Business Credit Cards
Our objective reviews will help you pick the right business credit card.
What Are 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.
Who Qualifies for a Business Credit Card?
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.
What are the Advantages of Using a Business Credit Card?
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.
What Should You Consider Before Applying for a Business Credit Card?
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.
How Do You Apply for a Business Credit Card
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
Business Credit Card
A business credit card is a credit card intended for use by a business rather than for an individual’s personal use. Business credit cards are available to businesses of all sizes and can help those businesses build a credit profile to improve future borrowing terms.
Annual Percentage Rate (APR)
Annual percentage rate (APR) refers to the yearly interest generated by a sum that's charged to borrowers or paid to investors. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan or income earned on an investment. This includes any fees or additional costs associated with the transaction but does not take compounding into account. The APR provides consumers with a bottom-line number they can compare among lenders, credit cards, or investment products.
Unsecured debt refers to loans that are not backed by collateral. If the borrower defaults on the loan, the lender may not be able to recover their investment
because the borrower is not required to pledge any specific assets as
security for the loan.
Secured Credit Cards
Secured credit cards can be used by borrowers with bad credit or little credit history to finance day-to-day purchases while they build their credit. Using a secured credit card, cardholders deposit funds with a card issuer, and can then spend up to that amount on their credit card before needing to pay down their balance.
The interest rate is the amount a lender charges a borrower and is a
percentage of the principal—the amount loaned. The interest rate on a
loan is typically noted on an annual basis known as the annual percentage rate (APR).
Employer Identification Number (EIN)
An employer identification number (EIN) refers to a unique identifier assigned to a business entity by the Internal Revenue Service (IRS) so it can easily be identified for tax purposes. EINs are commonly used by employers for the purpose of reporting taxes. It's a nine-digit number and formatted as XX-XXXXXXX. Businesses can apply for EINs directly through the IRS, which usually issues them immediately.
A billing cycle is the interval of time from the end of one billing statement date to the next billing statement date for goods or services a company provides to another company or consumer on a recurring basis. Although billing cycles are most often set on a monthly basis, they can vary in length depending on the type of product or service rendered.
Small Business Loans
Short-term business loans, also called short-term commercial loans,
can provide much-needed funding for business owners in a pinch. Whether
you need to cover a gap in your cash flow, take advantage of a promising opportunity, or handle some emergency expenses, a short-term
loan can give you quick and easy access to the financing you need.