A Small Business Credit Card Application Guide

Getting a credit card for your small business can be the best thing you can do for your accounting department. There are many things, both good and bad, that you should know about small business credit before you fill out a small business credit card application. For example, you will be able to assert more control over your employee spending and your bookkeeping records by opening a credit account for your business. On the other hand, in some cases, your small business spending habits can impact your personal credit. So here are five things you should consider before filling out a small business credit card application.

Small Business Credit Card Application

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Considering Personal Credit

If your business is brand new, financial institutions will use your personal credit as the determining factor for whether your business gets a credit card or not. If your personal credit isn’t that good, or you don’t want extra credit checks on your credit history, this can be an obstacle in obtaining small business credit cards.

Rules Against Using Personal Credit Cards for Businesses

Carefully look over the terms of your personal credit cards and you should see a statement somewhere that you cannot make any company charges on it. Credit companies don’t want you to mix personal expenses and transaction charges together on individual cards. To set up a professional and legal business, you need a business credit card for business costs.

Control Over Employee Spending

Small business credit card applications have a place where you can request additional cards for employees with preset limits. With certain restrictions in place, you can allow your employees to use credit cards without worrying about them going overboard.

Gain Incentives for Your Business

Small Business Credit Card Application

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Just like with personal credit cards, small business credit cards offer rewards–or incentives–for making purchases with their card. Incentives range from cash back rebates and travel miles to discounts for rental cars and hotel rooms. Since businesses are very valuable customers to credit card companies, the incentive programs for business credit cards are usually better than those available to personal accounts.

Provides Convenient Monthly Reports

The majority of small business credit cards come with convenient monthly statements that make it easier to track purchases and update accounts. The bookkeeping department will love you for getting a business credit card for the company!

Is a Small Business Credit Card Right for You?

The purpose of a business credit card is to meet the needs of the firm owner. They come with a high limit, with low-interest rates and additional automatic benefits. Detailed reports and excellent customer service can also be part of a small business credit card package, which is why the application can often require some documents for verification.

How Do You Begin?

Often, even when you’re a new business, you’ll receive a flood of small business credit card applications in the mail. You can also find applications online or through a branch office of your bank. These last two sources tend to garner faster results.

Before you start an application, however, it’s best to gather together a few documents that are often required by credit card companies. For a small business credit card application, you’ll be asked to provide proof of a business license. You may also be asked to provide documents to verify your good credit standing, especially if your business is a sole proprietorship. These materials might include last year’s tax returns or your latest billing statements.

What Should You Look for in Your Small Business Credit Card Application?

  • Be cautious

It’s easy to get carried away with all the package benefits that are available. Keep in mind that this process is first and foremost about credit. As such, you only want those additional benefits that best serve your particular needs. For instance, if you rarely fly in the course of doing business, a credit card that awards you frequent flyer points doesn’t serve your interests.

  • Search for payment flexibility

Primarily, you’ll want to find a credit card with a “grace period” that works to the advantage of your business. A “grace period” is the allowable time you have before the credit card company begins to charge you interest on new purchases. This time, when part of your benefits, often runs 20 to 25 days. Be aware, though, those grace periods are not the same for all credit cards. Most credit card companies will charge you interest immediately for new purchases unless you’ve paid off your previous month’s balance in full.

  • Ask for the lowest interest rate available

Often, just by asking, you can receive a lower rate. By keeping the interest rate low, you enable your business to use its funds more wisely on its immediate needs.

Featured Image Source: Thinkstock/gpointstudio

Posted on May 18, 2023