Getting a business credit card can be a great way to separate personal and business finances, earn rewards, and build your business’s credit history. However, the application process can seem daunting if you don’t know what to expect. In this comprehensive guide, we’ll walk you through everything you need to know to successfully apply for a business credit card.
Determine Your Business Credit Needs
Before applying, think about how you plan to use the card. Consider factors like:
Purchase Types
- What types of expenses will you use the card for? Common purchases include office supplies, business travel, online services/software, advertising, etc.
- Some cards earn higher rewards for specific categories, so match purchases to card categories.
Credit Limit
- Estimate your monthly spending to determine the credit limit you need.
- A limit too low results in declined transactions, while too high may signal risk.
Employee Usage
- Will employees be authorized users? You’re liable for their spending.
- If needed, choose cards with strong reporting features to track spending.
Reward Priorities
- Do you want cash back, points, miles, etc? Align rewards to your goals.
- Clearly defining your needs makes choosing the right card much easier.
Compare Business Credit Card Options
With your needs in mind, compare cards across major issuers like American Express, Capital One, Chase, Citi, and others. Key factors to consider:
Rewards Rates and Categories
- Focus on cards with higher rates in your top spending categories.
- Consider sign-up bonuses worth hundreds of dollars.
Annual Fee
- Entry-level cards often have no fee, while premium cards have fees up to several hundred dollars (offset by perks).
APR and Financing Offers
- Ideally, minimize interest by paying your balance in full.
- Options like 0% intro APR can provide flexibility.
Network Acceptance
- Visa and MasterCard have the widest acceptance. Know if the merchants you use accept the card’s network.
Management Features
- Review statement customization, spending reports, employee card options, integrations, etc.
Research thoroughly and make a shortlist of your top contenders.
Also Read: Business Credit Cards for Startups: A Complete Guide
Check If You’re Eligible
Business credit cards use different underwriting criteria compared to consumer cards. Confirm your eligibility before applying:
Time in Business
- Most issuers require 1+ years in business to qualify.
Business Revenue
- Annual revenue impacts approval odds. Minimums often around $50,000 – $100,000+
Business Structure
- Sole proprietors must use SSNs, while other structures can get an EIN.
Personal Credit Score
- Your score still influences approval, with minimums of around 650+
Existing Credit
- Low balances on current credit cards can help demonstrate responsible use.
Pre-qualifying tools can give initial eligibility estimates without a hard credit check. Avoid applying if your business seems unlikely to qualify – each application results in an inquiry which can impact your score. Building your profile first may enable success down the road.
Also Read: Business Credit Cards for Startups: A Complete Guide
Prepare Documentation to Complete the Application
To expedite processing and increase approval chances, have these items ready when you apply:
- Business name, address, contact info
- Social Security Number if sole proprietor, or EIN otherwise
- Date business formed
- Type of business (industry, services/products offered)
- Business financials – revenue, net income, projected revenue
- Estimated card spending patterns
- Bank account info
- Personal info – income, address, DOB, etc
This ensures you can provide all required details upfront. Try to apply when you have time to complete the full application. Rushing through it can lead to rejections due to missing information.
Also Read: Benefits of the United Business Credit Card for Your Company’s Success
Submit Your Application and Wait for Approval
Finally, it’s time to apply! You can submit applications online, in-branch, or over the phone with a representative. Expect the decision within 1-2 weeks. The card issuer will either:
Send an Instant Approval
If approved, you’ll receive a congratulatory message and can begin using your new card when it arrives. Just activate it using the instructions provided.
Request More Information
Issuers may ask for additional documents to verify eligibility if any data seems questionable. Quickly provide what they need to keep your application moving.
Decline the Application
Rejection is disappointing but common. Declines may indicate you need more time in business or higher revenues. Try building your business more, then reapply later or seek a different card.
Require a Security Deposit
For riskier applicants, issuers may offer conditional approval requiring a deposit equal to the card’s credit limit. This refundable deposit secures the line of credit until you demonstrate responsible use. Stay patient and persistent through the application process, and you’ll likely succeed in getting approved as your business grows.
Use Your New Card Wisely
Once approved, a business credit card is a valuable tool. Follow these tips to maximize benefits and build your credit:
- Use for business purposes only according to card terms
- Pay your statement balance in full and on time to avoid interest
- Set payment reminders and monitor transactions to prevent late fees
- Keep utilization low by limiting spending to 30% or less of your limit
- Review statements carefully and report any unauthorized charges
- Take advantage of card benefits like rewards, insurance, and cash flow flexibility
- Add employee names as authorized users if needed to manage spending
- Contact the issuer right away if your card is lost or stolen
Responsible habits lead to credit limit increases, perks, and great references when applying for future credit.
Next Steps After Getting Your First Business Card
One card is just the beginning. Here are some recommended next steps:
- Set up automatic payments to avoid late fees
- Download the card issuer’s app to monitor spending on the go
- Add your card to digital wallets for convenient and secure spending
- Use card benefits like rental coverage or extended warranty when possible
- Review statements and redeem rewards regularly
- Consider adding a second card in 3-6 months to extend your available credit
- As your business grows, apply for a card matched to larger spending categories
- Once you have several cards open, request credit line increases over time
The more you use business credit wisely, the more doors it opens for your company’s growth and scalability.
Also Read: All You Need to Know about Business Credit Card Pre-Approval in the USA
How is a 5 Star Business Credit Card better than an Office Depot Business Credit Card?
If you’re looking for a business credit card, you may be considering the 5 Star Business Credit Card and the Office Depot Business Credit Card. Both cards offer benefits tailored for small business owners, but the 5 Star Business Credit Card has some key advantages that make it a better choice overall. One major benefit of the 5 Star Business Credit Card is its generous rewards program. You’ll earn 2% cashback on all purchases with no limit on rewards earned. With the Office Depot card, you only earn 5% back at Office Depot and 1% back on other purchases. So if you want to maximize your rewards, the 5-Star card is superior. The 5 Star Business Credit Card also has a lower variable APR at 9.74%-18.74% versus 12.74%-21.74% for the Office Depot card. This means you’ll pay less interest on any balances you carry from month to month. Plus, the 5 Star card has no annual fee while the Office Depot card charges $55 per year after the first year. When it comes to welcome offers, the 5 Star Business Credit Card gives you $100 cashback after spending $500 in the first 3 months. The Office Depot card only provides 10,000 bonus reward points after spending $500 in 3 months. Overall, with its higher cash back earnings rate, lower APR, lack of annual fee, and better welcome offer, the 5 Star Business Credit Card is the superior option for most small business owners compared to the Office Depot Business Credit Card. Unless you frequently shop at Office Depot, you’re better off with the 5 Star card to earn and save more over time.
Conclusion
Applying for your first business credit card marks an important milestone for any company. It allows separating business and personal spending, earning rewards, and building your business’s credit history. In this comprehensive guide, we covered key steps in the application process, including assessing your needs, comparing card options, checking eligibility, gathering documents, and submitting your application. Once approved, be sure to use your new card responsibly by paying balances on time, keeping utilization low, and closely monitoring transactions. Responsible credit card habits will help qualify you for higher credit limits and more cards as your business grows. With the right card matched to your spending categories, you can enjoy significant convenience and benefits. For any business looking to accept credit card payments from customers, a merchant services provider like 5 Star Processing can fully manage your transactions. They offer fast, secure, and affordable payment processing optimized for online sales. When combined with a new business credit card to pay your expenses, you’ll have financial tools to streamline operations, track spending, and set your business up for success.
