For people who’re starting a business, regardless of the size, applying a business credit card is always a wise move. Because it not only helps business owners deal with cash flow issues but also separates their personal and business finances. There’re quite a few benefits to do so. Here’s further information about major benefits as well as the steps to apply for one.
The benefits of business credit card:
- Separate the business and personal finances: It will get things easier when you claim the annual tax return. And you don’t have to be personally liable for trouble arises from legal issues or debt of your company.
- Offer fast and easy access to cash flows: A business card could offer you cash with an interest rate even lower than a loan in a faster and easier approach.
- Build business credit: Business credit cards designed for new businesses will help you get more business credit scores.
- Give rewards: Business credit cards usually offer users rewards like redeemable points, gift cards, cash back, miles and so on. Some extra perks such as early access to major event tickets are also available.
How to apply?
There’re many types of businesses eligible for the business credit cards. If you earn money by selling items or services, you can apply for one. Besides, if you need the card for some reason, like buying supplies, you can also try to apply. Once you decide to apply for a business credit card, you will take the following steps.
First, compare the cards and find the one that suits you best. To select the most beneficial one for you, there’re several things you need to focus on:
- APR: The amount of interest you pay for the year is determined by the Annual percentage rate (APR). Choosing a card that offers a 0% introductory APR enables you to pay no added interest for a period of time (9 to 12 months).
- Fee: Some cards may offer abundant rewards but charge you much higher fees per year, which may compromise the benefits you get. Also, avoid the cards that charge foreign transaction fees.
- Rewards: Compare the rewards of different cards and find those closest to your needs. Remember to make sure you meet the requirement of minimum spending of the card.
- The card type: There’s some difference between credit cards and charge cards. The former allows you to carry a balance, while the latter needs you to pay monthly bill. Charge cards will not charge interests, but you’ll lose flexibility as you have to pay the minimum per month. So you’d better avoid the cards if you have no stable cash flows.
Second, make sure you meet the requirements such as having enough personal credit scores. Because different cards have their own minimum credit score. After you check your credit scores and select the particular card you qualify for, it’s necessary to gather what you need to fill out your application. Here’s a list of materials you may have to prepare.
- Legal name of your business
- The phone number and mailing address of your business
- Business entity or structure
- Your legal name, tax identification number, contact information and social security number
- Industry type
- Your role in the business
- Time in business
- The number of employees
- Annual Business Revenue and Estimated Monthly Spend
- Your total annual income
- Your personal credit history
- A personal guarantee with your application
Finally, after you file the application, just wait for the approval. Usually it won’t take long to get a reply. Even you are denied, you will find the denial reason in the mail and make changes to improve the next chance of approval. Once you are approved, you can get your business credit card soon. Then you can activate the business credit card and use it legally and responsibly.