So things like your APR can change at any time and you loose protection against high fees. However, some major credit card issuers are choosing to voluntarily adhere to the CARD act in order to provide business owners more transparency in their policies.

You may also get higher limits with business credit cards considering your expenses can be much higher than the ones you’ll incur in your personal life. Plus, these cards tend to offer bonus earnings in categories more suited for businesses such as internet charges, office supplies, advertising and, of course, travel.

Aside from this, there aren’t any major differences between personal and business cards. Both these types of cards allow authorized users — in the case of business cards, authorized users are considered employee cards. The business owner (the primary cardholder) is on the hook for the repayment of all charges, including ones from employees. If you have a rewards credit card, points earned go to you, even if employees racked them up.

Do You Have to Have a Business to Get a Business Credit Card?

The short answer is yes, you need to have a business to be able to open a business credit card. Before assuming you don’t qualify, let’s define what a business is (you may already have one without your knowledge).

First, according to the IRS, you don’t necessarily have to have a registered business entity such as an LLC or corporation to count as one. There are different types of businesses, such as sole proprietorships and single member LLCs, so if you sell items on eBay or Etsy, or work as a freelance writer, you may be able to qualify for a business credit card.

The myth is that you need to have a federal tax ID (or EIN) to be able to apply for a business credit card. For some issuers of credit cards, you may be able to use your Social Security number instead if you put down that you’re a sole proprietor. Given that, you may not have access to higher credit lines unless you’ve been in business for a while and can prove you have a certain amount of income, but you can increase that over time.

In the meanwhile, you can still take advantage of the many benefits of a business credit card.

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Credit: Twenty20

What Are the Benefits of Business Credit Cards?

As a business owner, you no doubt have to juggle a lot of responsibilities, so a business credit card can be a major help.

Here are some of the many benefits of opening one:

  • Fast and convenient capital: Free up some cash flow and increase your working capital by using your credit card to purchase what you need to grow or maintain your business. If you’re in the growth stages, having access to capital can give you the ability to fulfill business orders, especially if you qualify for a 0% APR offer.
  • Separation of business and personal assets: Using a dedicated business credit card can help make it easier to separate business and personal finances. Not only will it be easier when it comes time to do your taxes, but it can also protect your personal finances from any legal trouble that can arise with your business.
  • Tax benefits: Certain expenses on a business credit card can be tax deductible. First, all qualifying business expenses can be deducted. This includes any annual fees, interest and any late fees. To find out for certain, it’s best to consult a tax professional.
  • Streamline employee expenses: Instead of reimbursing employees, give them employee credit cards so you can manage expenses much more easily. You can also limit the amount your employees send, giving you more control.
  • Access bookkeeping and accounting tools: Many business credit cards offer year-end summaries and you can download statements and purchase records for accounting programs. This can help you simplify your bookkeeping and track spending much easier.

How to Apply for a Business Credit Card

Before applying for a business credit card, check your credit situation. Then you’ll be able to assess whether you can qualify for certain credit cards. Use free tools to check your personal credit score. Then you can use that to shop around and research your options to see which cards you can be matched with, offering you the highest chances of approval.

Once you’re ready to apply, here are a few tips for the application process:

  • Gather all supporting documents. You wont need many documents, but here are a few common questions asked on business credit card applications: Federal tax ID number, annual business revenue, specific details about business and social security number.
  • Don’t lie: If you don’t have a business, don’t apply for a card. The same goes for lying about other information just to get a larger credit limit or other perks, because issuers may ask for supporting documents to prove you have a business.
  • Understand you’ll need to sign a personal guarantee: Before submitting your application, be aware that the issuer will take your personal credit history into consideration and that you’re on the hook personally for any charges incurred if your business can’t pay for it.
  • Make sure you can meet the spending requirements for a sign-up bonus: Check the fine print to see what you need to do to earn sign-up bonuses or take advantage of other benefits like travel credits.

What Is the Easiest Business Credit Card to Get?

Qualifying for a card will depend on your credit history — both personal and commercial. If you have never applied for a business credit card before, you can qualify for one using your personal credit score. The higher your credit score, the better your chances.

That being said, you can still qualify for a business credit card even with fair credit, but you may be able to get ones that offer benefits such as travel credits and 0% introductory APR offers. You can always build your business credit and consider another credit card down the line, once you’re able to raise your credit score.

For business owners who have bad (or no) credit, there are secured business credit cards. These ones require you to put down a deposit, which serves as your credit line. Some even offer free employee cards. For example, the Wells Fargo Secured Business Credit Card offers a credit line from $500 to $25,000 and offers a decent 1.5% cash back on all qualifying purchases.

Then, monitor your credit carefully and shop around for unsecured credit cards that suit your needs before applying or trying to upgrade to another one. To see what you can qualify for, check online comparison websites or credit card issuers for pre-approved offers.

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Credit: Twenty20

What Are the Best Business Credit Cards?

Since there isn’t one card that meets every business’ or employee’s needs, Slickdeals’ editorial team has rounded up some of the more popular business credit cards in their respective categories. Click the links or scroll below for the comparison table for in-depth reviews of each card. Also, visit our guide to the best business credit cards for more comparisons, tips and details.

1. Ink Business Preferred℠ Credit Card

2. Ink Business Cash℠ Credit Card

3. Bank of America® Business Advantage Travel Rewards World Mastercard®

4. Southwest Rapid Rewards® Performance Business Credit Card

5. Alaska Airlines Visa® Business Credit Card

How to Choose the Best Business Credit Card

Still not sure about which business cards are right for you? We get it. Choosing a credit card that meets the needs of your company and its employees is important, which is why Slickdeals’ Credit Card Hub helps you compare the benefits of different cards, search credit cards by rewards categories and explore cards by their issuers — all to find the best fit for your wallet.

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We want to make sure you get the best deal! Our editors strive to ensure that the information in this article is accurate as of the date published, but please keep in mind that offers can change. We encourage you to verify all terms and conditions of any financial product before you apply. Also, please remember this content wasn't provided, reviewed or endorsed by any company mentioned in this article.

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Ryan Tronier

Ryan Tronier is a personal finance editor and writer. He has worked in journalism and publishing for nearly two decades before becoming Slickdeals' Personal Finance and Credit Card Editor. Ryan's work has appeared in publications like USA TODAY, NBC News, Sapling and Techwalla. Find him online at ryantronier.com.

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