Business Credit Cards

A business credit card is a credit card intended for business purposes rather than personal use. Most business credit cards do not allow the user to carry a balance month to month, and any purchases made on the card must be repaid on or before the payment date.

Business credit cards are used by sole proprietorships, limited liability companies, and partnerships to manage expenses and take advantage of perks like cash back, airline miles, and points.

Sole proprietorships, limited liability companies, corporations, and partnerships may qualify for a business credit card, but you might qualify if you have a side gig.

Different credit card companies have different rules about how long you must be in business to qualify for a business credit card, so be sure to read the fine print before you apply.

And until your business reaches a certain level of success and stability, most credit card companies require a personal guarantee of repayment. You should expect that your business's financials and creditworthiness, as well as your personal financials and creditworthiness, will be analyzed during the application process.

In a lot of cases, business credit cards are easier to qualify for than a loan, especially for businesses that haven't established a solid history of profitability. Many businesses find it's easier to track expenses using credit card transactions. Plus, businesses can use the credit card to pay for equipment, inventory, services, or other expenses while they wait for vendors or customers to pay their invoices. Additionally, these cards typically come with rewards, like cash back, points, and airline miles the company can use. And finally, business credit cards help businesses establish good credit.

It's important to remember that interest rates on business credit cards is typically higher than rates for regular consumer credit cards since businesses pose a greater risk to lenders and banks. And unlike consumer credit cards, business credit cards don't carry a balance month to month, so you'll have to pay the balance in full on or before the payment due date.

Because business credit cards carry such high annual percentage rates (APRs), you'll want to avoid making large purchases that cannot be repaid before the interest kicks in. You'll be left with a hefty bill.

You should also monitor who has access to the company card to ensure only approved expenses are charged. Employees who are entrusted with a company card should sign an agreement that spells out limitations on certain daily expenditures.

It might also help to set up alerts any time someone uses the card so you track when the card is used and be notified right away if it's used fraudulently.

Every credit card company is different, and each one has a different application process. But as a general rule, it should take between 10 and 20 minutes to complete the application, depending upon how much information is required. You'll need:

• Business name
• SSN (sole proprietor) or EIN (formal business entity)
• Business owner(s) names, titles, and SSNs
• Personal information for each owner: date of birth, mother's maiden name, address, income
• Business address and phone number
• Annual revenues
• Number of employees
• Business established date
• Industry that the business operates in
• Estimated monthly spend on your new card