How to get a business credit card for a new business

It can be tough for new companies to take out a business credit card due to them not having a full business credit history. But there are ways you can build your business credit score quickly, or you may be able to use your personal credit score to support your application.

6 min read
Young woman using credit card whilst surrounded by boxes

How can I get a business credit card for a new business? 

There are five steps you will need to take when getting a new business credit card. Follow these to find the best card for your company.

1. Compare startup credit cards

  • annual charges – many lenders (but not all) charge you annually for your business credit card. The prices differ, so you’ll have to weigh up if the rewards outweigh the costs
  • rewards – business credit cards tend to offer more perks than personal ones. Common rewards include 0% interest introductory periods, travel insurance, and cashback. (Just make sure you need the rewards before you sign up, or you could end up paying more for no added benefit)
  • interest rate – if you pay your balance off in full and on time each month, you won’t have to pay interest. But that isn’t always possible, so you may want to find a card with a low interest rate. The best rates are usually reserved for people with high credit scores
  • fees and charges – you won’t have to pay any late fees if you pay at least the minimum amount each month. But there could be charges for certain transactions, like balance transfers or using the card abroad
  • multiple cards – if you have multiple employees who need to make business purchases you could find a lender who allows you to add on additional cardholders. Bear in mind that as the main cardholder, you will be liable for all of the transactions made on the card
  • administration – if being able to manage the card from your smartphone is important to you, it might be an idea to research lenders who have easy-to-use apps

2. Check your credit report 

You won’t have a strong business credit history if your company is brand new or hasn’t borrowed before. This doesn’t mean that your business is bad at managing credit, it just means that there isn’t enough information for the lender to go off. They need to be confident that your company can manage a business credit card responsibly. 

Lenders may check your personal credit score if you don’t have a business credit history or if you’re a sole trader.

If you run a small business and are worried about your personal credit history harming your chances of getting accepted for a business credit card, follow these 7 tips to improve your credit score before applying.

3. Check eligibility  

We suggest you use an eligibility checker to see whether you’re likely to get accepted before you apply. This will soft search your credit history, not leaving a footprint.

If the answer is no, it may be best to look for another business credit card. If the answer is yes, it’s likely you’ll be accepted if the information you provided was correct.

Remember, every time you make a credit application, the lender conducts a hard credit check, which leaves a footprint on your credit history. Lots of applications in a short amount of time can make you look desperate to borrow and put some lenders off. So this is why it’s important to use an eligibility checker so you only apply for a credit card that you know you have a good chance of getting.

4. Gather personal and business information 

It’s best to have all the information you need to hand when you apply. Doing so will make the application process go a lot smoother and quicker. Information the lender will ask you about includes:

  • personal – your name, address, age, etc
  • your company – the name, how many people you employ, the sector it’s in, etc
  • business finances – your company revenue, which countries you trade in, etc
  • credit expectations – what you need the card for (e.g. purchase or cashflow), what credit limit you’d like

5. Apply for a business credit card 

When you apply, the lender will base their decision on your company’s credit history, assets and what they think your business can afford. For small businesses, it’s very likely that they will conduct a credit check on your personal credit history, too.

The lender may also require you to sign a personal guarantee. This is a legally binding agreement that states that if your business is unable to repay the credit card, you will make the repayments. Think carefully before agreeing to this because it will tie your business and personal finances, and may affect your personal (and business credit score) if payments are missed.

How to build your business credit score 

To get approved for a business credit card, you may want to improve your company’s credit score first. Check out how to improve your business credit score, as well as things that affect it, below.

File your accounts correctly

After every financial year, you’ll need to file your accounts with HMRC (for all businesses) and Companies House (if you’re a limited company or a larger corporation). Make sure you follow the guidelines and file them in full, otherwise your company’s credit score could be negatively affected.

Pay your bills on time

Just as in your personal life, it’s important to pay your business bills in full and on time. Get into the habit of paying them as soon as they’re due or setting up a direct debit if you can be forgetful. This will help you to build up a good credit history and avoid negative footprints on your business credit score.

Avoid CCJs and insolvency proceedings

Having any CCJs or insolvencies pending against your company can severely damage your business credit score, and potentially even your personal one. Try to avoid this and seek debt advice if your business is struggling.

Keep track of your business credit score

Sign up for regular business credit reports or alerts that update you when your credit score changes. Being aware of your credit score will enable you to carry out swift damage control if something unexpected happens.

Update any changes

If anything about your business changes (like your registered office address), make sure you update the appropriate people, like Companies House and credit reference agencies. Any mismatched information on your credit report and credit card application can be a red flag to lenders and could slow down your application.

Look after your personal finances

Looking after your personal finances is especially important for small businesses with little credit history. Your personal credit score can make or break your application, so look after your finances properly. 

Don’t apply for multiple forms of business credit

Making multiple applications for business credit in a short space of time can damage your business credit score. This is the case whether you apply for a business credit card, business loan, or another form of credit. Instead, find a product you really want and check your eligibility before making a formal application.

Disclaimer: All information and links are correct at the time of publishing.