Whether it’s to pay off debt, save up for a down payment, or make a large purchase, starting a side gig is a great way to bring in some extra income. However, many people aren’t aware that as long as it’s bringing in money, their second job counts as a business, which makes them eligible for some financial perks, including having the ability to apply for a business credit card.
How do you get a business credit card?
In many respects, applying for a business credit card is the same as applying for a personal credit card. Credible can help walk you through the application process and help you find a card that works for your needs.
Similar to applying to a regular credit card, you’ll still be required to fill out an application with information pertaining to you and your revenue. However, this time, some of the questions will likely pertain to your business. For instance, you may be asked to provide the following information:
- Business name: The name of your company, unless you’re a sole proprietor, in which case you would simply enter your name.
- Business address and phone number: If you have a separate business address or phone number, you can supply that. Otherwise, enter your own.
- Industry and company structure: You’ll list your industry and whether your business is a corporation, sole proprietorship, etc.
- Years in business: If you’re a new business, you can simply put down zero.
- Number of employees: If you’re the only employee, write in one.
- Annual revenue: Be sure to report your total business revenue, rather than just your profit. That said, you’ll want to be careful not to exaggerate because you may be asked to provide proof.
- Estimated monthly spend: How much you expect your average monthly balance to total.
- Taxpayer identification number: This will either be your EIN or social security number.
- Personal information: You may be asked to provide additional information like a home address and your total income.
How to apply for a business credit card
The information that you provided on your application will provide most of what you need in order to apply for a business credit card. However, the other factor considered is your personal credit score and credit history. Lenders use this information to determine your creditworthiness as a borrower, especially if you’ve only been in business for a short while,
If you're confident in your credit score, then you can plug in some of your information into Credible's free online tool to find out what kind of offers are available and apply today.
If you have red flags like a low credit score or a history of missed payments, you likely won’t have as good of a chance at approval or getting a high credit limit. However, if you work to improve things by making your payments on time and keeping your debt-to-income and credit utilization ratios low, you should be able to improve your score and your chances.
Advantages of a business credit card
- Separate your business and personal finances: A business credit card can help you keep your business and personal transactions separate, which will make accounting much easier and can help to protect your assets in the event that your business ever faces legal trouble.
- Easily manage cash flow: Business cards can make it much easier to keep track of the money that you’re spending on a monthly basis.
- Potential to earn reward points: Many business cards offer bigger and better reward points (such as membership rewards, travel rewards, or more) than personal cards:
If it's perks you're looking for, then a business credit card is the right choice for you. It will offer business-specific advantages that personal cards won't offer. Do your research on Credible to find the right credit card for you.
Disadvantages of a business credit card
- Most require a personal guarantee: As the person who applied for the card, you’re required to pay off any balances, even if your business closes.
- High interest and annual fees: Most business credit cards come with higher interest rates and annual fees than personal cards when you carry debt.
- Fewer protections under the law: Personal cards are protected under the 2009 credit CARD Act. Some business credit cards don’t offer the same protections.
In the end, it’s up to you to weigh the pros and cons associated with opening a business card to determine if it is the right choice for you. If you think opening one of these cards could be a good step, it’s important to do your research first to find a card that suits your needs.