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Right now the best small business card to sign up for, in my opinion, is the Chase Ink Business Preferred℠ Credit Card.
That’s because it comes with an 80,000 Point Signup Bonus: Spend $5000 on your new card within 3 months and you’ll get 80,000 points — and Chase points are among the most valuable points currencies.
It’s worth walking through the various benefits of small business cards, and also who is eligible to get them.
Why Small Business Credit Cards are Great for Spending
Business cards generally don’t show up on your personal credit report. Banks do pull your personal credit when they are deciding whether or not to approve you for the card, but after that the card doesn’t get listed.
That’s useful because one of the major components of your credit score is your credit utilization . That’s not about whether you pay off your cards each month, that’s about how much of your available credit you are using at a given time.
Your cards report your balances each month — not your unpaid balances, not overdue balances, but how much you’re carrying on the card on a given day (and paying off the card before the end of the billing cycle may not help, since they may report mid-cycle).
About 30% of your score stems from how much of your credit you use. If you’re using $2000 out of $4000 available credit, you’re using 50%. You may pay off your bill each month but you still look risky, you’re not being afforded lots of credit that you’re responsible with in the eyes of your credit score. If you’re using $2000 out of $20,000 available credit, that’s only 10% and looks much better — even though you are spending the same amount on your cards each month. Which is why applying for more cards can actually improve your score, despite that conventional wisdom that it’s bad for your credit.
In addition to boosting available credit (increasing the denominator), you can improve your score by reducing the amount of that credit you are using at any point in time (reducing the numerator). By putting your spending on a small business card, the balance of which doesn’t get reported, you reduce the amount of credit that it appears you’re using. Which is good for your score.
How You Can Get a Small Business Credit Card
I find it very useful to have a business credit card, and have for a long time – I got my first one about a decade ago, giving my social security number as a business tax ID.
Before I had my registered award booking business I would use my social security number. Most of the time back then (much more so than now) I would be approved instantly, or at least automatically.
Even having $0 in business income was often fine, it’s good to separate out business and personal expenses from the very beginning when starting to look out for business opportunities. In fact, if you want to show the IRS you have a real business this is crucial — even before transacting business a separate credit card for business finance is advisable.
Whether or not a bank will approve you for a business card depends on a variety of factors, but $0 in business income in my experience wasn’t disqualifying.
I’ve been a huge proponent of diversifying income — sure, I have a job, but I also blog and book awards and my writing has earned income from several travel sites. In the past I’ve also done fundraising consulting. And I own a rental property, as well.
It’s much easier to deduct the expenses for a business when the financial transactions for that business are kept separate from personal finances. So just as it’s useful to have a business bank account, it’s useful to have a business credit card. And that’s true even — and especially — before you have any revenue for the business.
Answer questions on the application truthfully. If you don’t have any business income, then list zero. That may be fine, depending on the issuer’s opinion of you otherwise (e.g. income, credit, outstanding credit). You can get approved on the basis of your personal (non-business) income. And if you’re not approved automatically, you can still explain that you haven’t earned income from the business yet, you’re just now setting it up.
Different Perks and More Spending Bonuses
Earning on the Chase Ink Business Preferred℠ Credit Card is strong with 3 Points Per Dollar on Travel — that’s airlines, hotels, rental cars, tolls, even Uber — and 3 Points Per Dollar on Shipping and Advertising on Social Media and Search Engines which is great for anyone who advertises on Facebook or Twitter, or who spends money advertising with Google.
Unlike earlier Ink products with bonus category earning capped at $25,000 or $50,000 spending in a year, the cap on this card is $150,000.
And it comes with $600 protection against theft or damage for your cell phone.
An Opportunity to Get More and Different Cards
I have a wallet full of cards. The banks expect that. One credit card executive told me that they give you more than one of his bank’s cards because they know you want more than one card and would rather that you have multiples of theirs than one of theirs and other banks’ cards as well.
The cards you’re able to get are dependent on both your overall credit and your income, some banks have limits on the number of cards they will issue to you. But business cards aren’t usually part of a cap on personal cards.
They have different signup bonuses, and different spending bonuses, and so business cards can be an effective part of your points-earning strategy.
One thing to consider is that the Chase Ink Business Preferred℠ Credit Card is generally for people that have signed up for fewer than 5 new credit cards in the last 24 months. So make this one a priority early.