Starting a company is always scary, but it is quite an important step in the life of a business. A start-up’s first few years can be difficult financially; every business must work hard to compete in market positioning and consolidate.
When it comes to requesting a credit card for your startup, you may have many doubts about whether they will give it to you precisely because you do not have a reputation or a credit history as extensive as another company might have.
Why do startups need a business credit card for?
Unlike with a smaller project, a startup usually receives initial funding to get the business off the ground. Despite that, both types of businesses need financial support, having fairly similar banking needs.
A business credit card looks and functions much like a personal credit card. Its function is to provide the customer with a revolving credit account, with a limit fund established according to the customer’s credit history.
These business credit cards generate a billing cycle, where the customer must pay the amount spent on the card; if not paid within the billing time, interest will be charged in addition to the balance owed on the account.
Having a business credit card in a start-up company is beneficial because it helps them keep personal finances in a different account than the company’s finances, and it also helps to separate both accounts at tax time.
A start-up company mostly applies for a specialized business credit card because it offers more funds and broader access than a personal credit card and makes it easier to control company-related expenses.
Another beneficial point of having a business credit card is to generate business credits with its use and thus earn various rewards for regular card purchases.
Easy ways to get a business card for a startup
Applying for a business credit card for your startup is not complicated. However, you should not ask for it without doing some research first. Here are all the most important things you need to know to be prepared and get your application accepted.
Check your personal credit
Since the company does not have a credit card in your name, you will have no credit history for the bank to review and approve. Therefore, the lender will ask for your social security number to check your credit history.
We recommend that before you apply, you check your credit history because your credit history may determine the approval of the card. The bank needs to verify that the person responsible for the card is a reliable borrower to grant credit benefits.
Additionally, you will be directly responsible for the business credit card and will be liable for the payments and transactions made with it. This means that, even if the employees handle it, you will be the beneficiary of the company credit card.
Among the requirements to be checked by the lender will be the payment of invoices and taxes on time. Another thing that may be helpful is that if your personal credit card has a high credit score, the bank may set a higher funds limit and lower interest rates.
Research your options
Once you know your financial situation, you can start researching the financial market to have more options for applying for a credit card for your start-up business.
The most advisable thing to do is first to investigate the bank where you have your personal account to see the business credit card options available. This can be beneficial because the bank will approve the application more easily if there is a previous relationship.
However, this is not exclusive. Studying the offers of other banks is also recommended since they may have options that are better suited to the plan you are looking for in your startup company.
Things to consider when researching include sign-up bonuses, card benefits, credit rewards, and, of course, the credit funding limit.
Collect the necessary information to apply
Once you are researching different options, start collecting all the requirements you might be asked for at the time of application to make the process go faster. Each bank may vary in its requirements. However, most require similar documents.
Among the information you will need to submit is the company’s legal name, address and telephone number, type of business, legal structure, number of employees, annual income, social security number, and estimated income as monthly expenses.
To this documentation, the bank information of the person applying for the card must be added.
Best Business Credit Cards for Startups
Now that you have all the prerequisite steps for applying for a business credit card, we’ll recommend the best business credit cards for a startup company.
U.S. Bank Business Triple Cash Rewards World Elite Mastercard
This card is considered the best option for startups, has no annual tax, provides a $500 welcome bonus, and requires a minimum credit score of 700.
The Blue Business Plus Credit Card from American Express
The card from AmEx offers 15,000 opening bonus points, along with a $250 welcome bonus. In addition, double points will be earned on all purchases up to $50,000 annually. It is an adequate option for a start-up company to earn profits on purchases.
Capital One Spark Cash Select
This option will give you $500 in welcome cash, 1.5% to 5% cashback, and no annual tax.