Introduction: The Importance of Having a Business Credit Card

As a business owner, having a business credit card can provide you with a range of benefits including improved cash flow, expense management, and reward programs. Not to mention, it can help you establish a credit history for your business separate from your personal credit. In this article, we’ll explore 10 simple steps to secure your first business credit card, the mistakes you should avoid, the top business credit cards on the market today, and tips for maximizing your rewards.

10 Easy Steps to Secure Your First Business Credit Card

Securing your first business credit card doesn’t have to be a complicated process. Here are 10 easy steps to follow:

Step 1: Determine Your Business Needs

Think about your business expenses and the type of rewards that could benefit your company. Determine the limit and the type of card that would best serve the needs of your company.

Step 2: Understand Your Credit Score and Credit History

Most credit card issuers are interested in your own personal credit history when evaluating you as an applicant for a business card. Make sure you know your credit score and take time to improve it before submitting an application.

Step 3: Research Various Business Credit Card Options

There are numerous card options on the market and it’s important to choose the best according to your business’s needs, expenses, and rewards.

Step 4: Check Your Personal Credit Report for Errors

Check for any errors on your credit report. Address them, get them fixed, and wait until it is updated before submitting an application. Errors can significantly impact your credit score and creditworthiness when trying to secure your first business credit card or loan.

Step 5: Prepare Your Business Financials

Ensure that your business financials are up-to-date, accurate and organized. This includes your company’s balance sheets, income statements and tax documents.

Step 6: Choose the Best Card for Your Business Needs

Focus on your business needs such as low-interest rates, cash-back rewards or airline points according to your expenses and targets.

Step 7: Gather Your Application Materials

Many issuers seek proof that you own the company or have been authorized to make financial decisions on behalf of it. Prepare your business financial documents, identification proof such as driver’s license or passport and other requirements set by the chosen card issuer.

Step 8: Submit Your Application

Follow the instructions on the card issuers website to apply for the selected business credit card. Double-check the application for accuracy before submitting it and aim to submit as soon as your business documents are up-to-date.

Step 9: Follow Up on Your Application

It’s important to anticipate delays and check up on your application status. You can do this through email or phone according to the instructions set by the card issuer.

Step 10: Activate and Use Your Card Responsibly

Once your application is approved, activate your card and ensure you use it effectively and responsibly. Only use it for company expenses and consider setting up automated payments to avoid credit card fees.

5 Mistakes to Avoid When Applying for a Business Credit Card

Here are some of the most common mistakes to avoid when applying for a business credit card:

Mistake 1: Applying for Too Many Cards at Once

Submitting too many applications at once can be perceived as desperate for credit, potentially harm your credit score and negatively impact your chances of obtaining a business credit card.

Mistake 2: Not Checking Your Personal and Business Credit Scores

Always check both your personal and business credits scores before applying for a business credit card. This helps identify any incorrect information or errors that should be addressed beforehand.

Mistake 3: Failing to Understand the Terms and Conditions of the Card

It’s always important to read and understand the terms of the card such as interest rates, credit limit, the annual fee, rewards, and payment terms before submitting the application.

Mistake 4: Using Too Much of Your Available Credit

Using a considerable amount of your available credit can harm your credit score, and some card issuers may view this as a sign of financial instability or less creditworthiness.

Mistake 5: Ignoring Your Credit Utilization Ratio

It’s important to remember that credit utilization ratio is one of the most critical factors in credit scores. To protect your credit score and increase your chances of obtaining a business credit card, aim to keep the usage of your credit card below 30% of your available credit limit.

The Top Business Credit Cards on the Market Today

Here are our recommendations of the top business credit cards based on reward programs and the cardholder benefits:

Card 1: Features, Benefits, and Rewards

• Interest rate: 0% for the first 12 months and 14 – 22% annual percentage rate (APR) after
• Annual fee: $95 (waived for the first year)
• Sign-up bonus: 35,000 miles after spending $5,000 on purchases in the first three months
• Reward program: 2 miles per dollar spent on every purchase

Card 2: Features, Benefits, and Rewards

• Interest rate: 0% for the first 9 months and 13.99 – 23.99% APR after
• Annual fee: $0
• Sign-up bonus: $200 statement credit after spending $3,000 on purchases in the first three months
• Reward program: 1.5% cashback on every purchase

Card 3: Features, Benefits, and Rewards

• Interest rate: 0% for the first nine months and 13.74 – 19.74% APR after
• Annual fee: $0
• Sign-up bonus: $500 in cashback after spending $5,000 on purchases in the first three months
• Reward program: 1% cashback on every purchase

Comparison of the Three Cards

There are numerous factors to consider when choosing a business credit card. Do you prefer miles, cash rewards or statement credits? Is it important for you to avoid annual fees? This chart provides a good start to begin shortlisting according to your needs:

How to Build Business Credit to Qualify for a Business Credit Card

Building and maintaining a good credit score takes time, but once you have it, securing a business credit card becomes much smoother. Follow these steps to build good business credit:

Step 1: Incorporate or Form an LLC

Incorporate or Form an LLC helps separate your business’s liability from your personal assets, easing the process of building business credit.

Step 2: Get an Employer Identification Number (EIN)

Getting an EIN number proves that you’re a legally recognized entity, and it helps you build your business credit history faster.

Step 3: Open a Business Bank Account

Building business creditifies you need to keep your personal and business finances separate. Having a business bank account helps you track your expenses and prove to creditors that you run a legitimate business.

Step 4: Make Payments on Time

Making timely payments for all of your business expenses is crucial, including rent, loans, and credit bills. On-time payments establish you as a low-risk borrower to lenders.

Step 5: Establish Trade Lines with Vendors and Suppliers

Building a good rapport with your supplier increases the number of trade lines you establish for your business; timely payments in turn help you build a credit history that can be used positively.

Step 6: Monitor Your Credit Reports

One of the most important things to do in terms of preserving business credit is to track your credit report regularly to watch for any errors or discrepancies. Being aware of any score changes is crucial, especially when it comes time to apply for a business credit card.

Maximizing Your Business Credit Card Rewards: Tips and Tricks

Here are the top tips and tricks to help you maximize your rewards on business credit cards:

Tip 1: Choose a Card with Rewards That Align with Your Business Needs

Select the card that focuses on the rewards that are more important to your business such as cashback rewards or frequent flyer miles depending on your expenses.

Tip 2: Use Your Card for All Business Expenses

Use your business credit card for all your company’s expenses to maximize your reward points.

Tip 3: Stay Within Your Credit Limit

Avoid crossing your credit limit to avoid penalty dues, and monitor your account balances regularly.

Tip 4: Pay Your Balance in Full Each Month

Pay your balance in full and avoid interest rate charge fees, ensuring faster reward accumulation.

Tip 5: Take Advantage of Sign-Up Bonuses and Special Offers

Don’t forget to take advantage of sign-up bonuses and special offers specific to your card while the deal lasts.

Tip 6: Monitor Your Rewards and Redeem Them Strategically

Monitor your rewards regularly and plan your redemptions accordingly. Choose options that benefit your business, such as travel or account credits.

Conclusion

Getting a business credit card can be daunting, but it doesn’t need to be challenging. By following these ten simple steps, understanding common mistakes, and researching the best business credit cards for your company, you’ll be able to access the finances your business needs. Remember, regular monitoring of your credit score, timely and on-budget payment and maintenance of the good utilization rate is critical to establishing and maintaining excellent business credit, creditworthiness, and the ability to access future financing opportunities.