Your business is in full swing and you’re ready for a business credit card. The only problem is, you’re not quite sure how to get one.
Fear not – applying for a business card is fairly straightforward. And there are myriad benefits of having one, such as separating your personal and business finances and having access to expense-management tools.
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There’s a low bar to jump for qualifying as a business. You’re eligible if you’ve formed one of Canada’s 4 business structures:
Sole proprietorship. Easy and inexpensive to set up. There is no limited liability, so both your personal and business assets are liable in the event of a legal dispute.
Partnership. Profit is shared between partners in an arrangement that is usually outlined by a contract. Again, there is no limited liability, so partners’ personal and business assets are at risk. (Ontario has 2 types of partnerships: general and limited. Partners share the management of the company in a general partnership. But in a limited partnership, some partners actively manage the company while others only provide funding.)
Corporation. There is limited liability, so only the business’s assets – and not the owners’ personal assets – are at risk in the event of a lawsuit. Corporations are also more enduring than sole proprietorships and partnerships as these entities are legally distinct and not tied to the people who own them. (Ontario has private corporations and public corporations, both of which you can create at either the federal or the provincial level. Private corporations do not publicly sell shares or securities, while public corporations do under the regulation of the Ontario Securities Act.)
Cooperative. Formed by a group of people (“members”) each of whom has an equal say in running the business and who collectively split its profits.
You can qualify as a sole proprietor if you make money through freelance work — for example, as a photographer-for-hire or an Amazon seller. Just make sure you’ve registered your business and have documentation to prove it.
If you have a partnership or corporation, you’ll enter your Business Number (BN) while applying for your card. If you’re applying as a sole proprietor, you’ll simply enter your Social Insurance Number (SIN). Provinces may have different rules regarding tax identification for cooperatives.
2. Establish business credit.
Every provider will check your personal and business credit. Your personal credit weighs most on the provider’s decision, but having strong business credit will increase your odds of approval.
To build business credit, start by obtaining vendor credit. Put your phone and utility bill under your business name. And ask your vendors — such as your office supply store or advertising agency — if you can start small lines of credit with them. You might also want to apply for a business loan. As you make consistent on-time payments of at least the minimum amount due, you’ll build your business credit.
3. Find the right business credit card.
There are many excellent cards on the market, and the perfect pick will depend on your specific needs. Here are a few key factors that’ll help you choose between different cards.
Annual fee. It’s a good idea to first check a card’s annual fee. You’ll want to get enough out of your card to offset this fee, which might mean earning a sufficient signup bonus or significant rewards.
Rewards. You’ll find big differences here. Consider your business spending and see whether certain cards offer accelerated rewards for your preferred categories. If your spending is relatively even across categories, you might like a card that offers a flat rewards rate for all spending.
Intro APR. Getting a 0% APR on purchases or balance transfers can be very helpful, especially when your budget is tight. For business cards, zero-interest periods tend to top out at around 15 months.
Signup bonus. Business credit cards are a competitive category, and providers are generally willing to offer big bonuses to attract business owners. A signup bonus alone can pay for your annual fee many times over.
Compare business credit cards
Getting a business credit card can help you streamline your business finances and earn rewards on your purchases. Make sure you compare multiple options until you find the right fit for your wallet.
4. Apply and wait for a decision.
Once you’ve picked a business card, it’s time to apply. You’ll need to provide information about yourself, including:
Your name, residential status and residential address.
Your Social Insurance Number (SIN) and date of birth.
Your email address and phone number.
Financial information, such as your annual income and source of income.
You’ll also need to provide information about your business, including:
The name of your business, its mailing address and its employee count.
Your years in business and annual business revenue.
Your Business Number (BN) or Social Insurance Number (SIN) if you’re applying as a sole proprietor.
Fill out the application form, request employee cards if needed and agree to the provider’s terms. The last step is to review your application and submit it.
Most major providers offer automated applications, so you’ll likely receive a decision within minutes. If there are issues with your application, you may need to wait a few business days to a few weeks to hear back.
After you’re approved, you’ll often receive your card within 10 business days. However, actual delivery may times vary between providers.
Why should I get a business credit card?
There can be many advantages to getting a business card, including:
Keeping your personal and business expenses separate.
Gaining access to advanced expense-management tools, such as employee spending controls and quarterly or annual expense reports.
Accelerated rewards on business purchases.
Higher credit limits.
Building business credit.
What if my business gets denied for a credit card?
If your business is denied for a credit card, don’t lose hope. There are a few things you can do to increase your chances of getting one soon or in the future.
Ask the provider to reconsider. Many providers use algorithms that automatically process applicants. For that reason, your application may have been denied by a computer instead of a human. Call the provider and ask for its reconsideration team, who will review your application manually. At that time, you can ask why you were denied and add clarifying information that may help your chances of approval.
Increase your credit score. You may have been denied because your credit score was too low. In that case, apply again when your credit improves. Keeping debt low and paying balances on time are two tried-and-true methods to increase your score.
Apply for a card for business owners with fair credit. You don’t have to have excellent credit to get a business card. Some providers offers credit cards specifically for fair-credit borrowers. Interest rates may be higher than what you would be get with a good credit score, but so will your chances of being approved. One card available to fair credit users is the Marriott Bonvoy American Express Card.
Am I personally liable for my business credit card?
Most of the time, the answer is yes. Your provider will probably ask you to personally guarantee your debt no matter your business structure. For that reason, it’s a good idea not to charge more than you can personally pay off. But there are some credit cards without a personal guarantee.
Applying for a business credit card can be very simple. If you’ve decided on a business structure, it’s a matter of comparing different business credit cards and finding the best fit. When you’ve settled on a card, you can easily apply for it on the provider’s website.
Frequently asked questions
Possibly. Some provinces or territories may not require that you register a sole proprietorship, but you still need to be bringing in some kind of income, for instance, from freelance writing or selling on Amazon. In this case, you can answer in your credit card application that you are a sole proprietor and use your own Social Security number instead of a Business Number (BN) or other tax identification.
Don’t lie to the bank if you don’t really have a business because they may ask for supporting documentation to prove that you have a business or that you have an income.
Yes, as long as you intend to make a profit.
Yes, but it’s not recommended. Sometimes a bank may review your expenses and if they see that you use a business credit card for personal expenses, they may close your credit card account. Additionally, it’s better for tax purposes to keep your business and personal records separate.
If you have a charge card, you must pay off your balance each month. This is different from a credit card, which allows you to carry a balance from month to month.
Unfortunately, you won’t know your APR until you get approved for your card. You’re more likely to receive a favorable APR if you have strong credit.
Kevin Joey Chen is a credit cards, banking and investments writer whose work and analysis have appeared on CNN, U.S. News & World Report, Business.com, Lifehacker and CreditCards.com. He's passionate about helping you get your finances in order by expertly navigating cutting-edge financial tools — including credit cards, apps and budgeting software.
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