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If you are just starting out with a business, you are undoubtedly going to want to build business credit and, to do so, you will need business credit cards for new business. But how does one apply for business credit cards, and how does business credit work? These are two questions we will address in this article.

Business credit works very similarly to personal credit in that it reflects the reliability of a certain kind of subject and makes said subject eligible for financing. This is often built in the same fashion as well; with personal credit cards for individual credit, and with business credit cards for new business. The key difference is that, because business credit is not based on individual humans, a more complex system of business creation must be organized to accommodate the business credit. To start a business credit profile, you must first start off in the legal professionals’ office with the formation of a C-corp or an LLC, depending on which direction you want to take your business in.

Another difference is the factoring of the repayment of credit. While personal credit is built almost exclusively around the timely repayment of debts and credit cards, business credit also largely integrates the factors of profitability and long-term stability. This means that while your Paydex score can, at least initially, be developed with the help of credit cards, eventually the business must also show that it can churn a healthy profit.

Applying for business credit cards can be a challenging ordeal initially, as business creditors tend not to like giving out business credit cards for new businesses without some sort of collateral. This usually means that the best way to start off with business credit cards is to apply for a secured credit card. This means that you will have to keep a certain amount of money in a savings account in order to secure the credit card. This may sound annoying, but it is the best way to get your foot in the door and start generating business credit.

This Business article was written by Mark Karavan on 2/14/2010