Is it time to get a business credit card for your side business?


Now more than ever, hustles are part of consumers’ financial picture. According to a June 2022 Bankrate survey, 41% of US consumers with a side job rely on that income to cover basic expenses.

And even those who already have a second job may need to supplement that income to meet the rising cost of living. If you’re trying to grow your side business, you might consider getting a business credit card. Here’s how to know if it’s time.

You have significant start-up costs

Depending on the type of side gig you are starting, you may need to invest some money to get it started. For example, if you want to rent a room with a company like Airbnb, you may need to spruce it up first. New bedding, furniture, and a new coat of paint can cost you thousands of dollars. Or maybe you want to make and sell jewelry, clothing, crafts, baked goods, or other products on an e-commerce site. If so, you may need to purchase products and create a website.

Instead of delaying your scramble until you can scrape together the cash to get started, consider getting a business credit card. Although you may not have enough funds, a bank certainly does.

However, you don’t want to overspend and go into debt, so it’s a good idea to consult a professional in your field. Contact SCORE, a non-profit organization that can connect you with a retired executive who can help you develop a business plan with the amount you need to start your scramble at no cost.

Once you know how much is needed to start your business, you can apply for the right business credit card to buy those items while still being able to afford the monthly payments. If you have significant upfront costs, you might consider the Capital on Tap business credit card, which offers a chance at a high credit limit of $50,000.

While the card has no annual fee and the regular APR can be as low as 9.99%, the catch is the surprisingly high end of the APR range: 34.99%. For this reason, this card only makes sense as a financing option for those with exceptional credit who can qualify for that ultra-low APR. If this is you, you can also expect to cover some of these initial costs with the $750 bonus you will receive after charging $7,500 within the first three months of account opening.

Your operating costs increase

As your business grows, your operating costs may also increase. For example, you may have started taking care of your neighbor’s dog. On a weekly basis, this occasional activity generated $100. But why stop at just one dog? With a few repeat customers, you can really multiply that number. When you do, however, you may need to purchase pet sitting insurance, buy lots of supplies, spend more gas to pick up other animals, and advertise your services.

When you want to expand, consider a business credit card that can meet the growing needs of your side business. It should offer substantial rewards as you spend on the things involved in your business, so look for one that offers a high-value rewards rate on those future expenses. The Ink Business Cash® credit card, for example, offers 5% cash back on the first $25,000 you charge on purchases in its bonus categories: Office Supply Stores and Internet, Cable and Mobile Services. telephony.

If you’ve covered the initial costs of starting your business with your personal cards, getting a business credit card for those growing operating costs can be a great idea. Not only will you earn rewards, but you’ll also build business credit and be able to keep your business and personal finances separate. Or maybe you have a simple credit card to start your business, but now that you’re generating more income, you want a premium credit card with better benefits and rewards. As a business owner, it’s a good idea to periodically evaluate your financial tools to make sure they’re still the best option for you.

You travel more

Maybe your side business is photographing weddings and special events, and your clients span the country. Or you turn your passion for adventure into writing about distant destinations for the media or your blog. A business credit card with travel rewards and benefits will be a great addition.

Analyze your travel needs and get the business card that will help you keep costs to a minimum while making your travels more comfortable. Some are ideal for airfare, some for accommodation, and some for car rentals and gas.

There are plenty of cards to choose from. For example, if you’re dedicated to a specific airline, consider credit cards that have partnerships with it, like the Delta SkyMiles® Gold Business American Express Card, which gives 75,000 bonus miles after spending $3,000 on purchases. in your first three months (offer until August 3, 2022), free checked bags and priority boarding.

Loyal to the Marriott brand? Discover the Marriott Bonvoy Business® American Express® Card, which offers a free night each year after your card renewal month, free Silver Elite status and a high rewards rate in many categories.

You need short term financing

The last thing you want to do is waste money on fees while you try to earn extra cash to make your life easier. Therefore, you might want to look for a business credit card that offers an introductory APR of 0%.

With such a card, you can carry a balance for a number of months and not have to worry about interest adding to the amount you owe. As long as you pay off all of the debt before the regular rate takes effect, you will not be charged any financing fees. This feature can save you a lot of money. Some of these introductory offers are very long, like the US Bank Business Platinum Card, which gives 20 months of 0% APR after account activation, and there is no annual fee.

There are also times when you may prefer to borrow a fixed amount of money and then pay in equal monthly installments. If so, a loan through the Small Business Association (SBA) may be a better choice. With the SBA’s 7(a) Small Loans Program, you can borrow up to $350,000, an amount that far exceeds the line on most business credit cards, and pay it off over several years.

What you need to get a business credit card

Getting a business credit card is easier than you think. The only major barrier to entry is that you will almost always need good credit, which is usually a credit score of at least 670.

For most small business credit cards, you don’t need to be an LLC or registered corporation to apply. Instead of a “corporate tax ID”, you can register as a sole proprietor and use your social security number instead of a tax ID. You may need to indicate the type of business you have and the date you started.

As with all credit cards, you will also list your basic income and expenses. Chances are your secondary earnings will qualify, as issuers consider a wide variety of revenue-generating ventures. What is important is that you have enough money to manage your expenses and the payments associated with the account.

After you get the right business card, use it well

Once you have the right business card, be sure to put it to good use. Your activity will likely show up on your consumer credit reports, as well as your company’s. Yes, that means late payments and other negative activity with your business credit card can hurt your personal credit score.

Fortunately, the process of creating business credit is quite simple. Most importantly, make all your payments on time and don’t max out your credit lines.

Finally, take advantage of your credit card rewards program. The more you charge, the more you’ll earn, but you’ll also need to keep the balance at zero to come out a winner. If you want to reinvest the profits into your side business, you can, but you can also use them to ease the financial pressures that prompted you to start the business in the first place.


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