When employees use personal cards and must submit reimbursement claims, it becomes more difficult to track and categorize business expenses. And, instead of making one credit card payment, the company must make multiple payments if several people have business expenses. In addition to tracking expenses, companies can benefit from having a business credit card by earning rewards and other perks.
Cashback: You can earn a set percentage of money based on the total amount of your chargesPoints: You can get a set number of points for each dollar spent on qualifying purchasesMiles: You can earn a certain number of miles for money spent on eligible purchases0% introductory APR: Applies to balance transfers and/or purchases for a set period of time
There are three steps you should take to apply for a business credit card: check your credit score, research your options, and submit your application. Companies that issue business credit cards typically use one or more of the three reporting agencies – Equifax, Experian or TransUnion – to check personal credit scores. Each of these agencies allows you to check your score for free every 12 months. While each agency may have a different score for you, these scores are often relatively close. Through their online banking services, many banks will also show you your credit score at no charge. These scores usually come from one of the three reporting agencies. You can also use independent companies like Credit Karma or Credit Sesame, which have programs where you can check your score at no charge. However, the scores reported through third-party companies may not be as accurate as the agencies’ scores. In addition to your personal score, you should check your company’s business credit score if it has one. Unlike personal credit scores, the process of scoring credit for businesses is not standardized. Several companies provide scores to businesses, such as Dun & Bradstreet, Nav, Equifax, and Experian, and each has different computing methods. You’ll want to find out which company the card issuer you’re applying to is using and check your score with that company prior to submitting your application.
The company issuing the card
A good place to start your research is the bank where you have your business account. If you already have a relationship with a banker there, they can help you determine the best card for your needs. If you don’t have a business checking account yet, you may want to look at the bank that handles your personal accounts, since, again, you have a pre-existing relationship with them. After that, you can check the major national banks, such as JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, U.S. Bank, Truist, PNC, and TD Bank. However, don’t overlook regional banks, such as Bank of the West, BBVA Compass Bank, BMO Harris Bank, California Bank & Trust, Comerica Bank, HSBC, Huntington National Bank, M&T Bank, etc. However, all credit card issuers do not report your business credit activity to the commercial credit bureaus. If developing a business credit score and history is important, you’ll want to choose a card issuer that does make those reports. Finally, you’ll want to find a credit card issuer that supports your type of business. Some do not offer cards to solopreneurs or non-profits, for example.
Type of business credit card
As previously mentioned, you can choose a business credit card with points, cashback, miles, or a lower interest rate. Knowing how you and your employees will use the card will help with this decision. For example, if you do a lot of business traveling, you may opt for a card where you can earn miles. If you want additional items, you may want a card with points you can exchange for a variety of items in the card issuer’s redemption catalog. Or, you may simply want a straight cash back card so you can decide how you want to use the money you earn from using the card.
Interest rates
If you don’t carry a balance from month to month, the rate of interest may not be important. But, if it’s possible you’ll carry a balance, you may prefer a card with a lower interest rate. Some business credit cards have a 0% introductory APR, which may be beneficial if you have a large purchase coming up.
Annual fees
There are annual fees associated with some business credit cards, while other cards do not charge you each year to use them. Cards with annual fees often have additional perks, so you’d need to decide if these perks are worth the extra charge. Financial features: Many business credit card issuers include account management tools. Among the features may be the ability to download your card information into your accounting program. These features can make it easier to manage your finances. While it may not be possible to get everything you want in a business credit card, by thoroughly researching your options, you can apply for the card and to the card issuer that meets the majority of your needs. Each company issuing business credit cards has its own criteria and material requests. Typical information they’ll want to know includes:
Business name: the company’s legal name and DBA if there is oneBusiness address: physical and mailing (if different)Business phone numberTax identification numberBusiness type: corporation, partnership, LLC, sole proprietorshipIndustry: retail, technology, manufacturing, construction, etc.Age: how long has the business be runningRevenue: current revenue and revenue projections or expectationsExpenses: monthly and/or annualPersonal credit score: typically looking for scores of 670 or higherPersonal guarantee: from the business owner and/or their partners to cover the debtSocial security number, date of birth, and personal income: of the person applying for the business credit card
Once you’ve gathered your information, you can apply for a credit card. Most card issuers have a secure online portal for the application. For some banks, you can also apply in person. It can take anywhere from a few minutes to two weeks to learn if you’ve been approved. Then, if approved, it can take up to two weeks to receive your card. You’ll have one single monthly payment to the credit card issuer instead of multiple payments to staff members. You may be able to take advantage of incentives like cashback, points, or miles. You may want to start your research with the bank that holds your company checking account.
