How to Apply for a Small Business Credit Card
Some entrepreneurs believe that business credit cards are only for large companies. While corporate credit cards are common, and generally limited only to big corporations, there are other options available to small business owners. In addition, there are credit cards available to business owners with poor credit scores.
In this post, we’ll outline six tips for small business owners applying for business credit cards. You may feel overwhelmed by the variety of options and their numerous application steps. However, by being thorough you can find the right credit card for your business!
1. Understand Your Situation
Before you even begin researching the right credit card for your small business, you should first understand your business’s current situation. Consider the following aspects:
– Your business’s credit score
– Your personal credit score
– What credit cards you currently have
– Existing debt
– Revenues and profits
– Why you need a credit card
The above list is not exhaustive, but will get you started. In addition, you should consider the type of business you own. A corporation is different from a sole proprietorship, which is different from a partnership. Therefore, these differences can impact your application for a small business credit card.
2. Prepare Financial Documents
There are many financial factors a bank will want to examine before issuing you a small business credit card. A creditor will require various forms, such as proof of income, tax statements, and other financial documents.
Before you apply for a small business credit card, you should gather and review these documents. This will make the application process go more smoothly. Make sure that these documents reflect your business’s current situation. For instance, if last year’s tax forms show financials that are majorly different than what they are now, make sure you can explain why.
3. Do Your Research
Don’t fall for the first business credit card commercial you see! Before applying, you should research a variety of cards to determine what the best option is for your business. Circumstances can vary from business to business. The right credit card for another business owner might not be the right credit card for you.
It’s tempting to immediately turn to the most well-known creditors. However, these creditors won’t necessarily offer the best terms. Frequently, you’re paying a premium for the name on the card, rather than the actual terms and funds provided. Make sure you consider a variety of financial providers so that you can get the best terms for your small business.
4. Read the Fine Print
Take time to compare each credit card, and do more than read the brochure and bullet points. Make sure you examine the fine print as well! Often, credit card companies will try to lure you in with a good introductory interest rate, but increase rates over time. To avoid being unaware of what future charges will be, ensure that you understand what the “real” interest rate is.
Make sure that you know about these factors:
– Late fees and penalties
– Grace periods
– Interest rates
– Amortization terms
Another important concept to understand is the CARD Act. The CARD Act provides various protections to consumers, such as a minimum 21-day grace period. In some cases, small business credit cards do not qualify for these protections. However, many banks will extend CARD Act benefits to their small business credit cards.
5. Speak with A Representative
A lot goes into choosing a small business credit card. Once you create a shortlist of potential small business cards you want to apply for, call the credit card company directly and ask to talk to a representative.
The questions you ask should be based on the research you conducted during the previous steps. Some sample questions you might ask are:
– How long is the grace period?
– How much of a notice will be provided if interest rates rise?
– Can business and personal rewards be combined?
It’s best to be thorough. Even if you believe you know the answer, it’s still not a bad idea to ask. Plus, you may uncover some potential risks or other issues that you hadn’t considered.
6. Apply to Multiple Small Business Credit Cards
The last step is to fill out the actual small business credit card applications. In most cases, this means completing forms online and providing the necessary documentation. As you complete the forms, make sure you read everything carefully. Don’t lie and or misrepresent anything on the form. Doing so could create headaches and perhaps even legal complications in the future.
It’s best to apply to several small business credit cards and then review all your options. After you apply, don’t jump at the first small business credit card offered to you. Instead, field multiple offers, read the fine print, and then make the choice that is the best fit for you and your business.
Sometimes the first offer is not the best offer. As a business owner, you owe it to yourself and your business to sign up for the best small business credit card available.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.