Can Anyone Get a Business Credit Card?

Oct 13, 2016 | Be First to Comment!

If you own a business, using a rewards card to cover your expenses could save you a nice chunk of change since these types of cards offer rewards in categories that pertain to the business, like office supplies. However, if you don't own a business, can you get a business credit card? MyBankTracker explains what the process entails if you want to get a business card, but don't exactly own a business.

The Chase Ink Plus card charges no foreign transaction fees if you travel outside the U.S. Image via Shutterstock
The Chase Ink Plus card charges no foreign transaction fees if you travel outside the U.S. Image via Shutterstock

Business credit cards offer nice perks in the form of big sign-on bonuses and more generous reward incentives, not to mention higher credit limits. Qualifying for one of these cards is typically dependent on your credit score and what kind of business you own, but the guidelines are pretty flexible. If you're eager to start cashing in on big rewards, here's what you need to know.

Can you apply for a business card without a business?

Before you try to get a business credit card, you need to know what the bank is going to be looking for. Specifically, the application is going to ask for your business's name and federal tax identification number. If you own a small business, providing that information shouldn't be a problem, but what if you're not actively running a company?

The good news is that card issuers tend to be flexible about what qualifies as a business. Chase, for example, allows you to open a business credit card as a sole proprietorship using your Social Security number. That simply means a business that's owned and operated by one person.

If you sell stuff on eBay or Etsy or you do a little freelancing outside of your regular 9 to 5 job, all of that would fall under the umbrella of a sole proprietorship. Technically, you could apply even if your business is still in the idea phase.

Your business income and credit score

You don't need to provide any financial documents for your business but you'll need to enter something for how much income it earns, even if it's "0". At the application stage, banks typically won't ask to see proof that your business is making a profit as long as you've got a steady income and a good personal credit score.

In some cases, however, you may be asked to provide a personal guarantee, which is basically a statement saying that you, not the business, is personally liable if you default on your debt.

The one thing you don't want to do when you're answering the income question is fudge the truth since that could be construed as fraud. If you tried to apply for a second business credit card later on or you ask for a big bump in your credit limit, that's when you'd likely need to prove what kind of money you're actually bringing in from your business.

Keep in mind that if you apply for a business credit card as a sole proprietor, the inquiry will show up on your personal credit report but the account itself would be listed on a separate business credit report.

Typically, your business credit card activity wouldn't affect your personal credit, but some banks, including Chase and Capital One, will report negative information like late payments on both your personal and business credit reports.

Read the fine print on your cardholder agreement

When issuing business credit cards, banks typically require you to agree that you'll only use the card for business-related expenses. Chase, for example, asks you to agree during the application process to only use the card for business purposes and avoid charging personal or household expenses.

If you decide to charge something that falls outside the business scope, the bank could convert you to a personal card. In that case, you'd forfeit all the points you've earned so it pays to be aware of how you can and can't use the card.

Business credit card vs. Personal credit card

One of the biggest differences between business and personal credit cards is how the rewards are structured. With a personal card, you might get cash back or points when you buy groceries, go out to dinner or book flights, but business cards tend to target different expenses.

Chase Ink Plus offers 5x the points on certain categories. Image via Chase

The Ink Card, for example, is one of the most popular business credit cards in the game because of the rewards it offers. There are two options to choose from: The Ink Plus® Business Card, which is designed for business travelers, and Ink Cash® Business Card, which pays cash back.

With Ink Plus® Business Card, you get 5 points per $1 on the first $50,000 you spend at office supply stores and on cell phone, landline, Internet and cable TV services each year. You also get 2 points per $1 on the first $50,000 spent each year at gas stations and hotels. Every other purchase pays 1 point per $1.

Chase Ink Cash has no annual fee. Image via Chase

The Ink Cash® Business Card card pays 5 percent back on the first $25,000 in purchases made at office supply stores or when you use your card to cover your phone, Internet or cable TV services. Cardholders get 2 percent back at gas stations and restaurants, plus 1 percent back on everything else.

When you compare that to what you get with a personal rewards card, it's easy to see how wide the gap is. The Barclaycard Arrival Plus™ World Elite MasterCard®, for instance, pays double miles on everything you charge. If you spend $10,000 a year on the card, you'd earn 20,000 points.

Now, if you had the Ink Plus® Business Card and spent $2,000 at an office supply store, $5,000 on gas and hotel stays and $3,000 on groceries, you'd earn 23,000 points instead. You're effectively getting more mileage out of your spending by putting everything on a business credit card.

Aside from the miles, points or cash you can earn, there are also the sign-on bonuses that make business credit cards so appealing. Right now, for example, you can get 50,000 bonus points with the Ink Plus® Business Card when you spend $5,000 in the first three months. That's 10,000 points more than what you'd get with the Barclaycard Arrival Plus™ World Elite MasterCard®.

Tip: The Ink Cash® Business Card is a great pick if you want to avoid an annual fee since the Ink Plus® Business Card will cost you $95 annually after the first year.

Final thoughts

So, can anyone get a business credit card? As long as you've got some type of business or plans to start one, even if it's just cutting lawns on the weekend or selling your old stuff online, then the answer is yes. The question of whether you should get one really comes down to your motives.

If you're trying to max out your rewards points or earn more cash back, a business credit card will let you do that and then some. On the other hand, if you struggle to pay your balances on your personal cards each month or you'd need to bend the truth to qualify, getting a business credit card may create more headaches than it's worth.

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