Business credit cards are an amazing tool for entrepreneurs looking for additional capital - but is it accessible to startups and new businesses? This question keeps startups from exploring business credit cards as a lucrative option, but this article aims to answer this question and give you all the steps you should know before applying for this type of business funding to secure the maximum amount of funding possible for your startup business. 

Does business credit work for startups? 

Business credit is an excellent source of capital for startups and any other business. Business credit works just like personal credit - companies are assessed and given an individual line of credit based on their financial history and score. This means that there are business credit options for startups that can build up their company's financial history to establish a good rating with lenders to qualify for more considerable sums of money. 

Since business credit cards are personally guaranteed, meaning the banks use your personal credit history to impact their lending decision, you don't need an extensive business credit report or financials to qualify for this type of funding - making it a perfect option for startup businesses. 

Many worry about the personal guarantee, but the accounts do not appear on your personal credit report. The banks only use your personal credit as a guideline to help determine whether or not they will extend business credit for startups.  

What are the business credit qualifications for startups? 

Now that we know business credit approvals are partially dependent on your personal credit history, what are the business credit qualifications for startups? 

For startups to qualify for business credit, you'll need a minimum personal credit score of 680. Though this number doesn't guarantee you will be approved, it indicates to lenders that you have at least a basic understanding of handling credit accounts properly. 

If your credit score stands below 680, it would be best to work on credit repair and removing any negative items impacting your credit score, such as those listed below: 

• Late payments 

• Collections/Charge offs 

• Bankruptcies 

• Excessive number of inquiries 

Applying for business credit with these items present on your credit reports would likely result in a denial, so it would be best to work on removing them before doing so. You can either work on disputing these items with the credit bureaus yourself or work with a professional credit repair company, like Kaydem Credit Help, to remove these items as quickly as possible. 

Next, the entity you choose to apply with can significantly impact the results. You should carefully select your industry and business name to ensure your entity doesn't appear risky to business credit lenders. Banks always try to minimize their risk when extending credit, so ensuring your entity portrays your business in the best light will help you achieve this goal. 

For a more in-depth review of what the business credit lenders are looking for and how to maximize your chance of approval, click here to join Fund&Grow's free business credit masterclass. Fund&Grow is responsible for securing over $1.8 billion of business credit for more than 30,000 entrepreneurs from all industries, making them leaders in the business financing industry. The Fund&Grow team created this masterclass as a free resource for entrepreneurs, so they go over everything you need to know in this free training to secure the funding you need quickly. 

How to apply for business credit for startups 

When submitting applications, the process is very similar to personal credit cards. However, business credit applications take longer to fill out since they will ask for additional information they typically wouldn't with a personal application. 

Many business owners make the mistake of applying for one account at a time rather than applying strategically using the credit card stacking method. 

Credit card stacking refers to applying for several credit cards to access a larger unsecured line of credit than what individual business credit cards offer. This strategy enables you to benefit from the best deals offered by multiple companies, such as their attractive zero-interest introductory offers, which you can combine to increase your buying power for your business. 

With business credit card stacking, you will have to dedicate some time toward applying for multiple accounts one after the other to avoid any inquiries from impacting the decisions of other lenders. Completing this process quickly and in the best order based on how long banks take to review incoming credit applications can be a challenge for entrepreneurs trying to get their businesses up and running, which is why many opt for a done-for-you funding solution as the one Fund&Grow offers. 

Throughout the 12-month membership, Fund&Grow handles all credit applications on your behalf and negotiates with the credit lenders to overturn denials and increase credit limits when approved. This program allows busy startup and seasoned business owners to sit back while a professional company handles everything for them, giving them access to up to $250,000 of zero-interest business capital. 

To learn more about the Fund&Grow program, click here. 

Business Credit FAQs 

Are there different types of business credit cards? 

There are different types of business credit cards that offer zero-percent interest for an average of 6-22 months, while others prioritize travel rewards, cash back, and reward points. Also, many tend to get business credit cards and corporate credit confused, but they are two separate types of business funding solutions. 

Business credit cards refer to the revolving credit lines extended by major banking institutions, like Bank of America or American Express, that is personally guaranteed but only report to your business credit report. 

These accounts allow you to spend up to the approved limit, and borrowers are responsible for paying a monthly minimum payment toward the balance, similar to the process of personal credit cards. The minimum payment is typically one percent of the balance on the account, and since most of these cards offer zero interest, they're a cost-effective tool for startups. 

On the other hand, corporate credit accounts refer to those given by specific vendors, such as Uline or Home Depot. These accounts are not personally guaranteed but can only be used with that vendor. Corporate credit also must be paid in full within the timeframe approved by that vendor. For example, if you receive a Net30 account, you must pay the balance in full every 30 days. 

How does business credit work? 

Business credit cards are used just like personal cards; however, they do not appear on your personal credit report (with a couple of banks being an exception to this standard). Borrowers can use business credit to purchase virtually anything their business needs, including software, equipment, inventory, machinery, monthly operational costs, real estate, and more. 

Borrowers are responsible for paying a monthly minimum payment of one percent of the balance they carry on the account at the end of the billing period. These accounts are revolving, so borrowers can use, pay off, and reuse the credit line as many times as needed, compared to a term loan, where you would need to reapply for additional funding once it's paid off. 

Which business credit cards report to personal credit report? 

Most business credit cards will not report to your personal credit report, but Discover and Capital One business credit cards are the exceptions to this standard. 

Do business credit cards have higher limits? 

Yes, business credit cards do have higher limits. A single business credit card could have a credit limit of $100,000 or more for qualified applicants. 

Are business credit cards personally guaranteed? 

Business credit cards are personally guaranteed, but they will never appear on your personal credit report unless the borrower defaults on payments for more than three months. The minimum monthly payments on these accounts are one percent of the balance on the card at the end of the billing period. These cards tend to offer zero percent interest offers, making it highly affordable for startups to make monthly payments. 

Startup businesses seeking a business credit card are in luck because qualifying and getting approved is more accessible than many think. It can be an invaluable tool for entrepreneurs to obtain the necessary funds for their businesses. 

If you want to learn more about success in qualifying and getting approved for business credit cards, watch Fund&Grow's free masterclass, which will provide step-by-step guidance on securing the funding your business needs. 

With the right mindset and dedication, success is attainable. So, join the masterclass now and start your journey toward fueling your dream of becoming an entrepreneur!