Who can apply for a business credit card?

Whether managing a mom-and-pop shop or freelancing, running a business can be tough work. It doesn’t matter if you have 30 employees or none at all — having a business credit card can be a convenience that helps business owners get the supplies they need, when they need them, without worrying about how much cash they have on hand.

The perks that these credit cards offer can help businesses save money on the essentials, as well as make keeping track of expenditures easier, but who can apply for one? Continue on to learn more about who should get a business credit card and about the numerous benefits these cards can provide.  

Can I get a business credit card?

In order to get a business credit card you are required to be an “authorized officer” of a business, which means that you are in the legal position to enter into contracts with financial institutions on behalf of the business. Although you may think of a business as just a company that is registered as an S Corp. or LLC, these business structures are not necessary in order to obtain a business credit card. Sole proprietors who do freelance work, such as writing or graphic design, as well as those with other nontraditional businesses like dog walking or selling homemade crafts online, can also qualify for a business credit card.

Can you get a business credit card without a business?

This answer isn’t as straightforward as you might think.

Again, you don’t need a traditional business with employees or a storefront, but you do need to be earning income in some way that could constitute a business. For example, you could qualify as a business if you:

• Complete contract or freelance work and receive a 1099 tax form at the end of the year.
• Earn money through a gig economy app such as Uber, DoorDash or Taskrabbit.
• Buy items locally to resell online.
• Make money by babysitting, mowing lawns or doing odd jobs.
• Sell products as part of a home-based business such as Avon or Tupperware.

So long as you earn money for yourself in some way, you can be considered a small business.

The important thing is to be able to prove, if needed, that you have business income. For instance, a credit card company may request a copy of your tax form to see whether you report business income on a Schedule C.

Do I need an employer identification number to get a business credit card?

Traditional businesses typically have an employer identification number – known as an EIN – that they receive from the IRS. However, you don’t need an EIN to apply for a small business credit card. Instead, you can enter your Social Security number.

In fact, you generally won’t be able to apply for a small business credit card with an EIN only. Even if you apply for a business credit card with an EIN, you will likely be asked for your Social Security number as well.

That’s because most issuers ask applicants to provide a personal guarantee that they will pay back any amount owed if the business is unable to do so. To ensure you are able to meet that obligation, a credit card company will check your personal credit report as part of their application review process.

What credit score is needed for a business credit card?

Several companies calculate business credit scores, which range from zero to 100, but not every business gets one of these scores. If you’re self-employed, don’t make payments to vendors or don’t request a credit bureau track your business, you may not have a business credit score.

That’s another reason why you’ll need to provide your Social Security number even when applying for a business credit card with an EIN. And that means you may be wondering: Do you need good credit to start a business?

The credit score needed for business credit card accounts can vary by issuer. Most will want to see personal credit scores that are in the good to excellent range, and that means a score of at least 670 for many cards. A score of 700 or greater can improve your chances of approval.

Not all companies have the same required credit score for business credit card applications though. Some cards, such as the CardName, are designed for those building credit and may be available to applicants with fair credit scores.

Will my personal credit score be affected?

Unless you have a corporation that can apply for a business credit card with an EIN alone, your personal credit score will likely take a small hit when you first apply for a card. That’s because the card issuer will pull your credit report for review. Known as a hard inquiry, this can drop your score by a few points temporarily.

After that, any impact on your personal credit score will depend on the card issuer and whether you pay your bill on-time.

For example, Bank of America says it does not report small business credit cards on consumer credit reports so long as an account is in good standing. Meanwhile, Discover is said to report all information from small business cards to personal credit reports as well as commercial credit reports.

Generally speaking, it is more common for credit card companies not to report information about business cards on your personal credit report, but it’s always good to double-check before applying.

How to apply for a business credit card

You’ve decided to get a business credit card—great! Now it’s time to get together the documentation banks will need just as you did when you got your personal credit cards, except a bit more information may be required for your business credit card application.

If your business is registered, you will need to submit your Federal Tax ID number, or Employer Identification Number (EIN). If you’re a sole proprietor that is not a formal business entity, you will submit your social security number. You will also be required to provide information about the business, including your contact information, the length of time your business has been operating, your business’s annual income, how many employees you have, the type of business you operate and your monthly expenses.

If you don’t have an established credit history for your business, you may still qualify for a business credit card. If this is the case, the bank will consider your personal credit history when making their decision.

 ➤  LEARN MORE: How to apply for a business credit card

What are the best business credit cards?

Now that you have learned general information about business credit cards, you can explore individual cards to determine which one is right for you. Below you will find some of the best business cards available and the features that make them a good choice for any business owner.

For more options, please see our full list of the best small business credit cards.

To see the rates and fees for the American Express cards mentioned on this page, please visit the following links: CardName (See Rates and Fees); CardName (See Rates and Fees); CardName (See Rates and Fees)

Ask the experts:

Are business credit cards worth it?

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  Brian O’Connell

  Cardratings Contributor

Used wisely, business credit cards can be a significant convenience for business owners. A sound, perk-heavy business credit card can aid business owners in getting the goods and services they need to grow their company without shelling out cash on the spot. Business credit cards offer cash back, rewards points, and other benefits. Just make sure to pay your credit card bill on time every month.

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Brian O’Connell

Cardratings Contributor

A former Wall Street bond trader, Brian O'Connell is the author of two best-selling books: The 401k Millionaire and CNBC's Creating Wealth. His work is bylined in national finance and business platforms like TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, Fox News, and many others. Mr. O'Connell is a graduate of the University of Massachusetts and he currently resides in Palmas del Mar, Puerto Rico during the winter months, and in historic Bucks County, Pa., when Mother Nature cooperates.