How to Get a Credit Card for Your Startup

Some argue that the best way to avoid debt is to pay it down right away. This is not always the case. If you dream of running your own business someday, you have likely weighed the option of using a credit card against using capital for your startup’s financial needs.

Let’s examine the benefits of a business credit card, what you should look for before applying, and how to get a credit card for your startup.

Why Would a Small Business Need a Business Credit Card?

Taxes

Even bosses have bosses. Uncle Sam comes once a year. Regardless of how much you owe, or how much you expect to receive, tax payment time presents a lot of paperwork to hammer through, and it all needs to be retained and filed in its proper place. Personal expenses should be kept separate from your business expenses, many of which can be written off at the end of the year. For this reason, it’s important to have all of your business transactions in one place.

Arrange to have your credit card statements mailed to you electronically for storage in zip files. These statements are proof of purchase/business expense if you get audited.

You Need Money to Make Money

Even a small startup costs a bear to get off the ground, especially if it’s a storefront business. Product, payroll, rent, and maintenance are included in a running list of overhead costs that you may not be able to pay out-of-pocket. As your business grows, and your output increases, expansion costs may also sneak into play.

Since life is unpredictable, having a good chunk of capital set aside for emergencies is important. Avoid drawing on these funds by charging business expenses to a low-interest card and paying them down with your monthly revenue. Instead, link your business credit card to a business checking account for easy online transfers. This way you know exactly how much money is going out and exactly how much is coming in. As long as your revenue is high and consistent, use your business credit card to build your overall credit rating.

What to Look for in a Business Credit Card

A business credit line should cover your overhead expenses five times over to ensure enough capital is available to move quickly on time-sensitive, albeit expensive, sales campaigns and other business imperatives. If your business credit card is the sole creditor for your business expenses, consider applying for a card that separates transactions by category. This makes things easier come tax time. Do you intend to use up your entire credit limit monthly? If so, consider a card with low interest rates.

How to Get a Credit Card for Your Startup

Ascertain your personal credit rating and commit it to memory because the credit card company will request your Employer Identification Number (EIN) and your personal credit history to determine your eligibility. A credit score of 700 or higher is usually required. Your interest rate is determined by your credit rating, your annual household income, and the size of the credit line.

Register your company with the state where you intend to conduct business. After you do this, expect to be inundated with credit card applications by mail. Do not fill them out. Visit the credit card company’s website instead, and use a secure online application service because sensitive information is required.

Complete the application. It should take no more than a few minutes to fill out. The application will ask for your information, both business and personal. Basic business information includes the name of your business, the date on which your business was registered with the state, the address of your business, and your EIN. You will also be asked to provide the type of your business, i.e., partnership, corporation, or sole proprietor.

Provide the company with your annual household income and any previous business income, although you won’t have any previous income as a startup– this information is also used to determine your eligibility.

Sign the application either on paper or electronically, and wait for confirmation that the application has been successfully submitted. Once approved, you can request additional cards for other business personnel.

About the author:

Kristen Gramigna is Chief Marketing Officer for BluePay, a credit card processing firm offering different types of credit card terminal options. She brings more than 15 years of experience in the bankcard industry in direct sales, sales management, and marketing to the company and also serves on its Board of Directors.