What is a Business Credit Card and How to Apply Online?
6 July 2022
Running a business has extensive financial requirements. Business credit cards provide a simple solution for managing all expenses for businesses, proprietors, partners, directors, and employees of SMEs and those self-employed. They help meet the short-term demands of clients and employees, saves time and effort and have several advantages for the business. Read on to understand how they work, their benefits and how to apply for a business credit card online.
What are Business Credit Cards?
Business credit cards or corporate credit cards are designed for business owners. They are used for business expenses such as purchasing supplies, office furniture, client entertainment, making impromptu purchases, travelling, etc. Many business credit cards have a clause in the terms and conditions prohibiting cardholders from using them for personal expenses.
Moreover, a business credit card helps you build business credit, which lenders and other banks will look at if you apply for a business loan. Some credit cards provide short-term financing, which is helpful for large purchases in the short term.
How do Business Credit Cards Work?
Business credit cards function similarly to personal credit cards. You charge purchases to your card and receive a statement with your total balance owed and the minimum amount due at the end of each billing cycle.
Business credit cards, like personal credit cards, have different interest rates: the more creditworthy your company, the more likely you are to get a favourable one. A business credit card is only for purchases related to the organisation; it is not for personal use.
How do Business Credit Cards Benefit Your Business?
A business credit card allows business owners to track expenses and manage their day-to-day operations. It aids in keeping business expenses separate from personal spending. It also provides easy access to a line of credit, which is especially beneficial to small-business owners who may lack the capital to get a business idea off the ground. Increased cash flow can also be used to cover changing inventory and seasonal or unexpected costs. There are many other numerous features available on business credit cards that can make owning and operating a business a lot easier.
Eligibility Criteria for Business Credit Cards
The parameters of each bank or credit card may differ regarding the eligibility criteria to apply for a business credit card. Your application may be rejected if you do not meet the bank’s requirements. But there are a few basic criteria you must meet to ensure that your credit card application is approved. These are:
The applicant must be an Indian citizen.
Age – Minimum 21 years of age. Maximum 70 years of age.
The applicant must be a self-employed professional, sole proprietor, or a partner in a partnership firm.
The applicant must have a credible credit history.
Documents Required to Apply for Business Credit Cards
Documents required to qualify for a business credit card are :
Aadhaar card, PAN card, voter ID card, or any government-issued employee ID card for identification
Passport, Driver’s Licence, Telephone/Electricity Bill, Aadhaar Card, etc. for address proof
Business PAN Number
GST Registration Certificate
Business Registration Documents
Bank information / Bank statement
Income proof required to qualify for a business credit card:
For salaried individuals: A copy of the latest bank statement and salary slips for the last three months.
For self-employed/business owners: ITR for the previous two years, business-related financial documents, proof of business continuity.
How to Apply for Business Credit Cards Online?
Here’s how to apply for a business credit card online:
Go to the preferred bank’s official website and apply for a credit card. Fill in basic information such as your name, email address, contact number, income, and address.
You will receive a call from a bank representative who will walk you through the process.
A bank representative will also come to your house to collect your documents.
Following the basic procedure, the bank will review the documents, and your card will be issued.
Why Should You Get A Business Credit Card?
Business credit cards have some distinct advantages compared to consumer credit cards. Some are listed below:
Create a Credit History and Credit Score
Increase your company’s cash flow
Separate your business and personal expenses
Loyalty points, rewards, cash back, and other benefits are available
Monitor Employee Spending
Keep Track of Business Expenses
Gives access to a Large Credit Limit than a personal credit card
Things to Consider While Choosing a Business Credit Card
With so many business credit cards on the market today, it can be difficult to choose the best one. Here are some suggestions to help you choose the best business credit card online.
1. Specific business requirements
The nature of the expense is the first thing you should consider when selecting a business credit card. Business owners or those seeking a business credit card should understand why they need it.
2. Benefits and Rewards
Business credit cards often come with bundled offers to entice users to use them frequently. It’s critical to consider which cards provide incentives and benefits that your company can use.
3. Fees and Interest Rates
Before choosing a business credit card, it is critical to consider the interest rates. Banks and credit card companies sometimes quote monthly interest rates. This can be useful when conducting day-to-day transactions.
4. Credit limit
Before applying for a business credit card online, applicants must ask card issuers to reveal the credit limit.
How to Avoid Business Credit Card Mistakes?
For all the benefits of a small business credit card, there are a few drawbacks. Here are some of the most common business credit card mistakes to avoid:
Your credit card is more than just a convenient and secure payment method. Credit cards are best used for temporary financing. Otherwise, your company may be saddled with costly debt once the low introductory rate expires.
Do not forget to track rewards and other perks for using your corporate credit card. Examine your credit card rewards programme on an annual basis, both to ensure you’re taking advantage of the benefits your cards provide and to consider whether it’s time for a change.
Always try to pay your credit card bill on time. This protects your credit score and keeps you from incurring late fees.
Business credit cards are similar to personal credit cards but designed for business expenses. Business credit cards can help you build credit, earn rewards, and keep operating costs low by allowing you to make purchases with special financing.
Choose the best business cards that will provide you with a variety of rewards and perks that will benefit your business. And, as with any personal card, do not overspend on a business card because you could be held personally liable for any debts.
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FAQs on Business Credit Cards
Q1. Is it possible for anyone to obtain a business credit card?
Ans: You do not need to be the owner of a corporation, but you must be able to list some type of business, even if it only involves one person.
Q2. Do business credit cards run personal credit checks?
Ans: When you apply for a business credit card, the card issuer may look at your company’s track record as well as your personal credit.
Q3. What is the minimum credit score required for a business credit card?
Ans: Most business credit cards require good to excellent credit to be approved. A score of 700 or higher is considered good.
Q4. How to improve credit card eligibility?
Ans: Identify the parameters you are not meeting to be eligible for a credit card. For example, check your credit score. Usually, a credit score over 750 is preferred by credit card companies. You must also take your employment type and age into consideration. Finally, check with the credit card company if they need any additional documents.
Q5. Who is eligible for a business credit card?
Ans. A business credit card is available to self-employed professionals, proprietors, or partners between the age of 21 and 70 who are Indian residents and has a good credit history.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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