What do you need to qualify for a business credit card?

While business and personal credit cards work similarly, applying for a business card is often more demanding. That’s because business cards typically offer higher credit limits and more valuable perks.

In this guide, we look at what you need to know before applying for a business credit card.

At a glance

• Lenders usually look at your business income, trading history, credit score and ability to repay before they approve you

• You may need to provide details about your business - such as its legal structure and turnover

• Your personal credit history can still matter, especially if you run a new business, work as a sole trader or need to provide a personal guarantee

What is a business credit card?

A business credit card enables you to borrow up to a set amount, which you repay in full or partially each month. In this regard, it’s just like a personal credit card. 

However, there are some important differences between the two types of cards, including: 

• Borrowing limits are typically higher with a business credit card than on a personal one

• A business credit card enables you to build a business credit score which can make getting business loans and other types of credit easier

• You can get additional business credit cards for employees, each with its own credit limit

There are also certain benefits to having a business credit card. These may include:

• Long 0% interest on purchase terms

• Cashback on spending with certain retailers

• Air miles

• Other rewards, such as vouchers, discounts and experiences

• Travel insurance, hotel discounts and attractive currency exchange rates

• Tax filing and business account software

• A business credit card makes it easier to separate business and personal spending 

Who can apply for a business credit card?

If you own a business, be it as a gig worker, freelancer, sole trader or limited company director, you can get a business credit card, providing: 

• You’re age 18 or older

• You’re a UK resident

• You have a UK-registered company

It’s worth noting that each provider has different acceptance requirements. For example, some don’t offer business credit cards to sole traders, while others require applicants to have a business bank account.

To avoid being rejected, always check the small print before applying.

How do I apply for a business credit card?

Preparation

Before anything else, it’s worth running free credit checks to ensure both your personal and your business credit reports are accurate. If you spot any errors, ask the relevant credit agency – Equifax, Experian or TransUnion – to amend them. 

If your credit file is in good shape, you can run free eligibility criteria checks on comparison sites and provider websites to confirm which business card applications would be successful. These are known as soft credit checks and they don't appear on your record.

Once you know what you should be eligible for, you should compare:

• Interest rates

• 0% purchase terms

• Perks

• Fees on the cards

Application

Once you’ve found the right card, you can apply by phone, online, by post or in branch, if there is one. Each application form is different, but the following information is typically required:

1. Personal and business details

• Your personal name, postal address, age and contact details

• Your business’s name, registered address and contact details

• Any previous personal or business addresses you’ve had over the past three years

2. Trading details

• When your business started trading

• The sector your business operates in and a description of the work you undertake

• The type of business you run, such as sole trader, partnership, limited liability partnership or limited company

• Whether you trade only within the UK or overseas

• Your annual revenue for the latest full year and potentially for the past few years

• Your unique taxpayer reference (UTR), which is the 10-digit code on your self-assessment (SA100) or company tax (CT600) form

3. Employees

• The number of staff you employ on a permanent, contract or temporary basis

4. Credit reports and permissions

• Providers run checks on your business credit report and, in many cases, on your personal credit report to establish how much of a risk you represent

• You may need to sign a personal guarantee to confirm you’ll repay any money owed out of your own funds if the business goes bust. You might need to know your personal income to ensure you have the cash to cover repayments. This is most often asked of new business owners who don’t have a robust trading history

5. Credit limit

• Consider how much you need to run your business smoothly. Lenders are bound to ask how you arrived at this figure, so be realistic

How long does it take to hear back about a business credit card application?

It can take anywhere from a few hours to around two weeks to find out if your application is successful. The timescale depends on several factors, including the card you’ve applied for, your credit report, trading history, and whether the provider needs more information from you.

Online applications tend to be faster than postal ones.

If your application is unsuccessful, don’t immediately try again because this can damage your credit score and reduce your chances of being accepted by other card providers. Try to find out why your application was unsuccessful, perhaps by seeking answers to one or more of the following questions: 

• Is there an error on your credit file that you can ask the credit reference agency to correct?

• Do you have any outstanding debts you can repay?

• Did you make a mistake on your application form that you can avoid next time?

• Did you meet the card provider's eligibility criteria?

Once you’ve reviewed the possible reasons for the rejection and considered your options, you can run fresh eligibility checks and apply for the most suitable and attractive card.

Read more …

• What is a business credit card?

• How to choose a business credit card

• Should you get a business credit card or business loan?