When you are new in the business and you have not yet built a good credit history, issuers of business credit cards will most likely require you to personally guarantee your application for business credit cards. This requirement for a business credit card application may be annoying at times, but the reality is that unless you do so, the chances of obtaining new business credit cards, are next to nothing.
There are a few things you can do, to obtain a business credit card despite a lack of credit history in your business. For one, make a point of getting your business registered with the credit reporting bureaus; the most well-known among these being Dun & Bradstreet. You are familiar by now with the reports on personal credit issued by consumer credit bureaus. This is essentially the same thing that Dun & Bradstreet will do for your business.
Since you are new to the industry, and because your business credit is linked to your personal credit as an interim measure, you need to have a solid personal credit history to crack the nod from issuers of business credit cards. When you decide to apply for a business credit card, it is important that you ensure the accuracy and quality of your credit history.
Naturally you will greatly improve the chances of getting your application for a business credit card approved if you approach the bank where you already conduct your business affairs – unless of course, your record with your local bank is less than perfect. If this is the case, you can try applying for a modest line of credit instead of a business credit card. The bank might ask you to deposit a certain sum of money as a kind of security for the credit line, and when you have proven yourself to be a good payer and a responsible borrower you will be in a position to proceed with your application for a business credit card. At that point, the bank will be more inclined to approve a business credit card for your business.
As a new entrepreneur on the block, your business credit cards will most likely come with higher interest rate. The interest rate should not deter you from using your new business credit card though. Instead, the moment you receive your business credit card, you should begin charging to your business credit card the everyday purchases you make for the business; and when the statement comes, make sure you pay off as much of the business credit card balance as possible. If you want to save money, pay off everything so that there will be no interest; if you want to give the bank a chance to earn money from your business credit card, carry a small balance into the next billing period.
The sooner you begin building your credit on the business side, the earlier will you be able to pull out from the personal guaranty you have extended. When your business has established its own credit history, do not forget to call the business credit card issuer and arrange for appropriate changes in the terms of your business credit card agreement.