Can you get a business credit card without an EIN?
Quick insights
- You might be able to apply for a business credit card using your Social Security number (SSN) if you don’t have an Employer Identification Number (EIN).
- Any work that produces a legitimate income may make you eligible to apply for a business credit card.
- Business credit cards can offer specialized perks and rewards that might help you manage expenses and build a business credit score.
No matter if you're just beginning to earn money from a new venture or you have an established business that's ready for the next level, you may be eligible to apply for a business credit card.
Even if you haven't officially incorporated your business, as long as you're trying to earn a profit in some legitimate way, you can apply for a small business credit card. The application gives you the option to enter your SSN instead of an EIN (if you don't have one yet).
In this article, we'll share some things to know about applying for business credit cards.
What is an EIN?
EIN stands for Employer Identification Number and is issued by the IRS. It is used to identify businesses in the U.S. This number includes information about the state in which the business is registered and identifies the kind of business tax returns that are required to be filed. Sometimes this number is referred to as the Federal Tax Identification Number (TIN).
To apply for an EIN, you can complete an online application at no charge. It may require details such as the name of your business, the industry, how many employees you have and a few more pieces of information. Once the application is submitted, the information is validated and an EIN is issued during that same online session.
What kind of work qualifies for a business credit card?
Any work that produces a legitimate income can be considered for a business credit card. Here are just a few examples of work that could be eligible, but there are many more:
- Writer
- Ridesharing service
- Tutoring
- Independent consultant
- Entertainer
- Handyworker
- Social media manager
- Dog walker or pet sitting
- Artisan who sells handmade works online
What are the requirements for a business credit card?
Though a formal business name or EIN is not required to qualify for a business credit card, there are several factors that an issuer might consider regarding your endeavor. This includes how many years the company has been in business and the company's profits.
Note that a business owner may be personally responsible for the credit line on a business credit card. Therefore, the issuer may consider your personal information, including credit score and total income, when evaluating the application. After that initial inquiry of your personal credit, the business line of credit that you open is typically separate, so your credit utilization ratio and payment history may not affect your personal credit score.
Why choose a business credit card over a personal credit card?
Personal and business cards can both give you access to lines of credit, but there are differences in how they operate. Personal credit cards are meant for individuals and their daily spending habits, like household items and groceries. Business credit cards are meant to be used by businesses for business expenses.
Here are a few reasons why you might choose a business credit card over a personal one when it comes to your business.
The business perks
The needs and expenses of a business owner are much different than a consumer's. Many business credit cards offer perks, including expense management tools, cards for employees, purchase protection and warranties and even access to certain airport lounges.
What kind of rewards do business credit cards offer?
Many business credit cards offer travel rewards or cash back on expenses in categories that cater to a growing business. This means every time you buy gas for your company car, fly across the country for a sales meeting, purchase new laptops for your employees or buy supplies in bulk—you could be earning rewards.
The opportunity to build a business credit score
At some point, you may consider financing the growth of your business through a business loan. When you responsibly use a business credit card by making on-time payments each billing cycle (at least your minimum payment), you may start to build a business credit profile, particularly if your account activity is reported to business credit bureaus. This business credit score, similar to your personal credit score, is a way for lenders to understand your creditworthiness. The higher the score, the better interest rates and lines of credit you might be eligible for if you apply for a business loan or other kinds of financing.
Business credit scores may be affected by length of credit history, payment history, credit utilization ratio, bankruptcies and other negative public records (such as liens, judgments or collections). In addition to those, a business credit score may also be affected by the age and size of the company, and the risk profile of the industry you're in.
When it comes to business relationships, this score may even act as a signal to potential vendors, suppliers and real estate professionals about how your business manages its credit. These parties can look up your business credit score by purchasing a credit report from a credit reporting agencyOpens overlay (or a credit/risk information provider).
Factors to consider in a business credit card
Before deciding to apply for a business credit card, you may want to consider several factors that could be impactful to your business.
Rewards
If you're putting a lot of your business expenses on your business credit card, you may be able to earn rewards for your purchases (depending on your specific card). Credit card rewards can often be redeemed for travel or even cash back.
When deciding which rewards card may be a fit for your business, you may want to consider what categories you tend to spend the most on. For example, do you find that most of your spending is on office supplies, product supplies and general operations? A cash back credit card may be an option. On the other hand, do you find that most of your spending is on business trips (either by air, train or car)? In this case, a card that offers travel rewards might make more sense.
Another consideration is how the rewards program is structured. Some cards may allow you to earn rewards at an accelerated rate in specific categories, while others use a flat rate rewards system for all purchases. The latter may be useful if your spending encompasses a variety of categories.
Added features and benefits for business owners
Business credit cards often come with special features geared toward business-related needs, including:
- Employee cards. Employees can get an authorized card with set spending limits for each.
- Exclusive discounts. Some cards may offer discounts for products or services you use regularly—such as hardware, subscriptions, cloud storage or tax software.
- Extended warranty protection. Some cards offer protections that extend the time period of the U.S. manufacturer's warranty on eligible purchases.
- Account management insights. View account details, statement and quarterly reports.
- Airport lounge access. Business travel may be less stressful with access to airport lounges that include amenities such as food, beverages, work stations and high-speed Wi-Fi.
Many credit cards offering rewards and perks have an annual fee. Be sure to read the terms and conditions before applying.
Interest rate
In general, interest rates can vary by credit card product. It's important to remember that the interest rate you are approved for is based on creditworthiness, among other things. You may be able to avoid paying interest if you pay off your balance in full each billing cycle. In any case, the higher your credit score, the more likely you are to get a lower interest rate.
Credit limit
Depending on your business plan, you may need a certain credit limit in order to finance your growth objectives. Business credit cards typically have higher limits than personal credit cards because they take into account business revenue, personal income and your personal credit score. If your business revenue is higher than your personal income, you'd most likely get a higher credit limit than on a personal card alone. After a period of consistent, on-time payments, the card issuer may consider a credit line increase.
In summary
No matter the size or scope of your business, you may be eligible for a business credit card. If you don't have an EIN, you may be able to use your SSN. As a business owner, you may find that keeping your personal and business expenses separate is helpful. Furthermore, you may find the business-related rewards and benefits of a business credit card offer additional value.
