How to Get a Business Credit Card
On my site, I spend most of my attention on credit cards focused on travel rewards, but there are many types of cards for all sorts of lifestyles and needs. Other different cards are oriented towards cash back, balance transfer, and even poor credit or student cards that allow you to build your score. Even travel cards can be further segmented into hotel and airline-branded cards. At the top of the hierarchy are two broad umbrella categories: Personal and business use. Aside from small business owners, most individuals end up getting personal credit cards. However, there’s a limit to how many one can reasonably have, and opening business cards can open new doors for multipliers and amazing sign-up bonuses not found in their personal counterparts. I guarantee most people would be surprised to find out they may actually qualify for business credit cards, even though they don’t own or operate what we perceive as a business.
You require neither a small business nor publicly traded organization to own a business credit card.
Do I Need to Own a Business to be Approved for a Business Credit Card?
When I suggest opening a business credit card to my friends and colleagues, most of them respond, “Well, I don’t own a business.” The real question boils down to, “Do you need to own a business to be approved for a business credit card?” Yes, you need to have a business, but no, you don’t need an established corporation or LLC to qualify as a business owner in most institutions. In reality, sole proprietorship qualifies for many business credit card applications, and most side gigs or hustles certainly count. For instance, if you were to sell old clothes on eBay or Craigslist, you would qualify for a business line of credit. Do you tutor students after school or over the summer? Sole proprietorship right there. What if you were to, say, write blogs for fun? Once again, sole proprietorship.
You can claim your blog as a sole proprietorship and qualify for a business credit card. Photo by Unsplash.
Do I Need to Establish My Personal Business Before Applying?
In general, I recommend having at least one traceable point of transaction under your belt before applying for a business card. This means that after selling one shirt on eBay, tutoring your neighbor for one hour, or purchasing a domain for your new blog, you would technically qualify as a sole proprietor.
There’s no need to embellish your business history or annual revenues to successfully apply for a business credit card. Photo by Unsplash.
Will There Be a Hard Credit Pull?
Yes, credit card companies and banks will look at your personal credit score when you apply for a business credit card. This means it will result in a hard pull on your personal credit file. That being said, once you’re approved, you are establishing a line of business credit that will not affect your rate of utilization or contribute to your personal score. The only caveat in this relationship is that defaulting on a business card payment will lower your personal credit score.
How Do I Find My Tax Identification Number (EIN)?
In a business credit card application, you’ll have to input your Employer Identification Number (EIN). If you own an LLC or corporation, you’ll already have an EIN for tax purposes. A sole proprietorship works differently; because you are the sole trader and the business is owned and operated by you alone, you can use your social security number (SSN) as your tax identification number.
As you can see on Chase’s business credit card application, one of the viable tax ID options to input is your social security number. Photo by Chase.
What Should I Report for My Annual Business Revenue or Sales?
People tend to overthink when they fill out the annual business revenue section on the application. If you already have a historical value to add here, that’s great! Even if you’re just starting your business with zero to minimal sales, you can estimate your annual income on your application. For instance, if you were to sell your clothes on eBay, you can project that you will make about $3,000 within the year. Do you or the bank know for certain that your annual revenue will be $3,000? No one can accurately predict the revenue you’ll be bringing in. For the purpose of applying for a business credit card, I generally recommend inputting a number no less than $1,000 per year, unless your historical values clearly state otherwise.
Do your best to project your business’s annual revenue, but don’t overthink it! Photo by Unsplash.
What Business Credit Card Should I Apply For?
As with personal cards, there are several great options for business credit cards. I strongly recommend initially focusing on Chase cards for three reasons. First, business credit cards generally do not count towards Chase’s 5/24 rule. That means you can expand your Chase portfolio without having to worry about being automatically denied for a personal Chase card, like the Freedom or Sapphire Reserve. Second, Chase business cards earn versatile Ultimate Rewards (UR) points. UR points are consistently valued at 2 cents per point and can be transferred to ten different airline partners and three hotel partners. Lastly, most Chase business credit cards have a downgrade path; in the event that you cannot justify paying an annual fee, you can downgrade to a no-annual-fee card, while continuing to earn UR points on daily expenditure.
The Chase Ink Business Unlimited can be used for everyday purchase. Photo by Chase.
Among the different options that Chase provides, I recommend the Ink Business Unlimited card. It has a lucrative sign-up bonus of $500 in cash back (or 50,000 UR points, valued at 1 cent each) after spending $3,000 in the first three months of account opening. The sign-up bonus can increase in value significantly if you also own a premium card, such as the Sapphire Reserve, Sapphire Preferred, or Ink Business Preferred. Since the Ink Business Unlimited card will earn UR points, holding one of the premium travel cards above will allow you to not only increase your points value to 1.25 to 1.5 cents each within the Chase Travel portal, but also transfer these points to airlines or hotels. This means the sign-up bonus can be worth $1,000 or more if paired and used correctly.
Ultimate Rewards (UR) points can be extremely lucrative. Photo by Chase.
The Ink Business Unlimited does not have an annual fee and earns an unlimited 1.5% on every purchase. Again, if you have one of its premium Chase siblings mentioned above, the earning rate can be 3% back on every purchase, since 1 UR point is worth 2 cents.
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Summary
A business credit card application can be initially intimidating if you’ve never filled one out before. However, most people will find it surprising that they qualify for business credit cards as sole proprietors, simply by having sold used goods online or by tutoring or nannying their neighbor. Business credit cards will open new doors for lucrative sign-up bonuses and have great multipliers that you can benefit from just everyday spending. I recommend getting a Chase business card as a starter for many reasons, and the Ink Business Unlimited is a great first choice. Follow my recommendations above and answer questions on the application truthfully, and you will be approved for a business credit card in no time!
