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Erik J. Martin is a Chicago area-based freelance writer/editor whose articles have been featured in AARP The Magazine, Reader's Digest, The Costco Connection, The Motley Fool and other publications. He often writes on topics related to real estate, business, technology, health care, insurance and entertainment.
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Liza Carrasquillo is an editor on the Bankrate credit cards team who focuses on providing accurate educational content to those at all stages of their credit card journey.
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A small business credit card can help you manage the transactions and expenses required to make your business a success. The best small business cards feature higher credit limits than personal cards, valuable rewards, employee card options and other helpful benefits. But be prepared: You’ll need to report your annual business revenue on your credit card application, which could raise questions, especially if you’re just starting out.
Explore why business credit card applications ask about your revenue, what counts as business revenue, what not to report, what to do if you haven’t earned any revenue yet and other information needed to complete your application.
When you apply for a small business credit card, issuers ask about your revenue because they need evidence you have the financial means to settle your debts.
Providing revenue helps issuers decide if you are likely to spend responsibly and can make payments on time. It gives the financial institution guidance on establishing spending and credit limits for a business credit card account if approved.
— Renee Jones, Vice President of Consumer Products, Georgia’s Own Credit Union
Although issuers keep the precise approval criteria for credit cards private, their evaluations typically involve examining factors such as your business revenue, business credit score, the length of time your business has been open and other factors to form an overall assessment of your creditworthiness.
American Express, for example, typically asks for your “gross annual business revenue” and “estimated monthly spend” on business credit card applications, while Bank of America typically asks for your “gross annual sales.”
This evaluation aids the issuer in determining whether to grant approval for the requested card. It can also help determine your likelihood of making timely payments and using the card responsibly.
Even if it is not mandatory to report revenue on a business credit card application, it can be beneficial, leading to higher credit limits and better credit terms.
— Phillip Parker, Founder, CardPaymentOptions.com
When a credit card application requests your revenue, it’s referring to the gross income of the business that’s generated within a single year. Revenue encompasses the overall sum of money acquired by the business. It differs from profit, which is revenue minus operating costs, taxes and various expenses.
Accuracy is crucial when reporting annual business revenue on a credit card application. It involves combining income from every source associated with your business. This often includes revenue from:
To ensure precision, review your business financial records meticulously and encompass all revenue streams from the preceding 12 months.
Experts recommend only reporting income that you can back up with documentation.
A financial institution may request proof of revenue, so it’s important to have pay stubs, contracts, receipts, invoices or other paper trails to back up your figures.
— Renee Jones, Vice President of Consumer Products, Georgia’s Own Credit Union
You may be able to declare both business revenue and personal income to issuers, which can make you appear more creditworthy and provide further evidence you have the means to make monthly payments on time if the application for a business credit card is approved. However, you should report personal income within the personal info section of the card application instead of the business information section.
If you are a freelancer, independent contractor or sole proprietor, you can report your pre-tax income from the previous year as your business revenue.
Do not include any income that lacks verifiable documentation, as issuers may request proof of revenue. That can include things like:
Also, exclude any income unrelated to the business. If you have a side hustle or second job unrelated to the business for which you are applying for a card, refrain from counting this as business revenue on that card application. While you can still acknowledge it as personal income, it should stay out of the business details section.
If yours is a brand new or recently established business, you may find it challenging to report annual business revenue, especially if you have none. In this scenario, report zero dollars. This may not result in an automatic application rejection; instead, the credit card issuer may look at your personal income to decide if you get approved.
Or, perhaps you can report sales projections based on business plans, contracts and anticipated sales, assuming the issuer allows it (check with them first). Just remember to have supporting documentation in the event the issuer requests verification.
For businesses without revenue yet, it’s important to be transparent. Applicants should disclose their business’ current financial status and any funding or capital they have. Some credit card companies might consider projected earnings or the personal credit history of the business owner in this situation.
— Phillip Parker, Founder, CardPaymentOptions.com
In addition to business revenue and personal income, be prepared to furnish the following details, if requested, when applying for a business credit card application:
Lacking a business credit score won’t typically affect the likelihood of you being approved for a small business credit card.
“In this case, the issuer might rely on your personal credit score,” says Parker. “However, this could affect the terms of the credit card, including the interest rates charged and credit limits.”
Ted Rossman, senior industry analyst for Bankrate, notes that most small business credit cards require a personal guarantee.
“That means, if your business fails, they can pursue payment from you as an individual,” he says. “That’s why your personal income and personal credit score are often important parts of your application.”
If you want to avoid this personal guarantee requirement, consider applying for a true corporate card backed by your business that doesn’t require a personal guarantee.
Learn more: How to check your business credit reportThe good news is that small business credit cards are available to a wide array of applicants, including traditional shop owners and operators, sole proprietors, landlords and online resellers.
The key is to have a legitimate business operation. Those without one or with questionable business practices might not qualify. Also, larger corporations, due to their size and financial complexity, typically aren’t eligible for a small business credit card. They’re better served by a corporate card.
— Phillip Parker, Founder, CardPaymentOptions.com
Jones points out that younger applicants may also get turned down.
“A 16-year-old who babysits wouldn’t qualify for a business credit card,” says Jones. “But an individual who is at least 18 years of age who makes a substantial amount of income and/or is legally established as a business can qualify”.
If you want to get that business credit card, be prepared to report annual business revenue accurately. These numbers can give a credit card issuer the confidence that you are a good credit risk. If yours is a new business without revenue to declare, ask the issuer what you should report. And if you get turned down for that coveted card, don’t worry. Try applying with a different card issuer or wait until your business is more established with healthier revenue to show for your efforts.
The Bank of America content in this post was last updated on August 29, 2024.
Arrow Right Contributor, Personal Finance
Erik J. Martin is a Chicago area-based freelance writer/editor whose articles have been featured in AARP The Magazine, Reader's Digest, The Costco Connection, The Motley Fool and other publications. He often writes on topics related to real estate, business, technology, health care, insurance and entertainment.
