You want to apply for a business credit card? That’s great news. With a credit card you can track your business outgoings and access credit when you need it, so you’ll have the flexibility to manage your cash flow. By managing the card well, you can also build your business credit score, which could make it easier to borrow larger sums in the future as your business grows.
However, if you apply for a business credit card that isn’t right for you, you could find yourself with a worse credit rating than before. That’s why it’s important to do your research before you apply: and we’re here to help. Here’s what you need to know.
Any company, big or small, can have a business credit card, as long as you have some sort of business income.
To apply for a business credit card, you’ll need to be a sole trader or the director of a registered business. That doesn’t necessarily mean you need to be the CEO of a huge company: freelancers or side-hustlers (we see you!) can also successfully apply.
You’ll need to provide information and documents about your finances and credit score (see our list below) so the lender can decide if you’re eligible for their card.
If you have a personal credit card, you may have seen that some comparison sites offer eligibility checkers that run a “soft” search of your credit file to show which credit cards you’re most likely to get accepted for without impacting your credit score. Sadly, business credit card eligibility checkers don’t really exist in the same way. However, some business credit card providers, like Capital on Tap, do provide “soft” eligibility checks for individual cards on their own websites.
How to apply for a business credit card
Work out what you want from your credit card. Do you just want the business credit card with the lowest rates and fees you can get; or a charge card with an integrated expense management system; or the best card for something specific, like rewards or business travel?
Compare credit cards. Look for the one that offers the best features (like additional employee cards and rewards) for the best price (rate and fees).
Check your eligibility to make sure you qualify for the card you want. If you can do this via an online eligibility checker, that’s ideal. If not, read the eligibility criteria: some cards and providers have a minimum requirement for your turnover, and/or the length of time you’ve been trading. If the eligibility criteria isn’t shown upfront, ask for it before you apply; you could damage your credit score, or that of your business, if you apply and get turned down.
Gather your documents. Now that you have picked a card and checked you’re eligible, start gathering everything you’ll need to apply: see our handy list below.
Apply for the card. You can usually apply online, but it could be over the phone or in person. You’ll usually find out very quickly whether or not you’ve been approved, but in some cases this can take up to a few weeks.
If approved, activate your card and start using it responsibly. You can usually start using your card as soon as you receive it – or even earlier, if you have the option to use a virtual business credit card.
How to choose the best business credit card
It all depends on what you need from a card: the best card for rewards might not be the best card for day-to-day spending, for example, and if you’re a startup or have a poor credit score, some providers may offer a business card that’s better tailored to you. The most important thing is to compare cards before you choose. Here are the factors you need to consider:
Annual fee. Many business credit cards have hefty annual fees attached. There are plenty with no annual fee too, although these tend to have fewer perks.
APR. This is the interest rate charged on outstanding credit card debt. Remember, the advertised APR only has to be offered to 51% of applicants, so you may be offered a higher rate, particularly if you’re deemed a risky applicant.
0% interest deals. Some business credit cards offer an introductory 0% interest rate deal on purchases, balance transfers or both. This opportunity to borrow money without paying interest could be particularly useful if you’ve just started your business. Just make sure to pay off your balance before the interest-free period ends and the APR shoots up.
Rewards. Many business credit cards offer cashback deals, air miles or retail reward points as a perk for spending. These can be particularly lucrative if you travel a lot for business. Speaking of which…
What information and documents do I need to provide?
Basic personal details about you and any business partners
Legal business name or “doing business as” name (DBA), if there is one
Business address
Business type e.g. corporation, partnership, sole proprietorship etc.
Business phone number
Tax identification number
Industry
Business turnover
Monthly or annual expenditure
Number of employees
Most lenders will also want to see information about the financial history of your business, including the number of years you’ve been in business, your annual revenue, any existing debt and your monthly expenses. You’ll need to provide tax documents and bank statements to back this up.
You may need to provide this level of information about your personal finances too, particularly if you’re a startup or a fairly new business.
Credit checks
There’s no getting around it: lenders will run a credit check on your business credit report, and most likely your personal credit report too.
If you have a bad credit score, it’s unlikely that you’ll be able to access the best business credit card deals. However, this doesn’t mean you shouldn’t apply for a business credit card at all.
For one thing, credit card providers are increasingly using open banking technology to assess potential borrowing. This means they could check your actual spending habits, not just your credit score, to paint a more complete picture of your finances.
There are also a few business credit cards aimed at businesses which have poor credit or are yet to build up a credit score. There are some downsides to these:
Most are secured credit cards, which means you’ll have to put up personal assets as collateral. These assets can be repossessed by the lender if you fall too far into arrears.
These credit cards are likely to have higher rates and fewer perks than other cards.
However, if you take out one of these cards, pay it off every month and make sure you’re doing everything else you can to boost your business credit score, it’s likely you’ll be eligible for more appealing credit cards soon enough.
What happens after I’m approved?
The lender will contact you to confirm details such as your APR, credit limit and annual fee. The APR might be higher than advertised and your credit limit may be lower, depending on your perceived risk as an applicant.
Once you accept the terms, your card(s) will be sent to you in the post, typically arriving within 5 working days. However, if you have the option to use a virtual card, you can usually start using the card as soon as your account has been activated
Bottom line
The application process for a business credit card is more complex than it is for personal credit cards, particularly if you’re a new business owner with a poor credit score. However, if you follow our steps you’ll cut out a lot of the hassle: and the benefits of choosing the right card for your business will hopefully be well worth it.
Frequently asked questions
Business credit cards are designed specifically for work spending, which is why lenders will assess your business credit score first. Many business credit cards include features like additional cards for employees, customisable spending limits for different users and expense tracking. The business will be liable for any debts incurred, not the user (unless a personal guarantee has been signed).
No, this protection is only offered with personal credit cards.
You usually can, although you should check the terms and conditions of your personal credit card to make sure it doesn’t prohibit business use. However, as your business grows and you spend more, you may find it beneficial to apply for a business credit card, both for keeping your business finances separate and for building up your business credit score. Additionally, you’re likely to be able to access a higher credit limit with a business card than you would with a personal card, and more additional cards for your employees to use.
Business credit cards can support up to 99 additional cardholders, although providers may set their own smaller maximums.
The main difference between a charge card and a credit card is that charge cards don’t allow you to carry debt over from one month to the next: you have to pay off your balance in full each month.
In some cases, yes: for example, this can happen if you fall too far behind on business credit card repayments.
Business credit cards are usually used for specific and day-to-day business expenses that can be repaid each month. Business loans are generally for larger amounts, so you’ll usually have to put up more collateral and/or go through more extensive credit checks.
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Grace was a Finder writer specialising in credit and loans. She's been writing about personal finance for several years and enjoys helping consumers sort the facts from the fluff. See full bio
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