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.
How to get a business credit card
1. Form a business.
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.
Once you’ve picked a business card, it’s time to apply. You’ll need to provide information about yourself, including:
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.
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.
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.