If you want to get business credit cards for new businesses, side hustles, or startups, you do not have to wait to establish a business credit card history before applying. If you already have good credit represented by a credit score of 690 or above you can naturally qualify based on your personal credit card history.
It is not necessarily a deal-breaker if your new business or side hustle hasn’t made any profitable money yet then do not worry you can say so on the business credit card application. The issuer looks at your business information and finances to determine if you’re eligible.
Here, we are going to share with you how to tackle your application for business credit cards for new businesses or startups.
Also read: What is a merchant account? Do you really need one?
Business credit card application requirements
When you are applying for a business credit card, you’ll be mostly asked for both personal & business information. Here is the business information that you need for applying for a business credit card:
1. A tax ID number
A tax ID number is very important when you are applying for a business credit cards. But most entrepreneurs do not have any tax ID number. Then you can use your Social Security Number (SSN).
2. The business’s name
Every business has a different legal name. To get business credit cards for new businesses you should add your business name to the application.
Also read: How to Get a Business Credit Card with an EIN Only
3. The legal structure (entity type)
If you want to know how your business is organized then this is where you can identify how your business is organized. (Read down below for more details about legal business structures.) Did you know? most new or startup businesses in the United States do not have a formal legal business structure like a corporation, partnership, or LLC. They are sole proprietorships, meaning they’re owned by a single individual who essentially “is” the business. Sole proprietors can also easily qualify for business credit cards just like any other business.
4. Address and phone number
Every business has a phone number and address but if you don’t have any specific business location and separate phone number for your business. Then you can use your number.
5. Total annual revenue for the business
Revenue means how much money your business brings in. If you have a new or startup business then it’s possible you might not have any revenue as a new business. In that case, you can put $0 on your application.
6. Information about individuals who own 25% or more of the business
If someone else has more than one-quarter share in your new business, you will want to have their date of birth, name, Social Security number, & address handy in case the issuer requests it.
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7. Type of industry
This is not the same as the business structure. It’s very different from the business structure. This is “what you do” in your business, such as construction, transportation, or general services, for example:
The personal guarantee
When you are applying for small business credit cards for new businesses, you generally need to personally guarantee any debt on the card. This means that if your business fails for any reason, you are on the hook for any balance, & the credit card issuer can go after your assets. In this case, your business structure protects you from liability for company debts, as with an LLC or corporation.
Plus, the personal guarantee also helps new businesses to qualify for a card even if the business does not have any revenue. Because of the guarantee, the business credit cards application also requires details about you so that the issuer can run a personal credit check. This generally results in a hard inquiry on your credit card report and a temporary dip in your credit score. Here are some other details you may be required to provide:
- Date of birth.
- Name and job title.
- Phone number.
- Annual income.
- Social Security number (SSN)
- Ownership percentage of the business.
- Home address.
- Email address.
Also read: How to accept credit card payments without a merchant account?
What do I set as the business structure?
For credit card purposes you do not need to have walls or employees to consider for a business. You’re a business and you’re engaged in an activity that earns money, and you aren’t someone else’s employee while doing it. Also, if you do not have any idea what your business structure is, then you are most likely a sole proprietor.
The most common type of businesses are:
Partnerships
We know you have all guys already heard about the word “Partnership”. In a partnership, meaning in business two or more peoples share the company’s profits and responsibilities. Medical groups and Law firms are often partnerships.
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Sole proprietorships
Sole proprietors have included such people as Etsy shop owners, freelancers, rideshare drivers, or “taskers” who perform services through TaskRabbit. A sole proprietor owns an unincorporated business by themselves, keeps all the profit & is equally responsible for all the debts.
S corporations
S corporation is specially designed for smaller businesses. Which allows the business owners to avoid personal liability while getting any special tax treatment. The businesses that can qualify for S-corp status need to follow all these rules strictly.
Also read: Best 5 payment gateways for small businesses 2023
Limited liability companies
An LLC (A limited liability company) shields its business owners from personal liability without needing them to form a corporation.
Corporations
A corporation is entirely separate from its owners because it is a legal entity. This means the business owners bear less legal liability for the company’s debts.
Also read: Merchant service provider: Explained simply
Choosing a business credit card
We suggest you always choose the best credit card for your business and the best business credit cards for new business is one that aligns with your requirements and spending patterns. Down below, we share with you some key factors that help you to choose the best credit card for your business.
Rewards
Did you know? business credit cards tend to have richer sign-up offers than consumer cards. While those offers are very attractive but remember don’t let them distract you from the card’s ongoing benefits and rewards. Concentrate on whether you spend often in the card’s rewards and benefits categories. This way, help you to get more value from the card.
Credit reporting
Every business wants to grow their business but if you also want to build your credit card history make sure your business credit card reports to Bradstreet & Dun, Equifax, and Experian, at the very least.
Also read: Best offshore high risk merchant account providers
Travel-friendly features
If you do international travel because your business requires a lot of international travel and you want to save your money then you can choose a card that doesn’t charge foreign transaction fees. When choosing a business credit card remember to avoid complications with payments overseas to a network with broad merchant acceptance like MasterCard and Visa.
Annual fee
Credit Cards with annual fees often offer benefits that more than outweigh the cost, but there are a lot of excellent business credit cards with no annual fee. Also, consider that you may be able to deduct the fee as an enterprise cost.
Also read: How to set-up credit card for small businesses?
Conclusion:
In the above article, we shared with you how you can apply for business credit cards for new businesses and what are the requirements for a business credit card. For more information like this feel free to contact us at Your Merchant Services Rep.
