Do you need a business to apply for a business credit card?
This is a common question, with a surprising answer. A lot of people don’t know this, but many credit card companies have different requirements for what constitutes a “business.” In some cases, almost anyone can apply for a business credit card, even if they don’t own a traditional “brick and mortar business.”
And this can be a good thing. Many business credit cards offer excellent perks, such as large sign up bonuses, additional cash back or rewards points in categories businesses are likely to spend, such as travel, gas, restaurants, and office supply stores. Some business credit cards even offer access to airport and hotel lounges, which is a nice benefit if you travel frequently.
In this guide, we’ll cover who is eligible for a business credit card, and how to apply.
Who Qualifies for a Business Credit Card?
If you already run a business, have established an Employer Identification Number (EIN), and have incorporated your business, then you’re probably already eligible to apply for a business credit card.
But many others may qualify for a business credit card, even if they don’t have a large or established business. Most credit card issuers will consider your application for a business credit card as long as you have “some” related business activities and your intent is to turn a profit from your business.
This can be almost anything that is designed to make you money. Do you participate in any of the following:
- Make money from a side job?
- Do consulting or freelance work?
- Make money online?
- Sell things on Etsy, eBay, Amazon, Craigslist, or local classifieds?
- Something else designed to make money?
If the answer to any of the above is “yes,” then you may be eligible to apply for a small business credit card. I’ll show you how.
You Can Apply for a Business Credit Card as a Sole Proprietor
Business credit card applications have a section for business type, business name, and Employer Identification Number (EIN). If you are doing business as yourself, then you can select “sole proprietor” as your business type, use your name as the business name, and use your Social Security Number as the tax ID number.
It’s that easy.
Who can be a sole proprietor? Almost anyone can claim to be a sole proprietor, which is the most basic type of business recognized by the IRS. According to the IRS, “A sole proprietor is someone who owns an unincorporated business by himself or herself.” This means that anything you do can be considered a business. This can include selling things on eBay, holding garage sales, babysitting, freelance work, consulting, coaching, or anything else.
Even though a sole proprietorship is a legal business, there are no formal requirements such as paperwork or registration fees for starting a sole proprietorship. The only qualification to be a sole proprietor is to claim you are a sole proprietor. It’s as easy as that.
Note: It’s important to understand that with a sole proprietorship, there is no legal separation between you and your business. Your business and personal debts are considered the same.
Why Business Credit Cards Can be Good for Individuals
If you apply for a business credit card as a sole proprietor, you can use it for personal use as well. Though you may find it a good idea to keep your business expenses separate for tracking and tax purposes. That said, some business credit cards are actually better than a card offered by the same company and branded with the same name. So you may look into these options if you need a business credit card.
Here are some of the reasons business credit cards can be good for individuals:
Better rewards and bonuses. Credit card companies know that most businesses charge more every month than individual customers and are often more profitable. This means the competition is fierce and credit card companies will do what it takes to recruit new customers. This works in your favor as they often have better cash back and rewards programs and sign up bonuses to attract new customers.
Higher credit limits. Many business credit cards offer higher credit limits compared cards issued to individuals because businesses often take in and spend more money than individuals. Why is a higher credit limit good for an individual? Because your credit score is determined using a formula that includes credit utilization (how much of your available credit you use). A higher credit limit can raise your credit score, provided you don’t max out your limits.
Balance transfers and 0% introductory offers. A lot of people use balance transfer offers to take advantage of credit card arbitrage (paying 0% interest on money borrowed from credit card companies). This can be a profitable enterprise. Others like to take advantage of 0% introductory offers so they can go out and charge some startup costs and pay them off over time without paying interest. When used correctly, these actions can either make or save you a lot of money.
Almost Anyone Can Apply for a Business Credit Card
I applied for my first business credit card as a sole proprietorship, soon after starting this site. I later formed an LLC to make it easier to separate my expenses and I later signed up for another business credit card under my LLC. I currently use the Ink Business CashSM Credit Card from Chase, and a Discover Business Card. The Chase card offers much better rewards, so I use it for most of my purchases. The Discover Card has been open longer, so I don’t want to close it, as the age of credit is a big part of your credit score (leaving the account open will help maintain my high credit score).
Will All Credit Card Issuers Issue a Business Credit Card to Sole Proprietors?
Each credit card company has its own rules regarding how they perform their credit or risk analysis. Some credit card issuers are more strict than others, and there are no guarantees you will be approved for each credit card you apply for.
I have had business credit card applications approved when I applied as a sole proprietor. And I have also had other credit card companies request additional information regarding my business, including the formation paperwork, income statements, and additional information.
So each credit card application should be viewed on a case by case basis. That said, I believe a good business credit card can be very valuable and is worth applying for if it will help you manage your business spending as well as earn rewards. I have earned thousands of dollars in business card rewards through spending we would have made anyway (all of our regular fixed monthly expenses, such as cell phone bills, utilities, website hosting, and similar expenses are on autopayment with our credit cards when possible).
Recommended Business Credit Card
Most of the large credit card issuers have a small business credit card in their offerings. I’m a fan of getting a small business credit card that offers a solid rewards program, either in the form of cash back, or travel rewards, such as airline miles, hotel points, or similar rewards. My current business is internet-based, so I make a lot of online transactions. But since I only travel a few times per year for my business, I personally prefer a cash-based rewards program. The card listed below is the card I use for most of my business transactions. You can view our list of best business credit cards for more options.
Ink Business CashSM Credit Card
The Chase Ink Business CashSM Credit Card is my preferred business credit card. I have been a Chase customer for over 10 years now, with a Chase bank account, a Chase Freedom credit card, and the Ink Business CashSM Credit Card, which I use for the majority of my business expenses.
The excellent customer service, access to business banking, ability to link my credit card to QuickBooks Online, and the rewards programs have made me a happy customer.
Limited time offer: The Ink Business CashSM Credit Card features a $500 cash bonus when you spend $3,000 in the first three months of card ownership.
Excellent Rewards Program: The Ink Business CashSM Credit Card features an excellent rewards program, with
- 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year,
- 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year, and
- 1% cash back on all other purchases, with no limits.
- Your cash back rewards do not expire while your account remains open.
There is a 12-month 0% introductory offer on purchases and balance transfers. To top it off, there is no annual fee, and you can get employee cards at no additional cost.
You can compare the Ink Business CashSM Credit Card and other small business credit cards on this page.