How to Get a Business Credit Card for a Startup

Business credit cards function just like personal credit cards but have unique features built specifically for businesses. With a business credit card, you can start to build a business credit history that is separate from your personal credit history.

Business credit cards report to business credit agencies, not personal credit agencies. This is important because it means that your payment history will not impact your personal credit score. It's also important because you will start to build business credit which can open up lines of credit or loan opportunities.

Also, business credit cards often come with higher credit limits and lower interest rates than personal credit cards. This means your business has more financial resources to pull from without having to worry about high interest rates adding even more debt to your company.

Credit card companies are also starting to include budget management features for businesses. You can have as many credit cards made for your team as you need and set automatic spending limits for each one.

Businesses that set up their own business credit card are taking advantage of free opportunities only provided to those with a card. Below are some of the major reasons your business should have a business credit card:

Establishing business credit is key to building a strong financial foundation for your startup. By using a business credit card and paying your balance in full and on time each month, you will start to build a positive payment history. This payment history will be reported to business credit agencies and will help you establish a good business credit score. A good business credit score will make it easier to get approved for lines of credit, loans, and other financing opportunities in the future.

One of the main benefits of a business credit card is the reward system. Different cards will have different rewards programs, but most will offer points, cash back, or travel miles for every dollar spent. These rewards can be used to save money on business expenses or to offset the cost of travel. Most companies even have reward tiers that offer higher rewards for more frequent payments. 

To appear as a startup with high-growth potential, you will want to keep your personal and business expenses separate. This means having a dedicated business bank account and credit card. By using a business credit card for all business expenses, you will create a clear distinction between personal and business finances. This will make it easier to track expenses, prepare for tax season, and maintain the corporate veil.

Startups that involve equipment, inventory,  or other high-cost items will need access to capital. A business credit card can provide this by offering a line of credit with a much higher limit than most personal credit cards. This will give your startup the financial resources it needs to make large purchases and manage cash flow. 

Most businesses have several individuals who make purchases for the entire company.  This can make it difficult to track spending and stick to a budget. Business credit cards come with features that allow you to set spending limits for each cardholder. This will give you more control over company spending and help you save money.

Different cards require different qualifications, but there are a few general requirements that all businesses will need to meet. Businesses are usually required to be located in the US, with the account holder being 18 years or older. 

Some credit companies require a good personal credit history to become approved, while other credit companies look at cash flow and business revenue to determine approval.

Technical financial features and complicated reward systems can make picking a business credit card difficult. To help save your business time, below are the three most important areas to look for when choosing a credit card. 

Rewards are a powerful feature for any business credit card. There are two general types of rewards: point-based and cash back. The type of reward system you choose needs to align with your business goals. 

In a point-based system, every purchase made gives you points based on the categories of spending. For example, travel expenses might be worth 7x points while hotels might be worth 5x points. You can then apply those points to future eligible purchases. 

The cash back system works similarly, except instead of accruing points, your business gets a percentage of cash back on each purchase. If you spend $100, you could earn up to 1.75% cash back for a total of $1.75 back to your account. 

Companies that don't plan on traveling much won't value the point-based system as much as a cash back system. Determine what your company needs most before applying to a credit card company.

Important to all business credit cards is whether or not they help you build business credit. This is separate from personal credit and will be the main factor in future loans and lines of credit. Because of its importance, it would be a waste for your business to use a credit card that does not build a credit history.

Build business credit by ensuring the card reports to all three business credit bureaus: Experian, Equifax, and Dun & Bradstreet. 

Also, keep your balances low relative to your credit limit. This will help maintain a good credit score for your business. 

Perhaps one of the most important considerations to business credit cards is the fees and interest rates. 

Fees associated with an account can include wire transfer fees, foreign transaction fees, multiple card fees, and annual fees. Most modern business banking solutions are lowering fees to customers but increasing fees to merchants who accept the payments. 

Interest rates are even more important than fees. Any balance carried over from the previous month will be charged interest. This is why it's so important to keep balances low and always pay on time. Even a single-day late payment can result in a penalty APR of as high as 30%. This could do serious damage to your business's cash flow if not managed properly. 

Although applying for a business credit card is not complicated, there are several steps you need to take in order to be considered for approval. 

The first is determining your eligibility. As covered earlier in this article, every credit card company will have different requirements to become eligible. You might need an Employer Identification Number (EIN), be of a certain age, and reside in the US.

Next, you'll need to gather all essential information and documents. This could include:

• Business name
• Registered address
• Annual revenue
• Number of employees
• Estimated spending needs
• EIN

Before applying for a card, make sure your business is not maxing out any personal credit cards. Also, avoid applying for many personal credit cards before your business credit card. Using the tips above will help your business get a business credit card with relative ease.

BILL is the perfect card for startups who are establishing a credit history for the first time. The card has a low minimum balance requirement and accepts businesses of any size, from small to large. 

BILL is also a charge card, so you won't be able to spend more in one month than what your limit allows. On top of that, it has a credit builder system for companies that don't get approved for an unsecured line of credit.

Rho is an excellent option for startups that are already established and have large capital backing. The required minimum balance is $50,000, or your company needs to spend at least $5,000 a month to keep the account open. 

The account has a tiered cash back reward system that provides higher percentages for businesses that pay off a balance more frequently.

Tillful is best for startups that have either no credit history or even bad credit history. The card is managed using a secured line of credit which means you have to pay a deposit and your line of credit is equal to that amount. 

It's one of the only secured-based credit cards which reports to all three major business credit bureaus, so it's a great way to build credit history. 

Recommended: Read our guide to the Best Business Credit Cards for Startups.