How to apply for a business credit card for your startup

How to qualify for a business credit card

Qualifying for a business credit card typically involves meeting certain criteria related to personal credit scores and business revenue. Personal credit scores often play a significant role in the approval process, especially for startups.

Now, specific requirements vary among card issuers, but here are some general factors that are commonly considered:

• Personal credit score: many card issuers use personal credit scores to assess the creditworthiness of business owners. Generally, a credit score of 670 or higher is considered good and may increase the chances of approval.
• Business structure: sole proprietorships, partnerships, LLCs, and corporations may all be eligible, but requirements can differ.
• Business revenue: established businesses may need to show a minimum annual revenue, which can vary depending on the card issuer and the specific card. For new businesses, projected revenue and business plans may be taken into account.

How to apply for a business credit card

Applying for a business credit card is fairly straightforward. 

Let’s review the steps required:

1. Research: Compare your options and consider your needs now and any you may forecast as you grow. For example, if you spend a lot in a wide variety of categories—consider a card with built-in spend controls to categorize expenses appropriately.
2. Prepare necessary information: Business name, structure (e.g., LLC, corporation, sole proprietorship), tax ID (Employer Identification Number or Social Security Number), annual business revenue, and years in business. As the business owner, you'll need to supply your SSN and personal income. (On that note, be prepared for a personal guarantee—many business credit cards require the owner to be personally liable for the debt.)
3. Check your credit score: This can play a role in your approval. Most financial institutions consider personal credit scores as a crucial element in determining eligibility for business credit cards, particularly for startups or small businesses without an established credit history.
4. Choose a card and apply: Depending on the type of card, apply online, by phone, or in-person at a bank branch. Processing times vary, but you often receive a decision within a day. 
5. Activate your card and set up your account online: Once approved, follow the issuer's instructions to activate your new business credit card.
6. Set up your account online.

Find the card most suitable for your business

Business credit cards are designed and tailored for varying business needs. The types of credit cards include:

Charge cards

Charge cards must be paid in full each month. They often come with higher spending limits and robust rewards programs.

Best for: Businesses with substantial monthly expenses and the ability to pay off balances regularly

Cash back cards

Cash back cards offer a straightforward way for businesses to earn rewards on their spending. These cards typically provide a percentage of cash back on purchases. 

Best for: Businesses with high operating expenses

Travel rewards cards

Businesses using these cards earn points or miles that can be redeemed for flights, hotel stays, airport lounge access, and other travel-related expenses.

Best for: Startups that involve frequent travel

Airline-specific cards

These cards offer perks such as priority boarding, free checked bags, and reward miles towards future flights.

Best for: Businesses that fly regularly with a particular airline

Low APR cards

These cards offer lower interest rates, which can help reduce the cost of financing for businesses.

Best for: Businesses that may need to carry a balance from time to time

Balance transfer cards

These cards typically offer a low or 0% introductory APR on balance transfers for a set period.

Best for: Startups looking to consolidate debt or reduce interest payments

Secured business credit cards

These cards require a security deposit and can help businesses build credit while still enjoying some of the benefits of a business credit card.

Best for: New businesses or those with limited credit history

Rewards category cards

Some business credit cards offer higher rewards in specific spending categories. 

Best for: Startups that have significant expenses in particular areas, such as office supplies, internet services, or advertising

No annual fee cards

These cards often still offer rewards and benefits without the added expense of an annual fee.

Best for: Businesses looking to minimize costs but still get some perks from having a credit card

Top business credit cards for startups

These are some of the best business cards to consider:

Rho Corporate Card

Best for: Businesses aiming to accelerate month-end close and set customizable pre-spend rules

Rewards rate: Up to 1.25% cash back on all purchases

Annual fee: $0

APR: 0% (as it is a charge card)

Key benefits:

• Ability to set customizable controls (e.g., strict spend limits for certain teams, limiting cardholder access to the C-Suite only, merchant restrictions and approvals)
• Cash-back rewards rates up to 1.25% to improve cash flow
• Simplified reconciliation with automated syncing to your accounting platform
• Integration with Navan Connect to streamline spend while traveling.
• ‍Mastercard World Elite Business program perks

Ink Business Preferred Credit Card

Best for: Businesses with varied expenses seeking points and a low annual fee

Rewards rate: 1x-3x points

Annual fee: $95

APR: 20.49% to 26.49%

Key benefits:

• Generous sign-up bonus (90,000 bonus points after you spend $8,000 on purchases in the first 3 months after account opening)
• Employee cards at no additional cost with customizable spending limits
• Points are worth 25% more when redeemed for travel through Chase Travel
• No foreign transaction fees
• Travel insurance protections

Delta SkyMiles Reserve Business American Express Card

Best for: Startup teams that frequently fly Delta and value premium travel benefits

Rewards rate: 1x-3x points

Annual fee: $550

APR: 20.49% to 29.49%

Key benefits:

• Premium travel perks and miles associated with Delta

• 15,000 Medallion Qualification Miles (Delta’s elite status program) after spending $30,000 in purchases up to four times per year
• No foreign transaction fees
• Global Entry or TSA PreCheck credit
• Access to Delta Sky Club and The Centurion Lounge
• On Delta flights: First checked bag free, priority boarding, and 20% back on in-flight purchases
• Trip delay, cancellation/interruption, car rental, and baggage insurance

Pros and cons of using a business credit card

Benefits

• Separating personal and business expenses and finances: Using a business credit card allows entrepreneurs to keep their personal and business expenses separate, which is crucial for accurate accounting and tax purposes.
• Cash flow management: Business credit cards can provide a short-term line of credit, helping to manage cash flow during periods of uneven revenue or unexpected expenses.
• Building business credit: Responsible use of a business credit card can help establish and improve a company's credit profile, potentially leading to better loan terms and higher credit limits in the future.
• Rewards and perks: Many business credit cards offer rewards and premium programs tailored to business needs, such as cash back on office supplies or marketing expenses, which can result in significant savings.

Challenges

• Personal liability: Many business credit cards require a personal guarantee, meaning the business owner may be personally responsible for the debt if the business cannot pay. Consider looking for a card that doesn't require a personal guarantee to protect your assets.
• High interest rates: Business credit cards often come with higher interest rates compared to other forms of business financing, which can lead to substantial costs if balances are not paid in full. As an alternative, look to charge cards which generally don't carry interest rates as the balance is due in full within a specific timeframe.
• Overspending risk: The convenience of credit cards can sometimes lead to overspending, potentially jeopardizing the financial health of the business if not managed carefully. To help avoid unnecessary spend, be on the lookout for cards with built-in controls to ensure you're only spending on what's critical to your business.
• Complex rewards programs: While rewards can be beneficial, navigating complex rewards programs and ensuring they align with business spending patterns can be challenging. To keep things simple, aim for cards with straightforward rewards programs, like cashback.

Solutions for startups with poor credit

For startups with poor credit, obtaining traditional credit cards can be challenging. However, there are still options available to help manage finances and build credit. 

Most business credit card issuers prefer applicants with credit scores of 670 or higher. Some cards may be available to those with credit scores as low as 620, but these often come with less favorable terms.

Here are several solutions for startups with poor credit seeking credit cards:

Secured credit cards are an excellent option for startups with poor credit because they require a cash deposit as collateral. These have lower credit score requirements and ultimately help to build the business’s credit history when used responsibly.

Prepaid business cards can help manage expenses. While these are not credit cards, they don’t require a credit check and so it’s easier to get them with poor credit. The user loads funds in advance and can track and categorize business spending to help keep expenses organized.

While using alternative methods, startups should focus on improving their credit profile. 

Improve your credit with these methods:

• Pay bills on time and pay the full balance each month
• Pay the balance in full halfway through the month as well as when you receive your monthly statement to keep credit utilization low
• Regularly monitor and dispute any errors on credit reports

By following these methods consistently, you can increase your credit score.

Wrap up

Applying for a business credit card to fuel your startup's growth is generally a straightforward process.

Choosing the right one can be a bit tougher.

To make your decision simpler, look for a card option that incentivizes strategic spending to help you maintain control over your cash flow.

Rho Corporate Credit Cards offers you exactly that. With the Rho card, you can benefit from features like spend limits and automated accounting that help you maintain compliance and make better financial decisions, eliminating unnecessary spend in the process.

Apply now to start enjoying the benefits of Rho Corporate Credit Cards today.