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There are a number of avenues you can take when applying for your first business credit card. Business credit cards are issued by wide variety of merchants, banks, and bank holding companies (such as Capital One). Business credit cards look very similar to personal credit cards, and in many ways, they are. But how does one select the right business credit card? Once again, it is a simple matter of doing your homework.
Business credit cards differentiate from personal credit cards, principally on the grounds that it is based on the credit of a fictitious business entity rather than a person. Thus, in order to apply for a business credit card, you must first create a business entity. This is done with the help of a legal professional. Based on your unique situation, you may find it advantageous to go with either a C-corp or an LLC (check with your advisor and colleagues before coming up with this business strategy.) Once this is complete you can register with the IRS and Dun & Bradstreet and start the development of your business credit profile.
The business credit profile demonstrates the reliability, stability, and long-term profit potential of the organization in question. Business credit is based on a scale of 0-100, with 75 being considered excellent. Business credit is often initially built in a fashion similar to personal credit; by taking out a credit card and paying it off responsibly. You can do this by applying for, say, a capital one business credit card; simply begin making business purchases with the credit card and pay them off. This will eventually enable you to buy bigger and better business credit cards and, more importantly, gain access to better loans.
Getting your first small business loan, be it in the form of a line of credit or a conventional mortgage loan, is a challenging task and having a good credit rating, in addition to a strong financial plan, is essential to securing it. Very often, the same capital one business credit card that you used to help secure your loan will later be used to supplement what you need for your business purchases.