As a small business owner, you might be wondering how to apply for a credit card, and what the benefits of having a dedicated credit card are. These are not uncommon questions to have, as your first instinct may be that it would be better to pay cash for expenses or to even use a personal credit card.
In addition, you may have poor credit or a lack of credit history that could be preventing you from applying for a business credit card. However, there are plenty of financial institutions that cater to small business owners just like you, helping them apply and receive approval for a credit card to use specifically for your business.
In this article, we’ll explain how to apply for a credit card and the benefits of getting one.
Why should I get a business credit card?
Again, your initial instincts may be to either pay for your business expenses using cash or a check rather than applying for a business credit card. Or, you may also think it’s easier to simply use a personal credit card you already have to make purchases for your business.
There are several reasons, though, why getting a business credit card would be in your best interest. The first and most important is that having a business credit card will allow you to easily separate your personal expenses from your business expenses, all business owners need to avoid commingling.
This is extremely important when it comes time to file your taxes at the end of the year. You’ll want to be able to easily access all your business expenses paid for on your credit card so that you can write them off as deductions to lower your taxable income.
Another reason to apply for a business credit card is so that you can build good credit in case you need a financial loan in the future. If your business hasn’t established credit history with a financial institution yet, your personal credit history will most likely be used to determine your approval.
Finally, the financial flexibility provided by a business credit card could allow you to invest in other areas of your company while paying your everyday expenses down over time.
How to apply for a credit card
Here’s how to apply for a credit card, with specific information that financial institutions will require from you.
The first thing you need to do when applying for a business credit card is to do your research on the type of card that would work best for you.
Are you looking for a secured credit card or an unsecured credit card?
Are you looking to earn points or cashback on purchases?
Once you have decided, it’s time to apply for one.
The bank will ask for certain documents or information, so it is better to have them ready. You’ll be asked to provide:
1. Your legal business name
You should have already formed an official business such as an LLC or a DBA. If you have, you will use the official business name on your credit card application.
2. Your tax identification number
While you don’t need an Employer Identification Number (or EIN) to apply for a business credit card, it does make it easier to gain credit and also file your taxes. It is free to get an EIN from the IRS, and it will allow you to make an application without providing your Social Security number.
3. Your role in the business
Most financial institutions will require you to explain your title and your role in the business when you apply for a credit card. They’ll also want to know what type of business you run.
4. Your contact information
Like any application for credit, you’ll need to provide your basic contact information, such as an address, phone number and email address of the business.
5. How long you’ve been in business
Financial institutions will also want to know how long you’ve been in business as well as the number of employees you have, if any.
6. Your annual revenue
Financial institutions will often want to know what your annual revenue is, and they’ll want you to provide documentation that supports what you claim. They will use this information, in part, to determine how much credit they are willing to extend to you.
7. Your personal income information
You’ll also often be required to provide your personal income history and your personal monthly expenses. This is important for financial institutions to have, especially if your business doesn’t have a credit history, as you’ll be the one responsible for the payments.
8. Your estimated monthly spend
The final step in how to apply for a credit card for your business is to estimate how much you’re likely to spend on the card each month. Financial institutions often require this information to determine how risky you may be in terms of paying them back.
How to apply for a credit card without an SSN
One roadblock that might stand in your way of applying for a business credit card is if you don’t have a Social Security number. Some financial institutions will require you provide your SSN on your credit card application, even if the card will be used for business expenses only.
There are some ways around it, though. The first thing you have to do is find a credit card provider that will allow you to apply with only an EIN or, more likely, an ITIN, or Individual Taxpayer Identification Number. Once you find such a provider, then you should apply for an ITIN, if you haven’t already.
With your ITIN in hand, you can then use the steps above for how to apply for a credit card.
It’s time to fund your small business
If you are looking for help in funding different aspects of your business, a small business credit card might be right for you. There are plenty of benefits to having a business credit card, and how to apply for a credit card is laid out above for you.
However, if you are looking to obtain funding to invest in your small business or to pay ongoing expenses, a small business loan may be the better option for you. At Camino Financial, our small business loans are easy to apply for, have low fees and allow you to borrow more money than a business credit card would.
We are constantly working to provide our customers with the best possible solutions for their business financial needs, and we live up to our motto of “No Business Left Behind” by also providing information and educational resources to thousands of other small business owners like yourself.
Request a quote for a business loan with Camino Financial today, and you could be on your way to growing your business to new heights tomorrow.