When should you apply for a business credit card

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Business credit cards can offer a range of benefits to help manage your business's finances. Here we'll look at when it might be the right time to apply for one.

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What can a business credit card do for your business?

Whether you’re a sole trader or running a company with multiple employees, a business credit card can help manage your finances more effectively. 

For a start they can be a great way to pay for your company’s expenses, offering you the ability to keep track and keep payments separate from your main business account. Unlike personal credit cards, business credit cards can come with a higher credit limit too.

A business credit card also help further separate your personal finances from your business finances. Using one will help build your business’s credit history instead of having to rely on your own. Not only can this lead to an improved business credit score, it can eventually take the focus off your personal credit score. 

It can also:

  • Help you to manage cash flow if you’re waiting for an invoice to be paid,

  • rack up rewards such as air miles or cashback on purchases,

  • make it easier for employees to pay their expenses and make it simpler for you to track if you issue them with a card,

  • be helpful in case of an emergency.

And if you’re looking to grow your business, then having a clear record of expenditures year-on-year coupled with the ability to build your business’s credit history and improve its credit score can help with future borrowing that may be necessary to scale up. 

Factors to consider before applying for a business credit card

Taking out a business credit card can help your business in a variety of ways, but it’s important to consider everything carefully when making your decision. Recognising potential impacts and understanding if the time is right can all make a difference in both your application and the effect of having the card on your business.

Some key factors to consider are:

Personal and business credit scores

Your business credit score, like your personal score, is dictated by your credit history. Paying bills on time, the amount of debt you have and the number of cards and loans in your name all contribute. When you first apply for a business credit card, your personal score is likely to be checked. If you have a poor score, or if you’ve made a lot of applications over a short period of time, then it could impact the terms of the business card offered. Ultimately you want to start to build your business credit history so you can unlock other means of finance in the future, such as business loans, without your personal credit score factoring into it. 

Company’s financial situation

As with any form of credit, you want to be confident that your business can afford the credit card in the first place. Ensuring that your business is in the strongest position possible will help with the application. Ask yourself: are you happy with your business’s cash flow? Are you confident that you’ll be able to make any repayments? Are any bills looming that you might’ve forgotten about? If you’re unsure, there’s no harm in speaking to an accountant or financial advisor to discuss your specific circumstances.

Separating business and personal expenses

Keeping your finances separate can make life much easier and a business credit card can really help. Whether it’s buying lunch for a client or some equipment for the office, being able to quickly and confidently identify what’s what is crucial. It’s not just simplicity either, mixing up personal and professional tax obligations can lead to errors, delays and even fines. Separating out business purchases from personal purchases enables you to see your expenditure at a glance, making tax returns easier. It might mean you can submit a tax return without the need (and cost) of an accountant too.

Making a large business purchase 

If you’re considering a large purchase for your business then this could be a good way to do it. Firstly, you have more protection than if you purchase using a debit card as purchases are protected under Section 75 of the Consumer Credit Act. While this doesn’t mean you automatically get a refund if you’re unhappy, if the product was misrepresented by the seller or they breached their contract, you can make a claim for a refund through your card provider. It’s also worth looking around at different credit cards too. For example you might not get charged any interest on your purchases for a set period if you take out a 0% interest card. 

Benefit from spending

You could also benefit from rewards on day-to-day business spending too. Reward credit cards for example offer a host of different perks to suit you. Some offer air miles, some offer cashback on purchases, some offer exclusive discounts and some offer points that can accumulate to give you rewards. So if you’re spending the money anyway, it can sometimes benefit to do so on a business credit card. And if you pay it off within 56 days, you won’t pay any interest. 

Manage employee spending

If you employ people then issuing them with a business credit card can be mutually beneficial. It means your employees can make business expenses without it impacting their personal finances and you can easily track the expenses without the hassle of expense administration. 

Applying for a business credit card

Here’s a broad step-by-step guide to applying for a business credit card:

1 - The easiest way to apply is online, and you can browse our business credit card deals to help with this. You can also apply by phone or by visiting your preferred branch

2 - Provide your personal details - this will check your eligibility, so you’ll need to prove that you’re aged 18 or over and that you’re a UK resident

3 - Provide details about your business - again this also forms part of the eligibility checks, so you’ll need to prove that your business is active and registered as a legal entity. You’ll also provide financial information about your business too, such as turnover and when you started trading

4 - Once you’ve provided the relevant information, you should receive a decision instantly. If approved, this decision will usually outline the credit limit and interest rate the provider is offering

5 - You should then receive your business credit card within a week and you’ll be able to start using it 

What else should you know before applying

As with any credit products, you’ll want to make sure you understand what you’re taking out and what could happen if you fail to meet any repayments. 

Check the Annual Percentage Rate (APR) on your card so you know what interest you will be charged if you don’t pay off your statement in full within 56 days. Read the agreement so you understand what fees could be charged in the event of you being unable to make a minimum repayment. You also want to make sure you’re at ease with the impact on your credit score if you do fail to keep up repayments.

As you can issue business credit cards to employees, make sure you’re comfortable with the employee before doing so. There’s a level of trust in doing this and it’s important each party understands this.


How does a business credit card impact personal credit?

When you first apply for a business credit card, the search will appear on your personal credit file. So if you make lots of applications in a short period of time then it could make it more difficult to obtain credit.

Can a startup or new business apply for a business credit card?

Yes, a startup or new business can apply for a business credit card. If your business hasn’t built up a credit history yet, the provider will likely check your personal credit history to help make its decision.

Is there a maximum credit limit for business credit cards?

No, there isn’t a maximum credit limit for business credit cards as such - but any limit you’re offered will be subject to your business’s circumstances such as its type and size and that will be taken into account alongside your credit history.

About Kyle Eaton

Kyle is a finance editor specialising in all things related to small and medium enterprises (SMEs). He has over ten years' experience working in financial services and as a writer.

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