Welcome fellow travel enthusiasts and savvy business owners! As someone who’s navigated the world of travel rewards for years, I know firsthand how crucial a good credit card is, especially for managing business expenses. In this comprehensive guide, I’m going to walk you through everything you need to know about getting a business credit card, from determining eligibility to selecting the perfect card for your needs. Let’s dive in!
#
Is a Business Credit Card Right for You?
Many people believe you need a sprawling corporation to qualify for a business credit card, but that’s simply not true. The beautiful thing is that even a sole proprietor, like a freelance writer or a rideshare driver, can benefit from these cards. If you’re generating income from a service or product, chances are you qualify.
Now, a crucial distinction exists between a side gig and a hobby. If you’re simply monetizing a pastime, like selling handmade crafts occasionally, a business card might not be the right fit. It’s about intent. Are you actively trying to run a business and make money? If so, a business card could be a game-changer.
Frankly, I recommend consulting a financial professional if you’re still unsure whether your side gig qualifies as a business.
#
Exploring the Different Types of Business Credit Cards
Choosing the right business credit card is similar to picking the perfect travel destination – it depends on your unique circumstances and goals. Ultimately, the card that provides the best value will depend on several factors, including your credit score and spending habits.
Here’s a breakdown of the most common types:
##
1. Secured Business Credit Cards: Your Credit-Building Launchpad
New to credit or rebuilding after some financial bumps? A secured business credit card can be your launching pad. These cards require a security deposit, which acts as collateral, making them easier to obtain. While they might not have the flashiest rewards or perks, they’re an excellent way to establish credit history and demonstrate responsible financial behavior. As I’ve always said, patience and good credit habits are crucial.
##
2. Cash-Back Business Credit Cards: Rewards for Everyday Spending
If you value simplicity and prefer straightforward rewards, a cash-back business credit card might be your ideal choice. These cards offer a percentage back on your business expenses, providing a direct return on your spending.
Some cards, like the Capital One Spark Cash Plus, offer a flat-rate cash back on all purchases. This card offers 2% cash back on every purchase with no limits. In the past, I personally found these cards incredibly useful for covering general business expenses, from software subscriptions to office supplies.
Alternatively, if you want a business credit card with no annual fee, then I recommend the Ink Business Unlimited® Credit Card. This card comes with unlimited 1.5% cash back on all your business purchases.
On the other hand, some cards offer bonus cash-back in specific categories. The Ink Business Cash® Credit Card is a great example, offering a higher percentage back on purchases at office supply stores and on internet, cable and phone services (on the first $25,000 in combined spending each anniversary year).
##
3. Travel Business Credit Cards: Fueling Your Wanderlust
As a travel blogger, I am a HUGE fan of travel business credit cards, which will be handy if a fair amount of your business expenses go toward travel. If you frequently travel for business, these cards can be a goldmine of points and miles.
Airline credit cards such as the Delta SkyMiles® Platinum Business American Express Card or hotel cards like The Hilton Honors American Express Business Card will let you earn rewards on all of your spending and even higher bonus rewards for spending done with their brands. They also come packed with additional brand-specific benefits.
General travel cards offer flexibility if you don’t want to stick to one airline or hotel. For example, with The Business Platinum Card® from American Express, you’ll earn 5 points per dollar spent on flights, prepaid hotels and short-term rentals booked through Amex Travel.
#
Credit Score: Your Key to Unlocking the Best Cards
Your credit score is a major factor in determining which business credit cards you’ll qualify for. Most business credit cards require a credit score in the good-to-excellent range (typically a FICO score of 670-850). I always recommend checking your credit score before applying to avoid disappointment and a potential ding to your credit report.
If your credit score is lower, don’t despair! There are still options available, such as secured cards or cards designed for those with fair credit.
#
Comparing Business Credit Cards: Key Factors to Consider
Once you’ve determined the type of card you’re interested in, it’s time to compare the available options. Here are some crucial factors to consider:
##
1. Welcome Offer/Sign-Up Bonus
One of the most appealing aspects of business credit cards is the potential to earn a lucrative welcome offer or sign-up bonus. These bonuses typically require you to spend a certain amount within a specific timeframe, so make sure you can realistically meet the spending requirement.
I’ve seen some cards offer bonuses worth hundreds, even thousands, of dollars in cash back or travel rewards!
##
2. APR (Annual Percentage Rate)
The APR is the interest rate you’ll pay on any balances you carry from month to month. Ideally, you should aim to pay your balance in full each month to avoid accruing interest charges. However, if you anticipate needing to carry a balance, a lower APR can save you significant money in the long run.
##
3. Introductory 0% APR Offer
Some business credit cards offer a 0% introductory APR on purchases, balance transfers, or both. This can be a valuable perk if you need to finance a large purchase or consolidate debt. I’ve personally used 0% APR offers to finance business equipment or cover unexpected expenses without incurring interest charges.
##
4. Rewards Program
Evaluate the card’s rewards program to determine how well it aligns with your spending habits. Do you spend heavily on travel, office supplies, or advertising? Look for cards that offer bonus rewards in your key spending categories. It’s also important to consider the credit card’s redemption options.
##
5. Business Card Benefits
Many business credit cards offer additional benefits tailored to small business owners, such as free employee cards, expense management tools, and travel insurance.
##
6. Annual Fee
Some business credit cards charge an annual fee, while others don’t. I always weigh the benefits and rewards offered by a card against the annual fee to determine if it’s worth the cost.
#
The Application Process: What You’ll Need
Applying for a business credit card is relatively straightforward. You’ll typically need to provide the following information:
* Business name and address * Type of business (sole proprietorship, LLC, corporation, etc.) * Tax identification number (EIN or Social Security number) * Annual business revenue * Number of employees
Remember, even if you’re a sole proprietor, you’re still considered an employee!
#
SSN vs. EIN: What’s the Difference?
This is a common point of confusion for many applicants. If you have a registered business with an Employer Identification Number (EIN), you’ll use that on the application. However, if you’re a sole proprietor without an EIN, you’ll use your Social Security number (SSN) as the tax ID.
#
What Happens After You Apply?
After submitting your application, the issuer will review your personal credit report to assess your creditworthiness. This typically involves a “hard credit pull,” which can temporarily lower your credit score.
You might receive an instant approval, or the issuer may require additional information to verify your identity or income. If your application is denied, don’t be afraid to call the reconsideration line!
#
Final Thoughts: Unlock Your Business’s Potential
Obtaining a business credit card can be a game-changer for small business owners, offering access to credit, valuable rewards, and tools to manage expenses effectively. By carefully considering your needs and choosing the right card, you can unlock your business’s full potential!
