What Is a Business Credit Card?

Overview

A business credit card is a credit card or charge card issued by a bank for companies or people engaged in business activity. Because there are so many small businesses and sole proprietors in the U.S., banks sometimes also call these Small Business Cards.

One major advantage of using a business credit card is that it makes it easy to separate business expenses from personal expenses. This is helpful not only for bookkeeping and preparing taxes at the beginning of the year, but also for avoiding the risk that large business spending or debt could negatively affect your personal credit profile. You can also issue employee cards linked to the primary account to manage company purchases and repayments in an organized way.

From a rewards perspective, business credit cards are no worse than personal cards when it comes to welcome bonuses and cash back. It is common to see business cards offering $400 in cash or even more valuable airline miles or hotel points. If you are able to hold some of the best business cards, you can also earn excellent rewards on company spending. (See the recommended cards at the end of this article.)

Who Can Apply for a Business Credit Card?

Business credit cards are not limited to large companies. As long as you have your own company or are engaged in business activity, regardless of size or income, you can apply for a business credit card for that business activity.

If you have formed a company, such as a Corporation, LLC, or Partnership, you can apply for a business credit card using your company’s TIN (Tax Identification Number). If you are engaged in business as an individual—for example, selling items on Amazon or eBay, doing freelance or gig work, or collecting rental income—you can apply as a Sole Proprietor (similar to a self-employed individual) using your own SSN (Social Security Number). Even if you have not officially started the business yet and only have an initial idea, in theory you may still be able to apply as a Sole Proprietor.

Applying for a Business Credit Card

Application Process

Applying for a business credit card is very similar to applying for a personal credit card. The main difference is that, in addition to personal information, you also need to provide information related to your business activity. Below, we use the Chase Ink Business Preferred business credit card as an example. Applications for business cards from other banks are generally similar.

Step 1: Enter Business Information

  • Legal Name of business: Your company’s legal name. If applying as a Sole Proprietor, this would be your own name.
  • Business Name on Card: The name you want printed on the card. Your own name is fine.
  • Type of Business: Choose based on your business structure, such as Corporation, LLC, or Partnership. If applying as an individual, select Sole Proprietor.
  • Tax identification number: Enter your company’s TIN. If applying as a Sole Proprietor, enter your SSN.
  • Select Business Category and Type: Choose the category that best matches your business activity.
  • Number of employee、Annual Business sale、Year in Business: Enter your actual number of employees, annual sales, and time in business. This information is for the bank’s reference and may affect approval, credit limit, and similar details, but it is not necessarily the deciding factor.
  • Address: You cannot use a P.O BOX; you must provide a physical address.

Step 2: Enter Personal Information and Complete Security Verification

Step 3: Add Employee Cards

  • If you want to add employee cards for your employees, you will need to enter the employee’s personal information and SSN.

How Business Credit Card Applications Are Approved

In general, banks decide based on whether the information in your business credit report meets their requirements, such as business history, income, existing business credit cards, number of employees, and so on. If this is your first time applying for a business credit card, the bank will usually rely on your personal credit report to decide whether to approve you.

Reconsideration

Reconsideration for business credit cards is usually more difficult than for personal credit cards. A credit analyst may ask detailed questions about your business model and related circumstances. So whether or not you actually have active business operations, you should be prepared to answer questions. If you are not confident in your explanation, it may be better to wait and see what happens.

Credit Reporting

  • Business credit history: Just like personal credit reports, businesses also have credit reports. However, business credit reporting is more complicated, and individuals generally cannot access it directly. Your business credit history includes credit card applications and payment records, and likely also loans and similar items. In short, once borrowing activity begins, all related information will be recorded in your business credit history.
  • Hard Pull: You may notice that when completing personal information verification, you need to provide your SSN. At that point, the bank will pull your personal credit report once, resulting in a Hard Pull that may lower your credit score by 5-10 points.
  • Impact on personal credit: Whether you apply using a TIN or an SSN, most banks do not report business credit card payments or balance information to your personal credit report (except Capital One and Discover). So aside from the initial Hard Pull, the card generally will not affect your personal credit history afterward. Of course, if long-term delinquency or bankruptcy is involved, it may still affect your personal record.

Risks of Business Credit Cards

Business Credit Cards and Immigration Status

One major reason many people avoid business credit cards is that they believe business cards are tied to immigration status. Here is my view:

From the bank’s perspective, the review of a business credit card application focuses only on whether your business activity is real, whether the company has gone bankrupt, and your credit history. The bank generally does not review your immigration status. Of course, banks also do not proactively report your personal information to immigration authorities or the tax authorities.

However, from the immigration perspective, if you are currently on an F1 student visa or a nonimmigrant work visa (H1b), you generally are not allowed to independently engage in business activity outside of studying or authorized employment. If you claim to have business activity when applying, there is some risk. Of course, if you claim to have such activity but do not actually have it, immigration authorities may not be able to do much, and the bank’s side may only shut down your card. In general, it is not recommended to apply for a business credit card if you do not have a green card and are not a U.S. citizen.

*The above is only my personal understanding and does not constitute advice. Please consult your bank and an attorney for your specific situation.

Risk Control on Business Credit Cards

Just like personal credit cards, banks also evaluate risk based on how business credit cards are used. For example, a sudden spike in spending or failure to repay debt may also lead the bank to shut down your credit card directly. Compared with personal cards, however, business cards generally have a much higher tolerance, since large purchases and repayments are more common in business activity.

One thing worth specifically mentioning is that AMEX business credit cards can also trigger Financial Review. Once FR is triggered, the specialist will ask you to provide the business tax return corresponding to your TIN. If you cannot provide it, bank statements and similar documents cannot be used as a substitute; your only option may be to close the card or have it closed. There have been cases where a personal tax return was accepted instead, but that should apply only to Sole Proprietor situations (where business and personal income are reported together). So if you really trigger FR and do not have a business tax return, it may be better to proactively close the business card and see whether you can preserve your personal cards.

Benefits of Applying for a Business Credit Card

Expand Your Welcome Bonus Opportunities

You may run out of personal cards to apply for fairly quickly, and after a while you may have already earned most of the available welcome bonuses. What then? You can turn to business credit cards and go after another round of bonuses. AMEX is a classic example: it has many business cards, and their welcome bonuses are often high. Another important point is that business card applications use an EIN, so you can apply once per EIN. For example, applying for Chase Ink with multiple EINs is completely possible.

Flying Under 5/24

Since most business credit cards (including Chase business cards) do not report to your personal credit report, even if you are already over 5/24, a Chase business credit card application may still be approved normally. And the new card also will not show up on your personal report. If you are already over 5/24, applying for business credit cards first is highly recommended.

Spending Does Not Affect Personal Credit

Because balances on business credit cards generally are not reported to personal credit reports, you can put a large amount of spending on business cards and avoid having an overly high balance on your personal credit report that could hurt your credit score.

Recommended Business Credit Cards

After covering all of that dry but useful information, let’s end by recommending a few standout business credit cards. Just choose from the ranking below!