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Every small business has expenses, from computer equipment and inventory to professional memberships and travel. Having a business credit card can help you keep your business expenses organized as you finance the expenses that allow your business to grow.
Anyone who sells goods or services for a profit (including freelancers, sole proprietors and new business owners) can apply for a small business credit card. If you don't have the business credit score to qualify, you may be able to open a business account based on your personal credit and income alone. Here's more on who qualifies for a small business credit card and how to get the card you want.
What Is a Small Business Credit Card?
A small business credit card offers a revolving line of credit you can use in your business to make purchases and finance expenses over time. A small business card is similar to a personal credit card, only it's geared toward business use. Business credit cards may have features that are helpful for businesses, such as categorized expenses that simplify your tax accounting and rewards for spending on common business expenses.
Getting a small business credit card can help you establish business credit. It also helps you keep your personal and business finances separate, which may be important if you need to show the IRS that you're operating a business and not a hobby, or if you have a corporation or limited liability corporation (LLC) and want to protect your personal liability
Learn more: Pros and Cons of Business Credit Cards
Who Can Qualify for a Small Business Credit Card?
Almost anyone who owns a business can qualify for a small business credit card. This includes homebased business owners, independent gig workers, freelancers, contractors, sole proprietors and startups. Though there's no guarantee every application will be approved, if you have good personal credit and fall into one of the following categories, you may be a candidate for a business credit card.
Gig Workers
Gig workers work independently doing short-term jobs, often through an online platform. Even if you do gig work as a side business, you may qualify for a small business credit card if you work as a contractor and not an employee.
Here are a few examples of independent gig work:
- Rideshare drivers
- Delivery drivers
- Caregivers
- Pet sitters
- Online tutors
Freelancers and Independent Contractors
Independent contractors and freelancers may work on longer-term projects requiring specialized skills like graphic design or web development.
Here are a few roles commonly filled by independent contractors and freelancers:
- Writers and editors
- Accountants
- Consultants
- Interpreters
- Graphic artists
- Photographers and videographers
- Web developers
- Virtual assistants
- Independent truck drivers
Sole Proprietors
Sole proprietors own their own unincorporated businesses. Though many operate as solo practitioners, others have employees or network with other self-employed contractors. Common examples of sole proprietors include:
- Plumbers
- House cleaners
- Hair stylists
- Caterers
- Landscapers
- Personal trainers
- E-commerce sellers
- Massage therapists
New Business Owners
Any type of business may qualify for a small business credit card, even if it doesn't have an extensive track record. If your business is brand new, you may need to qualify based on your personal credit and income. Still, getting a business credit card in the early stages of entrepreneurship can help you establish business credit. It provides a baseline from which your access to credit can expand.
How Do I Choose the Best Small Business Credit Card?
Start by taking stock of your personal and business credit, as well as your spending and financing needs. Then look for a business credit card that fits your profile and intended use. Here are a few ways to approach these issues.
Add Up Fees and Costs
Like personal credit cards, small business credit cards may come with a variety of costs. These often include annual fees and interest charges, plus additional fees for things like foreign transactions or late payments.
Evaluate Your Spending Plans
To find the best card for your business, think about how you're likely to use it. If you plan to use your business card to pay for occasional or small expenses only, finding a card that doesn't charge a large annual fee may be your top priority.
Consider Your Financing Needs
Some business owners use credit cards to pay for large expenses over time. A credit card may allow you to make necessary purchases without dipping into your cash, making it easier to manage your business's cash flow. If you plan to use your card to finance a work computer, equipment, inventory or other large business expenses, you may want to prioritize a low annual percentage rate (APR) and high credit limit.
Look Closely at Rewards and Cash Back
Using your business credit card to pay for large purchases or even regular expenses like your insurance and utility bills, supply runs or software subscriptions can earn you significant rewards—without racking up interest charges, as long as you pay your balance every month. If you're a significant spender, but not necessarily a balance carrier, consider looking for a card with a great rewards or cash-back program.
Ask About Cards for Employees
Some business card accounts offer additional cards your employees can use to make purchases, cover travel expenses or pay bills. These cards often come with easy-to-use card controls that let you set spending limits and turn cards on and off when not in use.
Factor in Your Credit Scores
A business credit card can help you establish and improve your business credit score. Like your personal credit score, your business credit score serves as an indicator of how well you manage debt. Making your business credit card payments on time and maintaining a low balance (or no balance at all) will help boost your business credit score.
Your business credit card account can affect your personal credit as well. Some business credit card issuers report your account activity only to commercial credit bureaus; others report to consumer credit bureaus as well. Accounts that are reported to consumer credit bureaus will affect your personal credit score. You can look for a card issuer that reports only to commercial credit bureaus, but business credit cards generally require you to personally guarantee repayment of your debt. Falling behind on your payments will likely affect your personal credit either way.
How to Apply for a Small Business Credit Card
Applying for a small business credit card is similar to applying for a personal card, only you'll need to supply information on both your business and personal finances. Here's a basic process to follow when you're in the market for a small business card.
1. Check Your Personal and Business Credit Scores
Checking your business and personal credit scores will help you avoid surprises and identify business credit cards for which you're likely to qualify. You can buy a one-time copy of your Experian business credit report and credit score or sign up for Experian's business credit monitoring services to access your report and score anytime. You should also get a free copy of your personal credit report, review it for accuracy and check your personal FICO® Score☉ Θ.
Your credit card application typically results in a hard inquiry on your credit report, which can cause a minor, short-term negative effect on your credit score. To help minimize the impact, be selective and apply for a card that fits your credit score range so you're more likely to get approved.
2. Choose the Right Card for Your Business
Check with your business bank or use an online marketplace to find small business cards that fit your credit score range. Compare annual fees, APRs, rewards and business features like extra cards for employees (if you need them). Also look for promotional perks, including:
- Intro offers: Some cards offer a cash back or rewards bonus for opening an account and spending a certain amount with the card in a given time period.
- Rewards programs: Rewards add up quickly when a program fits your spending. For example, some business cards give three times your typical rewards rate when you pay for social media and search engine advertising.
- Promotional APRs: If you need to carry a balance to cover startup spending, a card with a 0% or low-interest promotional rate can save you money.
Choose a card that suits your needs. If you're just starting out or you only need a card to cover occasional small expenses, choosing a no- or low-fee card with fewer bells and whistles is fine. You can always upgrade or add another card when your needs change and your business credit is more established.
3. Gather Your Business and Personal Information
Your small business credit card application will likely evaluate both your business and personal creditworthiness. Be prepared to provide personal information, including your name, Social Security number and annual income. Additionally, you may be asked for the following information about your business:
- Business name, address and phone number
- Industry
- Years in business
- Number of employees
- Annual business revenue
- Federal tax ID, which could be your employer identification number (EIN) or, if you don't have an EIN, your Social Security number (SSN)
4. Complete and Submit the Application
Submit your application in person at a bank branch, by phone, online or in-app. Though you may not have every one of these options with every card application, choose the method you're most comfortable with.
5. Wait for a Decision
Your decision may arrive within minutes, though in some cases additional review of your application can take days or weeks. Once your application is approved, you'll be mailed a card (or cards) within a week or so.
If your application is declined, the card issuer will send you an adverse action letter explaining their reasons for denying your application. You can ask them to reconsider if you have additional information to offer, such as income sources you didn't include in your original application. Otherwise, try to work on improving your credit and/or income and reapply later. Or look for a card with credit and income requirements that are more in line with your application.
Learn more: What to Do if Your Credit Card Application Is Denied
Frequently Asked Questions
What Credit Score Do I Need for a Small Business Credit Card?
Most small business credit cards are targeted to people whose personal credit scores are good or excellent, which translates to a FICO® Score of 670 or higher. If your credit is fair (a FICO® Score of 580 to 669), you still may be able to qualify for a business credit card, but you may start out with a lower credit limit and a higher annual percentage rate (APR). Getting a business credit card and using it responsibly can be a great way to build business credit—and make the case for a credit line increase down the road.
If your scores aren't where you want them to be, improving them before you apply for a business credit card could help you qualify for a card with lower interest rates and better rewards. Catching up on past-due accounts, making all payments on time and paying down credit card debt to reduce your credit utilization ratio (the amount of available credit you're using) can all help to improve your credit.
How Long Do I Have to Be in Business to Get a Small Business Credit Card?
There's no universal requirement for how long you need to be in business to qualify for a small business credit card. Some card issuers prefer that you be in business for at least a few months, but you may be able to get approved for a business card even if your business is "prerevenue." If your business is new, the card issuer will look at your personal credit score and income to qualify you for the card.
Can I Use My Personal Credit Card for Business Expenses?
You can use a personal credit card for business expenses, but you probably shouldn't. Keeping your business and personal expenses separate helps to keep liability for your corporation or LLC separate from your personal liability. If you're a sole proprietor, maintaining separate business finances demonstrates to the IRS that you're a business and not a hobby.
On a more practical note, using your personal card for business expenses makes bookkeeping more complicated. You'll need to scour multiple accounts at tax time to document your business expenses. Using dedicated business accounts for business income and expenses keeps your finances straight.
The Bottom Line
Once you open your business credit card account, practicing good credit habits such as making on-time payments can help you maintain a good credit score. Building good business credit helps you make a future case for business loans and credit line increases. Your business credit score also affects how vendors, suppliers and lenders see your business. You can keep track of your business credit by using Experian's business credit monitoring services.