How to get a business credit card for Startups or New businesses?

A business credit card is a credit card solely used for business expenses. It’s available for businesses of all sizes, including startups, freelancers, and sole proprietors. A business credit card can help you keep your business and personal expenses separate, offers access to a revolving line of credit, and can help you build your business credit profile.

What is a business credit card for startups?

Companies in the early stages of business, particularly if they’ve received funding from investors, are often called startups. But the banking needs of startups and other new businesses are typically quite similar.

A startup would use the same type of business credit card that any small business would use. Keep in mind what your business needs are when selecting which credit card is right for your startup.

How do business credit cards work for startups and new businesses?

Business credit cards work similarly to personal credit cards. You’re given access to a revolving line of credit with a set limit based on your credit history. If your balance is not paid in full within the billing cycle, you will be charged interest for the unpaid amount.

Business credit cards are a great way to ensure that you keep your personal finances separate from your business finances and make it easier to differentiate the two when it’s time to do your taxes.

A business credit card for a new business is different from a personal credit card because it offers more access to capital and helps you track your spending for business-related expenses. It can also help build a business credit score and earn specific rewards for common purchases.

Increased capital

Startup small business credit cards provide you with the capital you need to head in the right direction. Without a credit card, you may not have the funds to purchase the items your business needs in its beginning stages.

You can use a business credit card for any expenses related to your startup, including:

  • Licenses
  • Permits
  • Insurance
  • Research expenses
  • Marketing costs
  • Technology
  • Taxes
  • Utilities
  • Office supplies
  • Payroll

Employee credit cards

You can open credit cards for your employees to use and easily track their day-to-day spending. This eliminates the need to reimburse your employees for business costs on their personal credit or debit cards. It can also be beneficial to track any fraudulent charges and pinpoint precisely where they came from.

How to choose a business credit card for your New Business

The type of startup small business credit card you choose will depend on what you believe your business needs. Consider how much your business spends monthly or annually and what benefits would suit your needs best.

Business expenses

View your business expenses over the past few months to see what you spend the most on. This will help you decide on what business credit card and benefits will work best for your startup.

If you travel often, you may be more interested in a business credit card that offers robust travel rewards. If you spend more on office supplies and equipment, entertain clients at restaurants, or spend regularly on fuel costs, these are all things to consider.

Sign up bonus

You’ll want to choose the business credit card that offers the best sign-up bonus. A sign-up bonus is when the lender provides a generous amount of rewards points or travel miles for spending a certain amount with your credit card over a particular period.

Your business credit card sign-up bonus should reflect how much you spend on your business. For example, the CitiBusiness® AAdvantage® Platinum Select® Mastercard® offers 65,000 American Airlines AAdvantage bonus miles after making $4,000 in purchases within the first four months of opening an account.

Rewards

Business credit cards offer rewards in cashback and travel miles in return for the money you spend while using the card. They usually provide around 1% to 5% cashback that you can use to purchase more of your business essentials. Some transactions may earn more rewards than others, like office supplies. Keep in mind the type of rewards you’d like to earn with your business credit card.

Fees and Rates

As you narrow down your decision, it’s best to consider the rates and fees associated with your business credit card. Compare how much the annual percentage rates are for the cards you’re interested in and any other fees that may be associated with it, like late fees, processing fees, and foreign transaction fees.

How to get a business credit card for startups in 3 steps

Research your options

Take the time necessary to research your options for your business credit card. Start with your bank first to see what they have available, and then look around with different financial institutions if you can’t find what you need. Consider each card’s benefits like sign-up bonuses, rewards, and credit limits.

Check your credit

Although you’re applying for a business credit card for your startup, the lender will still require your personal social security number to check your credit history. You’re going to be personally liable for your business credit card and liable for any employee transactions that may be fraudulent. So, your potential lender must see you as a reliable borrower.

Credit card companies look to see that you pay your bills on time, have a low credit utilization rate, and little to no collections. If your credit score is higher, you’ll be eligible for more credit cards, a higher credit limit, and lower interest rates.

Apply for your business credit card:

Once you’ve decided which credit card is right for your startup business, you can gather the information needed to apply.

You’ll need the following:

  • Business legal name
  • Business address
  • Business phone number
  • Type of business/Industry type
  • Business entity/legal structure
  • Federal tax identification number/social security number
  • Number employees
  • Annual business revenue
  • Estimated revenue: monthly expenses using the credit card

Don’t apply for multiple credit cards at the same time. It's more beneficial to apply for one credit card that you’re most interested in and that you’re most likely to qualify for rather than applying for multiple cards at once. Lenders make a hard inquiry on your credit, which will negatively impact your credit score. They will assess your personal credit report when applying for a business credit card. Hard inquiries can lower your credit score.

How to make the most of your business credit card for new business

You can do a few things to get the most value from your business credit card as a startup.

Take advantage of sign-up bonuses

Don’t overlook your sign-up bonuses. Business credit cards offer some sweet deals when you initially sign up for them. You can get a considerable reward bonus just for spending using your business credit card. So, if your expenses add up to be enough to do so, swipe your card to receive this incentive.

Redeem your rewards miles for travel

If you travel often for business-related trips, you can redeem your rewards miles to pay for future flights and hotel stays. This will save you money in the long run.

Pay your balance on time

Paying your credit card balance is the best way to make the most of your business credit card. No one likes to pay late fees or interest. Missing payments can easily lead to debt. Be sure not to overspend and set aside the funds to make on-time payments each month, so you’re not penalized for carrying over a balance.

What credit score do you need to get a business credit card?

Credit card lenders will ultimately decide if you’re approved based on your personal credit history. A credit score of 700 or higher will get you approved for a business credit card. However, there are some options for lower credit scores.

If you have a lower credit rating, you may receive a lower credit limit and higher interest rates to start off. There is potential to earn a credit limit increase over time as you show yourself as a dependable borrower with consistent on-time payments.

Business credit card for startups FAQ

Can you get startup business credit with an LLC?

Incorporating your business as an LLC (Limited Liability Company) will ensure your company is a separate entity from your personal assets. An LLC will help protect your personal effects in an instance where your startup is issued.

Once you’ve incorporated your business, you’ll have the ability to apply for business credit under your company name instead of your personal name. This will be the start of your business credit report, which will let lenders know important information about your company and improve your ability to get new loans and increase credit limits.

To help improve your business credit report, you can ask the vendors or suppliers you do business with to report your payment history to all three credit bureaus. And just like personal credit, it’s imperative to pay your business credit card bills on time to prove that your business is reliable and will pay back the loan on time and in full.

Small Business Credit Card Requirements

To get approved for a business credit card, you’ll need:

  • A good or excellent credit score
  • Personal or business income that reflects the ability to return the payment
  • Operate a small business/startup with the intent to make a profit
  • Use your business credit card for business expenses only

Can I get a small business credit card with no revenue?

If you have a startup company, you most likely have little to no revenue coming in, which may be why you’re looking to get a business credit card. Fortunately, you can still get approved for a credit card despite being pre-revenue: Simply place $0 on your application when you initially apply.

Many banks will consider your other sources of income as well as your relationship with them. For example, if you’ve had a personal checking account with your bank for over ten years and decided to apply for a business credit card, you would be more likely to get approved.

Explore your business credit card for new business options

No matter what stage your business is in, Citi has a business credit card that will meet your needs. The CitiBusiness®/AAvantage® Platinum Select® Mastercard® allows you to earn travel miles on your business purchases and American Airlines purchases. The Costco Anywhere Visa® business credit card is designed for Costco members and enables you to earn cashback rewards wherever Visa is accepted.

Apply for one of Citi’s business credit cards today to start earning rewards for your startup business.

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