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Applying for a business credit card is usually a straightforward process that you can complete online or in person at a branch of the relevant bank.
You’ll be asked to provide some essential info about your business – and in some cases, you may have to meet certain requirements, like having registered your business as a limited company or exceeding a certain turnover threshold.
While it shouldn’t take long to fill out the application, it’s well worth shopping around so you can compare the best business credit cards in advance of applying. You should also take time to check your business credit score and eligibility. This will help you find the card that’s right for you – and boost your chances of being approved.
Just bear in mind that business credit cards and personal credit cards come with a few key differences. Business credit cards, for example, generally come with higher credit limits and offer more in the way of perks and rewards – although they don’t have the same consumer protections as personal cards.
Choose a business credit card
There are a few different types of business credit cards, and each is designed for a certain purpose.
- Purchase cards usually offer low, or 0%, interest rates for a set time, which can be helpful if you need to spread the cost of expensive purchases or if your business has a temporary gap in its cash flow.
- Balance transfer business credit cards could help you save money on interest for a set time when you transfer an existing credit card balance onto a new, low-interest (or interest-free) card. Just bear in mind that you’ll usually have to pay a one-off fee to transfer a balance.
- Travel business credit cards are best used for overseas business trips as they typically offer good exchange rates and shouldn’t charge you extra fees for making purchases in another country.
- Rewards business credit cards come with offers or rewards – things like air miles, vouchers or cashback – whenever you make a qualifying purchase.
- Charge cards aren’t technically credit cards, but they work in a similar way. The key differences are that charge cards usually don’t have fixed credit limits and don’t charge you interest – because you’re required to settle the balance in full at the end of each statement period. If you don’t clear your balance in full each month, expect to pay late fees.
Next, think about how you plan to use your business credit card.
- If you would like to transfer a balance from an existing card, or plan to pay off your balance over time, look for a low or 0% introductory interest rate.
- If you usually clear your balance each month, higher-interest reward credit cards and travel credit cards could help you save money on fees or enjoy extra perks.
Business credit card eligibility
Once you’ve chosen a business credit card that suits your needs, take a few minutes to check that you meet the eligibility criteria.
There are business credit cards on the market for sole traders, business owners and directors, and self-employed business partners. So regardless of whether you’re a part-time side-hustler or a CEO, your type of business shouldn’t be a barrier to taking out a card.
Lenders’ basic criteria vary, and verification and credit checks also play an important part. But generally, you’ll need to be:
- Aged at least 18 or over.
- A UK resident with a permanent UK address.
- Earning a minimum monthly income.
- Not declared bankrupt or have any recent individual voluntary agreements (IVAs) or county court judgments (CCJs).
Depending on the lender, you may also need to satisfy some additional criteria. For example, your lender might ask that you:
- Have a business bank account.
- Have a certain amount of trading history (for example, a year or more).
- Meet certain business turnover requirements.
- Sign a personal guarantee.
Business credit card eligibility checkers
An eligibility checker can help you find out how likely you are to get the business credit card you want. You may also be given an idea of the credit limit and APR you can expect to be offered.
It’s quick, easy – and free – to check your eligibility online via the provider or broker. Crucially, an eligibility check usually won’t show up on your business credit report, which means other lenders won’t be able to see any evidence of your search.
Although it might seem like an unnecessary extra step, this will help you target your applications, keeping them to a minimum. Making multiple credit applications can reduce your chances of being accepted for credit.
Check your business credit score
Your business credit score is a number from 0 to 100 that helps lenders decide whether to offer you credit. A high score typically means that you’ve had credit in the past and managed it well, which could make lenders more likely to trust your business in the future.
If your business has never had credit, perhaps because you’ve not been trading for long, your business may have a lower business credit score. This means a lender may view your business as higher risk because it can’t see any evidence that your business has previously borrowed money and paid it back.
Several factors can harm your business credit score. If you’ve missed payments, exceeded credit limits or defaulted on a credit agreement, it will be recorded on your credit report.
Each time you apply for business credit or a business loan, it’s also recorded on your credit report. Lenders may view multiple applications in quick succession as a sign that your business is in financial trouble. This, in turn, could make them wary of lending to you – and will almost certainly make it harder to access credit on the best terms.
For that reason, it’s best to keep the number of business credit card and loan applications to a minimum. You can pay to check your business credit score before you apply for a business credit card to help reduce the risk of an unsuccessful application. For example, there may be an error on your credit report that you can ask to be corrected or steps you can take to improve your score before you apply.
Compare business credit card costs
Now that you’ve worked out which business credit card suits your needs and established whether your application is likely to be accepted, you’re ready to compare the key features and decide on the best deal for your business.
The following details are important to consider:
- Fees and charges: This includes the fee for going over your credit limit or paying late, using the card abroad, and for returned payments (when payment can’t be collected). Some business credit cards may also come with an annual fee or charge you for making balance transfers.
- The interest rates charged on balance transfers, purchases and cash withdrawals.
- Is there an introductory interest-free (or low-interest) period and, if so, how long it lasts, and the rate you’ll pay afterwards.
- The minimum monthly repayment you must make.
- The annual percentage rate (APR) is the amount you will be charged in fees and interest over a year if you don’t clear the total balance each month.
Apply for a business credit card
When you’ve followed all the steps set out above, you’re ready to make your application.
You can generally apply for business credit cards online, although depending on the card, you may also be able to apply in a branch at a bank or building society, over the phone or by post.
As part of your application, you will need to provide some basic financial and personal details, including information about your business. Your credit card provider could ask for:
- Your full name and date of birth.
- The name and address of your business.
- Information about the registration of your business and your industry.
- Personal address details for the last three years.
- Bank account details.
- Details of your personal income and business turnover.
- Contact details, including email address and phone number, for both you and your business.
- Information about your trading history (assuming your business isn’t a start up).
- Information about your employees (if you have any).
- Information about what countries your business operates in.
- A personal guarantee.
The provider will then run a credit check with a credit reference agency. Because it is a hard check, this will leave a mark on your credit history. Your personal credit score may be checked as well as your business credit score, especially if your business is on the smaller side.
If your application is successful, you will need to sign a credit agreement. If you apply online you can do this digitally, but if you apply in a branch, by post or over the phone you will be sent paperwork to sign and return.
Before you sign, read the small print to check your credit limit, interest rate, details of fees and charges and the minimum payment amount. Don’t sign unless you’re happy with all the terms and conditions. If you’ve changed your mind, you’re under no obligation to sign the agreement and can simply walk away.
If you sign the forms but later change your mind you have a 14-day cooling-off period. This means you can cancel the agreement without giving a reason why. If you have borrowed any money you will need to pay it back, along with any applicable interest.
How long does it take to get a business credit card?
If you’ve applied online, you could find out if your application has been successful in a matter of seconds. However, different lenders have different policies, so it could take a few hours or even a few days before you get a final decision.
Once approved, your card and PIN will be sent out in the post. This could take up to 10 business days to arrive. However, some providers will offer instant credit via a virtual card that you can add to your digital wallet. This means you can use your card right away.
What to do if your application is declined
You might be offered an alternative business credit card if your application is declined. This card may have a higher rate of interest and lower credit limit. If this happens, be clear on the terms of the offer before going ahead.
If you receive a flat refusal, it could be for a number of reasons, including:
- Information from your credit file shows a high amount of credit on other accounts, missed payments, or times when you exceeded your credit limit.
- Fraudulent activity or mistakes on your credit file.
- Too many applications for credit or loans over a short period.
- A lack of credit history can make it hard for lenders to assess how likely you are to repay what you borrow.
- Failing affordability checks because your business doesn’t have a high enough annual income, you don’t have sufficient personal income, or because your business hasn’t been trading for long enough.
- Lenders can’t verify your identity because you’re not on the electoral roll.
A lender probably won’t tell you exactly why you’ve been turned down, but it’s worth asking which credit reference agency it used. You can then obtain a copy of your report, look for any issues and take steps to improve your score before you apply again. Just bear in mind that you may have to pay to check your business credit score.
Resist the temptation to apply for other business credit cards right away. You could just be rejected again, and making several applications in a short time – even if some of them are accepted – could damage your credit score.
Working on your business credit score, using eligibility checks before applying and taking time to complete the forms correctly can help put you in a better position next time around.
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