Do You Need a Business to Get a Business Credit Card?
The term "business" is much broader than most people realize.
Do You Need a Business to Get a Business Credit Card? Understanding the Real Requirements
The world of business credit cards often seems reserved for established companies and entrepreneurs, but the reality is far more inclusive than many people realize. While you technically need a "business" to qualify for a business credit card, the definition of what constitutes a business may surprise you.
Understanding What Qualifies as a Business
The key to answering this question lies in understanding that a "business" encompasses far more than traditional brick-and-mortar establishments or registered corporations. Any activity you undertake independently to earn money can qualify as a business. This includes side hustles, freelance work, or even occasional money-making ventures. For instance, if you've ever sold items on online marketplaces, provided tutoring services, or driven for a rideshare company, you're already operating a business in the eyes of many credit card issuers.
The Application Process and Requirements
When applying for a business credit card, you don't need formal business registration like an LLC or corporation. Most card issuers allow you to apply as a sole proprietor, using your Social Security number as your tax identification number. The application will typically request basic business information, including but not limited to:
Your business name (which can be your name)
Annual business revenue (which can be $0 for new ventures)
Business structure (sole proprietorship for most individual entrepreneurs)
Federal tax ID: Your Employer Identification Number (EIN) or Social Security number
Amount of time you have been in business
Number of employees
What really matters in the approval process is your personal creditworthiness. Most business credit cards require excellent personal credit scores (typically 690 or higher) and stable personal income. This is because business credit cards generally require a personal guarantee, meaning you're personally responsible for any debt incurred on the card.
Benefits of Business Credit Cards
Obtaining a business credit card can offer several advantages, even for small-scale entrepreneurs. These cards often feature higher credit limits than personal cards, substantial sign-up bonuses, and specialized rewards categories that align with business spending patterns. They also provide valuable tools for expense tracking and can help establish a separate credit history for your business activities.
Important Considerations
While business credit cards are more accessible than many people think, there are several important factors to consider:
Truth in Application: Always be honest when applying. Don't inflate business revenue or create fictional business details. Card issuers may request supporting documentation to verify your business activity.
Credit Impact: The application will result in a hard inquiry on your personal credit report, though ongoing card activity typically won't affect your personal credit score unless you default on payments.
Separation of Expenses: While it's technically possible to use a business card for personal expenses, it's generally advisable to keep business and personal charges separate, particularly for tax purposes and to maintain clear financial records.
Advisor Recap
Yes, you need a business to get a business credit card, but the threshold for what constitutes a business is lower than many people assume. If you're engaging in any independent money-making activity, whether it's a full-time venture or an occasional side hustle, you may qualify for a business credit card. The key is being truthful in your application and understanding that your personal creditworthiness will play a crucial role in the approval process.
The good news is that you do not have to navigate this on your own. If you are an individual, you can check the box during our intake survey, and we will automatically include business credit cards in our analysis for you. If you already have a business and are looking for a card, then our business card services will match you with the best card for your business needs.
