What Do Banks Want To See From A Company Applying For A Business Credit Card?

Applying for business credit is just as involved as applying for personal credit cards

, but there are far different requirements. Banks need to know that the company they are considering has a strong credit history and a stable operation. The things you will need when applying for a business credit card aren't difficult to provide if you have taken the time to build the credit foundation for your business that will insure business borrowing success.

Who is Applying?

Banks need to be sure that the person applying for a business credit card has the official capacity to accept debt on behalf of the company. What that means is that the owner or a designated executive for the company must make the application. Since in most cases when a business applies for a credit card, it is the owner doing the asking, banks may ask for proof that you are the owner. You can do this by providing tax records or your EIN certificate.

License Information

The bank will need to see proof that you are properly licensed in your city and/or state when necessary. If you have incorporated, you will need to show proof of your LLC. It is nearly impossible to apply for a business credit card as a sole proprietor and most individuals will still opt to incorporate in order to get the benefits of business loans and credit easier. As a sole proprietor you would have to put your own name on the application rather than the business, and your home contact information. This links you to your personal credit rather than your business, and is defeating your goal to access business lending. Remember, it is not the same as backing your business credit card with your personal credit, this is creating more personal credit and no business credit.

If this is a necessity for your situation, then at the least have the bank add your EIN number to the credit card and make sure that the bank reports to the business credit reporting agencies as well as personal credit reporting agencies. Some will only report to business credit reporting agencies for a personal credit card even with an EIN attached unless the credit information is bad. That means that even if you keep your credit in good standing, it won't be building your business credit score. It will only improve your personal credit.

Basic Information that you need to get right!

You will be asked to provide all of the basic identity information such as the legal name of the business, the DBA if it is operating under a different name than what appears on the legal documents, street address and phone number. The address for the company should be a real address, even if it is your own home address if you are operating out of the house. P.O. addresses will not work. Your phone number should be a land line as well, even if you routinely use cell phones to conduct your business, its best to provide a land line phone number that is different from your home phone.

Business Knowledge

In many cases, you will need to submit a business plan for several reasons. The main reason banks want a business plan to confirm the businesses fundability by illustrating a reasonable plan for success, including a thoughtful analysis of expense, revenues and cash flow needs.. The banking institution wants to see an operational plan that provides them with confidence that the business has the ability to repay credit card debt. Another reason for the business plan, however is to show that the business owner has market knowledge, industry expertise and operational experience to manage the growth of the expanding business. Does the business plan reflect reasonable expenses and expectations, or is it merely a pipe dream of a wishful entrepreneur?

There are many low cost tools that provide a framework for developing a business plan. Any business plan should include a full description of the type of business/industry, a summary of the businesses service or product, a sales plan, etc.. Along with plan, you should list all of the people involved if you have partners. When you list the people involved in your business on your business plan, give a full account of what they bring to the business and how they improve your organization. Most importantly, provide solid financial reports that provide insight on the businesses revenue plan, cash flow, profit and loss statement. These documents are the key to providing the insight that will motivate banks to provide the cash credit you desire.

Personal Credit Backing

As important as it is to separate your personal finances from that of your business, you may have to use your personal credit as backing for a young company, or one that is just starting up.

There is an upside to backing your company credit card with your personal credit. If your personal credit is strong, it shows banks that you have faith in your business and want to give them that assurance as well. If anyone is going to believe in your company, it will probably have to be you first. Once you do that, banks are much more likely to have faith in you too. However, if your personal credit is in bad shape, it won't do you any good, and it can definitely damage your business fundability to offer it.

by: J Corey Pierce

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