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8 min

What do you need for a business credit card?

Managing business finances gets harder as costs grow. A business credit card can simplify payments, improve cash flow, and build credit—but you must meet financial and credit requirements to qualify.

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A smiling young man wearing a florist's apron sits at a wooden table in a plant-filled shop. He is talking on a red smartphone while holding a blue credit card, surrounded by fresh flowers and potted plants.

Personal credit cards simplify our lives and give us flexibility wherever we go and whatever we buy. A business credit card does the same for business owners and their teams. But there’s more to it than that. Here’s why you need a business credit card, how to get one, and what to do if you need to improve your eligibility.

What is a business credit card?

A business credit card is very similar to a personal credit card—it lets you make purchases and track expenses in a convenient way. However, it belongs exclusively to your business bank account and is used only for business expenses.

And yes, you need a separate bank account for your business to simplify bookkeeping and, in certain business types and legal situations, to protect your personal assets.

But are business credit cards worth it? Let’s explore. 

Why is it important for businesses?

Just like a separate business account, it’s important to pay your business bills with a credit card that’s dedicated to business expenses. Some of the benefits include:

  • Higher spending limits, because businesses sometimes require a higher credit than individuals.
  • Bigger and more relevant rewards. Besides the usual consumer rewards, like travel, you can get rewards for business-related expenses, like advertising.
  • Complimentary credit cards for employees, with the option to set and track their spending.

Illustration showing benefits of a business credit card including higher spending limits, bigger rewards, and complimentary employee cards.

Factors to consider when choosing a business credit card

If you’re reading this and thinking, it’s time to look for a business credit card, you’ll likely Google your way to a lot of options. Take these factors into consideration before signing up to one of them.

Your business needs

A few of the factors to take into account include:

  • How much financial room do you need? First, look at whether what the business credit card offers aligns with the credit limits you need. Second, if you’re looking to expand or make some big investments into your business growth, and you know you’ll need a loan, look into how using this card can help you build credit so you can eventually  take out a loan with favorable terms.
  • How about employee and financial management? If you need to provide credit cards to your employees, can your card issuer simplify this process? How much control does it give you in terms of setting, managing and analyzing their expenses?
  • How can you save on your biggest upcoming—or most recurring—expenses? Compare credit card rewards to choose the one that’ll save you the most money. On that note, remember to also compare card fees.

Credit history

Both your personal and business credit score matter here. Let’s explore this.

  • Personal credit score: If you have a good personal credit score, it’ll be easier to get a business credit card. If you don’t, you might need to improve it first, say, by reducing your credit utilization rate. Strive to spend less than 30% of your total credit limit. Ultimately, getting a business credit card will support you with this too, as you’ll be paying business expenses with a separate card.
  • Business credit score: Similarly, your business credit card score can impact your ability to get insurance or loans at decent rates. It can also impact your personal score. Choose a card that supports you in building your score, like one with financial management features.

Annual fees

Annual fees vary widely depending on the card type.  Some issuers give you a fee-free first year, but think long term and compare what happens after that year.

For example, if one issuer doesn’t charge any fees the first year, but then charges twice as much as a different issuer, it’ll end up costing you the same by the end of the second year—and more by the end of the third.

Interest rates

The average interest rate is approximately 22%, but it depends on your credit score. If your score is low, it might end up being 30%. The more you improve your score, the better interest rate you’ll be able to get.

Business credit card requirements: How to ensure eligibility

Now that you know what to look for, let’s check some boxes and ensure you’re eligible for the kind of card you need.

Your business type

You can apply for a business credit card with a variety of business structures, including small business, freelancing, LLC, partnership, corporation and nonprofit.

Credit score

If you don’t have another business credit card, the evaluation will be based on your personal credit score. The minimum score you need is typically around 670, which is a “good” credit score on the FICO scale.

The higher your score is, the better rates and conditions you’ll likely get. The top tier is anyone with a score between 781 and 850.

Credit score gauge showing ranges from poor to excellent, highlighting 670 as the minimum score for business credit card eligibility.

Your overall income

You don’t necessarily need to have a high income to get a business credit card, but banks do look at your income to understand how much risk they’re taking on.

Types of business credit cards

There are many types of credit cards your business can get. Here are the key options:

  • Prepaid business cards: Business owners can add money to a credit card in advance, and only this sum can be used for purchases.
  • Charge cards: You pay the balance in full each time, so there are less fees.
  • Rewards or cash back cards: Credit cards that put a bigger emphasis on letting you accumulate rewards–or flat out give you money back—the more you buy.
  • Secured business credit cards: Meant for businesses with no, or low, credit score. You make a deposit, whose amount impacts how much credit you get. You often need to deposit at least $500.
  • Unsecured business credit cards: Regular credit card, like a consumer one, where your credit limits are influenced by your credit history and revenue, among other factors.
  • No personal guarantee (PG) business credit cards: A card that only requires your Employer Identification Number (EIN) instead of your social security number (SSN), so you’re not personally liable for paying (or not paying) the credit card’s balance. Instead, your business entity is. Unfortunately, no PG cards  are usually not a small business card, but rather meant for large companies.

 

Tips for improving your eligibility

If you need to improve your eligibility for a business credit card, try the following strategies.

  • Open a business account. Make it the account where customers transfer payments, and the one you pay your expenses out of. This will show you have a working business and will help you build your business credit.
  • If you can’t get the credit card you want, try to get another one from the list above first. Make payments on time to prove you manage money well, or better than before. Then, apply again to the one you want.
  • Improve both personal and business money management. Pay all your bills on time and work to reduce your debt. Simultaneously, look for ways to reduce your credit utilization rate. The common recommendation is to keep it under 30%. For example, if your overall credit across all your credit cards is $21,000, 30% is $6,300. Try to keep your expenses, even personal ones, under $6,300.
  • Step up your cash flow. Cash flow is how much money goes in and out of your account. Ideally, you always want to have more in your account than you need to spend. This way, when it’s time to pay your bills or make a necessary business purchase, you have enough money in your account—and you’re not left vulnerable to emergencies and unexpected occurrences. You get there by reducing expenses and increasing revenue. It might take a while, so be as patient and consistent as you can. Consider using cash flow management apps to make it a little easier.
  • Use debt to your benefit. If you need to take a loan, make it as small as possible and pay it on time. It can turn what might look negative—needing to borrow money—into a positive, proving you can be trusted to make your payments on time.

 

Impact of personal credit on business credit card approval

As we explained above, the impact of your personal credit score for business credit card eligibility and conditions is significant.

When you set out to get your first business credit card, all issuers have in order to assess the risk they’re taking is your personal credit history. Therefore, your personal credit could impact the type of business card you can get, if you can get one at all, as well as your interest rates. The better your personal score is, the better the terms your small business can obtain.

Simplify credit card payments and credit building (even when vendors prefer other payment forms)

One of the ways to build your credit score is to use your credit card responsibly. However, to use it at all, you need vendors and contractors that accept credit cards, and not everyone does.

This is where managing a credit card for B2B needs gets complicated for some. Instead of worrying about it, use a platform like Melio, where you pay via credit card and get rewards, but your vendors get the money whichever way they want—instantly, by single-use virtual card, by bank transfer or by check. Healthy business finances are crucial for maximizing your business potential. With the right technology, it’s easier than ever to set yourself up for success.

This content is for informational purposes only and should not be considered financial, legal, tax, or accounting advice. Melio does not provide professional advisory services. Always consult a qualified professional before making financial or business decisions.

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