How to Get a Business Credit Card for a Young Business (and Why It’s Important)

Wage Optimizer


It’s finally happening. Maybe you’ve registered your new LLC and are ready to start your new business. Maybe you’ve assembled your business plan and are looking into financing your dream company. Chance are a business credit card is looking like a great option — and it often is. But what if your personal credit is not as great as it could be? What are the pitfalls of having a business credit card? These are questions every new business owner should be asking themselves. Here are some answers.

What a Business Credit Card Can Do

First of all, let’s settle the number one question: do you need a business credit card? Technically, no. But there are some very good reasons why you should have one:

  • You’ll improve your overall credit situation. A business credit card helps establish a separate credit history, and keeping your business credit separate means less impact on your personal credit.  
  • Banks tend to be more generous with business credit cards. If you’re a business owner, banks tend to offer bigger lines of credit and more perks than they do for personal credit. This can be a big benefit (but can also be a hazard — see below).
  • It separates business and personal expenses. Any business owner should know, commingling your personal and business accounts is a big no-no. It creates confusion and could get you in trouble with the IRS. A business card solves this problem.  
  • Simplified internal processes. Tracking expenses is much easier when you have orderly online statements. When tax time rolls around, you’ll thank yourself for having a business credit card and using it often. A business credit card also makes it easy to track and control employee spending.

Applying for a Business Credit Card

To apply for a business credit card, you’ll first need to register your business with the state. This could actually make applying easier, since you may find yourself getting credit card offers in the mail right away. Do your homework and make sure to compare services and programs before sending in any applications.

You’ll be required to provide details about your business (LLC, sole proprietorship, partnership, etc.) and your personal and business income. Like it or not, personal credit rating can and probably will impact the approval process. This can be a disadvantage if your personal credit isn’t spectacular. Rehabilitating your credit can take months (sometimes years), but with some work and guidance, you can often turn around even the worst credit score.


Business credit cards sound like a huge asset — and they often are. But you should know a few things before you jump into the deep end:


  • Business credit cards don’t always stack up favorably in terms of interest and financing. Traditional business loans may offer better interest rates and larger financing than a credit card. However, business credit cards also don’t require collateral the way business loans do.
  • When you sign up for a business credit card, you must also sign a personal liability agreement, meaning lack of payment can impact your personal credit and hike up your interest rate.
  • Business credit cards don’t offer the same protection as personal credit cards. Returns, error disputes, and other protective measures may not compare well to a consumer card.
  • As with any business, it’s possible to run into trouble if you run up a large amount of debt on your business card and then have trouble paying it back. The generous credit limits offered by banks when it comes to business credit cards can become a liability instead of an asset.

Is a business credit card right for your startup or fledgling business? Only you can decide that for sure — but chances are, when wielded with diligence and wisdom, you’ll find it a powerful tool for growing your business.