In the same way that a personal credit card has application requirements, a business credit card will have even more requirements. If you want to succeed in this straightforward process, you will need to understand what these qualifications are. The importance of understanding eligibility is to avoid disappointments at the last minute or risk affecting your credit score by taking the wrong credit card. Fortunately, there is a lot that has been written about this, so you can read more from the web. Speaking to a business consultant or a business financial adviser can also help. Here is a guide for you.
Understand the Nature of Your Business
Depending on the region of operations, the eligibility of a business card can be determined by the type of business that you do. Hence, the most prudent thing to do is understand the nature of your business and all the possible options. Small business startups and large corporate businesses that are already well- established may qualify for different categories of business credit cards. This means that you have to either consult or do some background research on what your potential lenders have to offer. The aim is to go for the best option with the most benefits for the business.
Explore Various Lenders and their Offer
Each state has numerous business credit card providers who are willing to offer these services. It is up to you to choose the one who will serve you best. As you research, take into considerations the terms and conditions that guide their services. Also check the credit limit in relation to what you think is enough to sufficiently help the business. A higher limit can tempt you to spend more and strain when repaying while a lower limit may not be sufficient to serve you.
Credit Score Position
Before getting your business a credit card, potential lenders will often ask for your personal credit score position. For existing businesses, they will check the credit history of the business itself. The idea behind this is to understand the possibility of repaying the credit card loan. Most people wonder why your personal score should be a consideration, yet business is a different entity. Indeed it is, but you being the owner and ultimate decision-maker means that it will be run your way. So if your credit score is low, you need to visit Boostcredit101 for the best corrective solutions.
Estimated Annual Revenue for the Business
Potential lenders are likely to ask for the projections of your annual income and the strategies for achieving that figure. It is through these figures that they can either approve or decline your loan. New businesses that are yet operating should have compelling reasons that they will hit the targeted revenue. On the other hand, existing businesses can easily show the annual revenues of previous years to convince lenders that they are eligible. There is caution here because some business people may be tempted to entice lenders with lies, which can be problematic later.
Documents for Operations
Whether the business is about to start or has been in operation for years, it will have to produce legal documents that show the approval to operate as a business. Some of the most important documents to attach include the following:
Certificate of Incorporation – This shows that the business is indeed registered and qualified to operate.
Tax Compliance Certificate – No lender would like to engage a business that does not comply with the taxation laws of the country. Therefore, these documents are likely to be asked for.
Clearance by Credit Bureau – We have already mentioned the importance of having a good credit score either for the business director or the business itself. In the case of prior operations, the entity will need to be cleared by the credit bureau through a clearance certificate.
Though a business can operate without a business credit card and still succeed, those with one are likely to have a smoother flow of operations. You can apply for one if the business qualifies as mentioned above. However, it is better reserved for emergencies rather than common use. It has an interest rate that should be avoided through controlled use.