5 Business Credit Card Requirements You Should Know About
With a quality business credit card, you’ll have access to the capital that you need, without having to wait for customer sales. Still, it’s important to consider interest rates, benefits, and other financial services being offered prior to applying for a business credit card.
In this post, we’ll discuss some of the most common business credit card requirements that you should be aware of. By being proactive and organized, you’ll be in a much better position to successfully get approved for a credit card that’s right for your business.
Are You Aware of These Business Credit Card Requirements?
1. Business Name and Contact Information
Regardless of your business’s industry, there is some basic information that all credit card companies will require. Although it may seem obvious, your business will need to have an official name. Even if you decide to change your company name in the future, having a working name is still a universal necessity.
You’ll also need to provide your business address, a phone number, and company email address. While many new businesses rely on the founder’s personal contact information, it’s still generally advised that you don’t leave any sections of a credit card application blank.
2. Business Structure
To keep your personal and business finances separate, it’s generally a good idea to declare your business as a distinctive legal entity. Even if you’re currently the only employee, declaring a sole proprietorship can still help you manage your financial liabilities. If you’re not the sole employee, you may want to consider establishing a legal partnership or even a limited liability corporation.
By establishing your business as a legal entity, your business will appear much more legitimate to credit card companies. Plus, they’ll have a better understanding of who they are lending which could enable you to qualify for better cards.
3. Credit Score
As is the case with individual credit cards, your credit score will matter when applying for a business credit card. If you own a new business with a limited financial history, your personal scores (Equifax, Experian, Transunion) will probably be considered. However, the longer your business has existed as a distinctive legal entity, the less likely your personal credit history will be considered during the application process.
4. Financial History
Businesses that can prove they have reliably paid their lenders in full and on-time should be able to secure a good credit card with a low rate. Fortunately, there are numerous ways for your business to defend your lendability.
It’s also important to note that past income statements and current balance sheets will probably be considered during the lending process. Having detailed tax returns, expense reports, and revenue reports will also make it easier for you to prove your financial legitimacy.
5. Projections of Future Cash Flows
In addition to past and current financial information, your business may also be asked to provide future projections of cash flows. Your ability to qualify for a business credit card will mostly be determined by the perceived likelihood that your debts will be repaid.
Even if you (or your business) currently has an excellent credit score, anything else you can do to reinforce future payment expectations will be helpful. However, despite the fact that most credit card companies want to see positive future cash flows, you should still be honest and use figures that are rooted in reality.
There is no magic formula that’ll guarantee you’ll be approved for a business credit card, but if you can provide a wide range of financial information, qualifying for the business card that you need will be easier. By having the information mentioned in this article organized and on hand, you’ll be in the best position to move your enterprise forward.
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.