What Is Business Credit?

Once you’ve selected a card, you’ll need to complete an application and agree to the terms and conditions before submitting. business credit card definition If you’re not an LLC, you can still apply using your employer identification number (EIN) or your social security number.

It’s important to put the policy in writing and have every employee who is issued a card read and sign it. Once you can switch to a corporate card, you can limit your personal liability. Corporate card holders are eligible for commercial liability, which means only the corporation is responsible for its credit card debts.

Business Credit Card vs. Corporate Credit Card: What’s the Difference?

Your credit score impacts your loan eligibility, and influences the rates you receive. But having a FICO score of at least 670 will give you the most options. Business credit is an estimation of a business’s risk, or ability to repay a loan or other financial obligations, much like personal credit. Here are five great benefits your company may be able to enjoy when you put in the effort to build your business credit.

• For example, you may limit one employee to $50 a day any day of the week for gas purchases, while limiting another to $100 for gas and $50 for meals each day, but only on business days.
• You repay the lender a fixed payment amount over a fixed period of time.
• Most business card issuers report the debt to business credit reporting services.
• That means a $20,000 loan could come with an origination fee between $200 and $1,000.

Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. To apply for a business credit card as an LLC, you must be the owner of the LLC or your name must be included in the operating agreement. In this article, we’ll outline some benefits of a business credit card, how to apply for one and how using one may affect your personal credit. Business owners can apply with an EIN if they have one established, or they may use their personal Social Security number. Lenders will base their underwriting analysis on all of the information included in the credit application.

Application Process for a Business Credit Card

Business credit cards are usually opened by small business owners rather than owners of large companies with many employees. There are many more reasons that a business owner might choose to apply for a business credit card. It builds a credit profile and history for the business and can help track business spending. It also offers a revolving line of credit with which to pay for unexpected expenses or large purchases, and can help cover bills without the need for immediate cash on hand. Business credit cards are designed to make it easier to purchase the things you need to keep your business going.

• By taking steps to educate yourself about business credit, you might already be miles ahead of the competition.
• It will also earn 1.5 points per dollar on eligible purchases made in select business categories and purchases of $5,000 or more (on up to $2 million per calendar year).
• Before a corporate credit card is activated, an employer may offer (or require) in-person or online training sessions designed to help employees learn the policies.
• The credit card company is looking for a broad category, like delivery, retail, or food service.
• If so, you may be wondering whether to choose a small business credit card or a corporate credit card.
• Some companies choose to disperse liability across all authorized cardholders, requiring employees to submit expense reports before reimbursement.

If you have a limited liability company or corporation, you probably have an Employer Identification Number. If you’re a solo operation, your personal social security number is sufficient. Our partners cannot pay us to guarantee favorable reviews of their products or services. We believe everyone should be able to make financial decisions with confidence.