Emerging Entrepreneurs May Soon Reap Benefits of Business Credit Cards; Here's How

Emerging Entrepreneurs May Soon Reap Benefits of Business Credit Cards; Here's How
Alain Filiz shows off some of his credit cards | Getty Images | Photo by Joe Raedle

The Visa, Mastercard and American Express logos are seen on credit and debit cards | Getty Images | Photo by Matt Cardy
The Visa, Mastercard and American Express logos are seen on credit and debit cards | Getty Images | Photo by Matt Cardy

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Business credit cards provide an array of benefits but have traditionally been associated with established businesses. But all that's about to change since a shift in perception is underway, revealing that obtaining a business credit card may be more accessible than imagined, even for those without a formally registered business.

Contrary to the common belief that business credit cards are exclusively for formally registered businesses, individuals engaged in side hustles or unconventional income-generating activities may soon qualify for them as well. The rigid criteria are evolving, allowing entrepreneurs to access the benefits of business credit cards based on various nontraditional ventures. These include selling products online, offering services like babysitting and dog walking, providing tutoring, driving cabs or delivering food, managing rental properties, practicing graphic design, freelancing part-time, and even personal training.

While lacking a formal business structure, entrepreneurs can still be considered eligible for top-tier business credit cards. If an individual receives a 1099 for their work instead of a W-2, it serves as an indication of their eligibility, regardless of a formal business structure.

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The application process for a business credit card mirrors that of a personal one, with a few additional considerations. Entrepreneurs must provide essential information about their business, including its name, annual revenue (or estimated revenue), and type. While card issuers typically request an Employee Identification Number (EIN), sole proprietors can often substitute their social security number.

The Resy Drive Thru, presented by the American Express® Gold Card, at the Hollywood Palladium | Getty Images | Photo by Rachel Murray
The Resy Drive Thru, presented by the American Express® Gold Card, at the Hollywood Palladium | Getty Images | Photo by Rachel Murray

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Credit scores play a pivotal role in determining eligibility, with most small business credit cards favoring individuals with an average credit score of 670 or higher. This categorization places them in the "good" credit or above range on the FICO scale. It's essential to note that even if an entrepreneur lacks a business credit report, issuers may consider their personal credit score.

Entrepreneurs are encouraged to explore diverse options tailored to their needs and budgets. Lists compiled by financial experts can guide individuals to find the perfect fit based on specific criteria. The Ink Business Preferred® Credit Card emerges as a top choice for small businesses aiming to earn travel rewards on common expenses such as travel, shipping, and advertising. It presents a modest annual fee of $95 and offers perks like no foreign transaction fees, auto rental collision damage waiver, and cell phone protection.

For entrepreneurs prioritizing fee-less options, The American Express Blue Business Cash™ Card is spotlighted. With a $0 annual fee and a 0% APR for the first 12 months on purchases (followed by a variable APR between 18.49% and 26.49%), it appeals to those seeking financial flexibility. The card introduces Expanded Buying Power, allowing users to spend beyond the card's credit limit, subject to factors like payment history and credit records.

In conclusion, business credit cards are positioned as a financial tool accessible to all entrepreneurs, irrespective of their business structure. The narrative is shifting from exclusivity to inclusivity, emphasizing that individuals engaged in for-profit ventures, even without formal registration, can reap the benefits of business credit cards.

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