Starting a Business with Credit Cards for Beginners

Starting a business with credit cards can be a great way to get started, especially for beginners. You can use credit cards to cover initial expenses, such as equipment and rent, and even earn rewards points.

According to the article, credit cards can be used for business expenses up to $5,000 without having to pay interest for the first 6 months. This can be a huge help for small business owners who need to get their business off the ground quickly.

However, it's essential to use credit cards responsibly. You should always pay your balance in full each month to avoid interest charges. This will help you avoid debt and keep your credit score healthy.

To get started, you'll need to apply for a business credit card. You can choose from a variety of options, including cash back, rewards, and low-interest cards. Some popular business credit cards include the Chase Ink Business Preferred and the Capital One Spark Cash.

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Credit cards can be a great option for startups, but it's essential to choose the right one. For funded startups, Brex and Amex are good options, with Brex offering a generous spending limit and Amex providing a generous spending limit as well.

If you're looking for a card with rewards, consider the Chase Ink line of credit cards, which offers cash back or points depending on the card. The Chase Ink Business Unlimited and Chase Ink Business Cash cards have no annual fee, while the Chase Ink Business Preferred has a low annual fee of $95.

Here are some key features to consider when choosing a credit card for your startup:

The sign-up bonus, also known as the welcome offer, is a great incentive to earn your business. Credit card issuers often offer this bonus to new cardholders.

Typically, you'll need to spend a certain amount on eligible purchases within a specific time frame to qualify for the bonus. This can be a great way to earn some extra rewards or cash back.

Some of the best business credit cards offer sign-up bonuses worth $1,000 or more. This can be a game-changer for small business owners or entrepreneurs who want to maximize their rewards earnings.

If you're looking for a sign-up bonus worth 100,000 points or more, you're in luck. There are currently 13 cards that offer this level of bonus, making it easier than ever to earn big rewards.

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The Chase Sapphire is a personal credit card that many startups use for business purposes, likely because founders want to earn travel points for themselves.

It offers generous rewards, with the Sapphire Preferred giving 2x points on travel and restaurants, and 1 point for each $1 spent on other categories.

Many founders start using their personal card for business because it's easily accessible, but this can be a problem for fast-growing, funded companies that need higher credit limits.

The founder also takes on the personal guarantee with a Chase Sapphire card, which can be a risk.

The Chase Sapphire Preferred is often used by founders because of its rewards, but it's not a business tool, and Chase has a better business card option, the Chase Ink.

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The best business card for you depends on your business needs. If your business doesn’t involve a lot of traveling, a cash back business card may serve your needs best.

If you do travel for business, a business credit card with travel rewards could be the better option for you. Some rewards cards have annual fees so be sure to compare any fees with how valuable the rest of the card may be to you.

Some cards have high annual fees because they have a long list of perks, but if you’re not going to use many of the perks, the card may not make sense for your business.

A cash back business card may be a good option if your business doesn't involve traveling, such as a consulting business.

If you are a venture backed company, look for cards specifically made for businesses with funding. Most small business cards are going to have features designed to give rewards and benefits to the individual holding the card, not to the company.

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Here are some key features to consider when choosing a card:

By considering these features, you can choose a card that meets your business needs and helps you succeed.

Business credit cards offer a range of features and benefits that can help your business thrive. You can often qualify for a business credit card more easily than a traditional business loan, making it a great option for startups or businesses with limited credit history.

Some business credit cards come with generous perks, such as unlimited free employee cards and expense management tools. Others offer rewards and incentives, like cash back, bonus miles, or discounts on office supplies, which can be a great way to earn rewards on everyday business spending.

A business credit card can also help you build credit, which is essential for future funding and larger loans or lines of credit. Some cards even offer instant signup and no personal guarantee, making it easier to get started.

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Here are some key features to consider when choosing a business credit card:

It's worth noting that some business credit cards come with higher rewards rates in specific business-related categories, which can be a great option if your business spends heavily in those areas. For example, the Ink Business Cash Credit Card offers 5% cash back at office supply stores and on internet, cable and phone services.

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Some business credit cards will offer new cardholders a chance to make interest-free payments for a certain length of time, which could be 12 months or longer.

These introductory 0% APR offers can apply to purchases, balances transferred from another credit card, or both.

The introductory period can vary in length, but it's typically several months, and once it ends, the balance on the card and future purchases will be charged a predetermined rate.

This means you'll need to pay off the balance before the introductory period ends to avoid interest charges.

Keep in mind that these offers are usually only available to new cardholders, so if you're already a cardholder, you might not be eligible.

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Business credit cards often come with employee card benefits, such as free employee cards, individual spending limits, and expense management tools.

Some business credit cards offer cash-back rewards on everyday business spending, with flat-rate cash-back rewards on all purchases or higher cash-back rates in specific business-related categories.

Interactive comparison charts, like the one found in Example 4, can help you compare different credit cards and their features, such as built-in spending limits, rewards, and ease of bookkeeping.

A personal guarantee is not always required for business credit cards, as seen in Example 4, where some cards do not have a personal guarantee.

Some business credit cards offer 0% introductory APR offers, allowing new cardholders to make interest-free payments for a certain length of time, such as 12 months or longer.

Here are some key features to consider when choosing a business credit card:

The Capital One Spark Cash Plus, for example, offers 2% cash back on every purchase with no limits, but it does have a $150 annual fee.

Business credit cards can come with a range of features and benefits that may fit your spending habits.

You can find business credit cards with no annual fee, which is a great option if you're on a tight budget. These cards often come with generous perks and rewards.

However, if you want a business credit card with higher rewards rates and enhanced features, be prepared to pay an annual fee. This fee can be offset by the rewards and benefits you receive, especially if your spending habits fit well with the credit card.

Be aware of other credit card fees, such as late payment fees, cash advance fees, foreign transaction fees, and balance transfer fees. These fees can add up quickly, so it's essential to understand what you're getting into.

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To get a business credit card, you'll need a good-to-excellent credit score, which is a FICO score of 670-850.

Most business credit cards require a credit score in this range, but some may have stricter requirements, like the Bank of America Business Advantage Unlimited Cash Rewards Mastercard credit card, which requires excellent credit.

If you apply for a card that requires good or excellent credit but have fair credit, you're more likely to get denied, and your credit score will take a hit from the hard credit pull.

It helps to know your credit score before applying for a business credit card to match the requirements of the card you want.

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Using credit cards for business can be a great way to manage expenses and earn rewards, but it's essential to choose the right card for your needs. You can use a business credit card to track expenses and keep personal and business finances separate, which is crucial for any business.

Separating expenses is as simple as using a business credit card for business-related purchases, and you can earn rewards and perks tailored to common business expenses, such as discounts on office supplies, travel rewards, and cash back in the form of statement credit on business purchases.

Some business credit cards, like the Ink Business Unlimited Credit Card, offer flat-rate cash back on every purchase, making it easy to earn rewards without worrying about complicated rewards structures.

Here are some key features to consider when choosing a business credit card:

By considering these factors and choosing the right business credit card for your needs, you can use credit cards to your advantage and help your business grow.

Brex is an excellent credit card option for funded startups. It offers an amazing rewards program for funded companies, earning points for all company spending on typical startup expenses like ridesharing (7x points), travel (4x points), and more.

Brex has innovated by adding a saving-like cash account, bill pay, and excellent expense management features. This makes it a go-to choice for startups that have raised a lot of capital.

One of the standout features of Brex is its lack of personal guarantee. This means that as a founder, you aren't legally obligated to take money out of your personal bank accounts to pay for your startup's credit card bills.

Here are some pros of using Brex:

Business Lines are a crucial aspect of credit cards for businesses. They allow you to earn rewards and cash back on purchases, making it easier to manage your company's finances.

The Capital One Spark 1% Classic is a great option for startups looking to build credit, as it has a $0 annual fee and may be available to founders with less-than-stellar personal credit.

Many business credit cards offer rewards and perks tailored to common business expenses, such as discounts on office supplies, travel rewards, and cash back on business purchases.

The Brex card is a great option for funded startups, offering amazing rewards, discounts on AWS and other common expenses, and high spending limits. It also has no personal guarantee, making it a great choice for founders.

Business Platinum Card from American Express offers a welcome bonus of 150,000 Membership Rewards points after spending $20,000 on qualifying purchases within the first 3 months of account opening.

The Ink Business Unlimited Credit Card allows you to earn 1.5% cash back on every purchase, with no complicated rewards structure to keep track of.

The Chase Ink line of credit cards offers several versions, including the Chase Ink Business Limited, Chase Ink Business Cash, and Chase Ink Business Preferred, each with its own rewards and benefits.

Here are some key features of the Brex card:

Applying for a business credit card is a relatively straightforward process. You can apply for most business credit cards through the credit card issuer's or bank's website.

To complete your business credit card application, you'll need several pieces of personal and business information. This includes your legal business name, business address and phone number, type of business, industry, and legal structure, approximate annual revenue, years in business, and number of employees, estimated monthly spending, Employer Identification Number (EIN), and Social Security number (SSN).

You may be asked to provide your business name, which can be your own name if you're a sole proprietor. You'll also need to provide your business address, which can be your home address. Your business type, such as sole proprietorship, LLC, or corporation, will also be requested.

You'll need to have your tax identification number ready, which can be your Employer Identification Number or Social Security Number. You'll also need to provide your annual business revenue and the age of your business. Finally, you'll need to enter the number of employees, which will include yourself if you're the only one working for your business.

Here's a list of the information you may be asked to provide when applying for a business credit card:

Keep in mind that applying for a credit card may temporarily drop your personal credit score a few points due to a hard inquiry. It's best not to apply for many cards at once to avoid multiple credit inquiries affecting your score.

If you're a sole proprietor, you might not have an EIN, and in that case, the tax ID will be your Social Security Number, aka your SSN.

As a sole proprietor, your business name will be your name, which can be a bit confusing, but it's how it works.

You can apply for a business credit card, even without an EIN, but you'll need to use your SSN as the tax ID.

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The American Express Bonvoy is a great option for small business owners who frequently stay at Marriott hotels. It offers 6x reward points for spending at Marriott hotels, making it an attractive choice for those who want to earn travel rewards for their family to use on vacation.

Founders who choose the Amex Bonvoy will get the founder elite status at Marriott hotels, which can be very important for business owners who are always on the road closing sales. This status can provide perks and benefits that can make a big difference in their business travel experience.

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The Amex Bonvoy can also be synced with QuickBooks and Expensify, making bookkeeping easier and faster for business owners. This can be a huge time-saver for those who are busy running their business.

However, it's worth noting that founders who choose the Amex Bonvoy will be taking on personal liability for the card, which can be a drawback for some business owners. Additionally, the credit limit for the card is based on the founder's credit score, which may be frustratingly low for high-growth, funded companies.

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