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How to Qualify for a Business Credit Card

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The process of applying for a business credit card is fairly simple. You’ll need to research cards, pick the one you want, gather relevant information about your business, complete an application and await the issuer’s decision. While the actual application is quick and easy, preparing beforehand ensures that you choose the right card for your business and get approved.

Who can apply for a business credit card?

There are several types of business credit cards. Some are reserved for large corporations that have dozens or even hundreds of cardholders, their own expense and reimbursement policies, and complex security needs, while others are geared toward small businesses with five or fewer employees.

With so many business credit cards available, there’s one for just about any type of business. Even sole proprietors who aren’t formally incorporated usually qualify for some business credit cards.

Restrictions on who qualifies usually vary by individual card issuers, but these are some you might encounter:

  • Organization type: Some card issuers will not issue business credit cards to nonprofits or unincorporated businesses, like sole proprietorships.
  • Industry: Some institutions will not extend credit to businesses operating in certain industries, such as multilevel marketers and cannabis- or firearm-related businesses.
  • Applicant qualifications: Every issuer has its own minimum qualifying criteria for card applicants, including income, time in business and credit score.

Unless you’re prohibited from getting a card due to one of these restrictions, getting a business credit card is often just as easy as getting a personal card. Even if you are prohibited from getting a card from one issuer, you may still be able to get a different card from a different issuer. 

What do you need to apply for a business credit card?

When you apply for a business credit card, you’ll need to supply all of the information that you’d customarily provide to apply for a personal card. Basic contact information like your name, mailing address, phone number and email will all be part of the application. You’ll also need to provide several items specific to your business:

  • Business name
  • Business address
  • Years in business
  • Annual revenue
  • Estimated monthly expenses using the card

In addition, you’ll need to provide your tax identification number (TIN). If your business is incorporated, this may be your business’s EIN. If you’re a sole proprietor or a single-member LLC, this may just be your Social Security number. You’ll also need to state your position at the company, as well as Social Security numbers for any other business partners who own over a certain percentage of the business (usually 20% or more).

Depending on the issuer, a card application may also ask what industry the business is in, the nature of business (whether it’s for profit, for example) and the number of employees or additional cardholders.

How to apply for a business credit card

If you think you fit the criteria for a business credit card and would like to get one to support your operations, you can apply anytime. While an application is simple and only takes five to 10 minutes to complete, there are several things you should do first to make sure you get the right card for you.

1. Research your options.

There are dozens of different business credit cards available. Some are great for small startups that need cheap capital, offering long 0% introductory periods. Others are ideal for more established companies with reps who do a lot of traveling, because they accumulate reward miles. Still other cards offer cash-back programs that offer great rewards for spending in certain categories.

Before you settle on a card, you should know your options. Study your business expenses to see what categories you’re spending money in that could qualify you for rewards. Look for available rewards programs and think about what form you’d like your rewards to take (miles, cash, statement credits, or other perks and benefits). Also, be sure to check cards for fees and interest rates.

2. Pick a card.

Once you’ve identified cards that offer the right mix of fees, rates and rewards, you’ll have to decide which one is right for you. Make sure that you read the literature carefully and understand all of the cardholder rights and obligations. If the card offers a 0% introductory period, find out when that period ends. If there are caps on rewards or limits on how rewards can be redeemed, you should be aware of them before you apply.

Also, be sure to check the card’s qualification criteria to make sure that you can qualify for the card you want. [Interested in business credit cards? Check out our best picks.]

3. Check your credit.

If you have been in business for three or more years, you may qualify for a business credit card using your business credit score. More likely, though, you’ll be applying with your own Social Security number, and issuers will check your personal credit score.

In either case, it’s usually a good idea to check these scores on your own before you apply to make sure they’re in good shape. The higher your scores, the better; if your personal credit score isn’t at least 650, you may want to consider holding off on applying altogether. That will give you time to improve your credit score by doing things like paying down debt, bringing accounts current or resolving past credit disputes. [Read related article: How to Apply for a Business Credit Card if You Have Bad Credit]

4. Gather your info.

Once you feel that your credit is in good shape, you’re almost ready to apply. The last thing to do is to gather all of the information you’ll need as part of your application:

  • Your business’s TIN (found on IRS Form W-7 or SS-4)
  • Your Social Security number
  • Social Security numbers for any business partners who own 20% or more of your company
  • Your incorporation documents to confirm the number of years you’ve been in business
  • Recent financials to check your revenue and monthly spend estimates
  • A list of employees who will need cards

5. Apply.

Now that you’ve found the card you want, confirmed that your credit is in fine shape, and gathered all the relevant information that you’ll need to apply, it’s time to actually complete an application. This process is usually completed online and only takes a few minutes.

Depending on the data you enter initially, the card issuer may have additional questions for you or require other information. This may be completed in subsequent steps as part of your online application, or it may require separate follow-up via phone or email.

6. Await the card issuer’s decision.

After you formally submit your card application, the only thing left to do is wait and see if you’re approved. Approval decisions can take a few minutes, or they may take a day or two if additional follow-up is necessary. If approved, you’ll get your card(s) in the mail to activate and start using.

Factors that impact business credit card approval

Though applying for a business credit card only takes a few minutes, credit card issuers gather a good deal of information about both you and your business in that brief application. With all of this information going into an application, it’s easy to see that many items that can make or break your approval:

  • Your business type (some issuers don’t support nonprofits or sole proprietorships)
  • Your revenue or revenue expectations
  • Your time in business
  • Your personal credit score
  • The availability of personal guarantees from you and any partners in your business
  • Your industry

Of course, this list isn’t comprehensive. Credit card applications can be denied for any number of reasons. Just having a weird business address – one that isn’t easily found in a postal code lookup – can be a disqualifying factor.

The most common disqualifying factor, however, is your credit score. Most small business owners who apply for business credit cards apply using their personal credit, not their business credit. Because of this, if a business owner’s credit report isn’t in good shape – with a score of at least 640 to 700, depending on the card they’re applying for – they may be denied.

What’s more, the relationship between a small business credit card and the owner’s credit card is a two-way street. The business owner’s personal credit score may cause the business’s card application to be denied, and any misuse of the company card may come back on the company owner’s personal credit.

Impacts on personal credit

When you apply for a business credit card – especially if it’s a small business card – your application will likely hinge on your personal credit. This means that when you apply, the card issuer will run a hard check on your credit. This hard inquiry will count against your credit and take several months to drop off your credit report.

Additionally, if you’re approved, sometimes (depending on the issuer and card) any balances you carry on your business credit may also appear on your personal credit report – the same way balances on your personal credit cards do. This will further impact your credit if you apply for other business financing or even a personal loan.

Last but not least, applying for a business credit card usually requires a personal guarantee from anyone who owns 20% or more of the business, and sometimes from each cardholder. If your business fails to make on-time payments or defaults on a balance, those items will hurt your personal credit score.

When not to apply for a business credit card

Getting a business credit card can be a quick and easy way to access credit for your business, but sometimes it’s not your best option, like in these situations:

  • Your personal credit isn’t in good shape.
  • You already have a lot of business debt outstanding.
  • Your business is just getting started and doesn’t yet have reliable income.

In these cases, you may not want to apply for a business credit card, because you’re less likely to qualify.

Just as often, though, a business credit card simply may not be the ideal type of financing for your business. If you need financing for a long-term project, for example, you may be able to secure better financing with a long-term, fixed-rate loan. If you have seasonal financing needs that last four to six months, you may be better off with a term loan or a line of credit. [Read related article: How to Apply (and Get Approved) for a Business Loan]

Bottom line

The process of applying for a business credit card is relatively quick and easy – it’s usually as simple as completing an application online. Before you do that, though, make sure that a business credit card is the right financing option for your business. Then, you need to research cards, pick the best one for you, gather your relevant info and confirm that you’ll likely qualify based on your credit score before you submit an application.

That way, you can ensure not only that you’ll be approved – and thus not waste a hard inquiry on your credit – but also that you’ll find the best card for your business.

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom | Fintech Zoom

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom



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Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

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The government’s incentive to step in and bail out depositors when banks fail is clear from past experience.

By Anusha Chari & Amiyatosh Purnanandam

The failure of the Punjab and Maharashtra Co-operative Bank (PMC) in September 2019 shone a light on the limitations of India’s deposit insurance system. With over Rs 11,000 crore in deposits, PMC bank was one of the largest co-op banks. That the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance covered depositors, provided little solace when the realisation hit that the insurance amounted to a mere Rs 1 lakh per deposit.

The predicament of PMC depositors is, unfortunately, not an anomaly. Several bank failures over the years have severely strained RBI and central government resources. While co-operative banks account for a predominant share of failures, other prime examples include the Global Trust Bank and Yes Bank failures. These failures entail a direct cost to the taxpayer—the DICGC payment or a government bailout. More importantly, bank failures impose long-term indirect costs. They erode depositor confidence and threaten financial stability, presenting an urgent need for deposit insurance reform in the country.

A sound deposit insurance system requires balancing two opposing forces: maintaining depositor confidence while minimising deposit insurance’s direct and indirect costs. At one extreme, the regulator can insure all the deposits, which will undoubtedly strengthen depositor confidence. But such a system would be very expensive.

A bank with full deposit insurance has minimal incentive to be prudent while making loans. Taxpayers bear the losses in the eventuality that risky loans go bad. Depositors also have little incentive to be careful. They can simply make deposits in the banks offering high interest rates regardless of the risks these banks take on the lending side.

Boosting depositor confidence and reducing direct and indirect costs require careful structuring of both the quantity and pricing of deposit insurance. Some relatively quick and straightforward fixes could help alleviate the public’s mistrust while improving the deposit insurance framework’s efficiency.

India has made some progress on this front over the last couple of years. First, the insurance limit increased to `5 lakh in 2020. Second, the 2021 Union Budget amended the DICGC Act of 1961, allowing the immediate withdrawal of insured deposits without waiting for complete resolution. These are very welcome moves. Several additional steps could bring India’s deposit insurance system in line with best practices around the world. Even with the increased coverage limit, India remains an outlier, as the accompanying graphic shows.

The government’s incentive to step in and bail out depositors when banks fail is clear from past experience. However, these ex-post bailouts are costly. The bailout process also tends to be long, complicated, and uncertain, further eroding depositor confidence in the banking system. A better alternative would be to increase the deposit insurance limit substantially and, at the same time, charge the insured banks a risk-based premium for this insurance. Under the current flat-fee based system, the SBI pays144 the same premium to the DICGC—12 paise per 100 rupees of insured deposits—as does any other bank!

A risk-based approach will achieve two objectives. First, it will ensure that the deposit insurance fund of the DICGC has sufficient funds to make quick and timely repayments to depositors. Second, the risk-based premia will curb excessive risk-taking by banks, given that they will be required to pay a higher cost for taking on risk.

India is not alone in trying to address the issue of improving the efficiency of deposit insurance. The Federal Deposit Insurance Corporation (FDIC) recognizes that the regulatory framework governing deposit insurance is far from perfect and the United States is moving towards risk-based premia. The concept is similar to pricing car insurance premia according to the risk profile of the driver. The FDIC computes deposit insurance premia based on factors such as the bank’s capital position, asset quality, earnings, liquidity positions, and the types of deposits.

In India, too, banks can be placed into buckets or tiers along these different dimensions. The deposit premium can depend on these factors. It is easy to see that a bank with a worsening capital position and a high NPA ratio should pay a higher deposit insurance premium than a well-capitalized bank with a healthy lending portfolio. The idea is not dissimilar to a risky driver paying more for car insurance than a safe driver.

Risk-sensitive pricing can go hand-in-hand with the increase in the insured deposit coverage limits bringing India in line with its emerging market peers. In a credit-hungry country like India, these moves would build depositor confidence, possibly increasing the volume of deposits and achieving the happy result of the banking system channeling more savings to productive use.

Chari is professor of economics and finance, and director of the Modern Indian Studies Initiative, University of North Carolina at Chapel Hill and Purnanandam is the Michael Stark Professor of Finance at the Ross School of Business, University of Michigan

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5 Signs You’re Not Ready to Own a Home, According to a CFP

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The housing market has boomed over the last year, despite a global pandemic and millions of Americans struggling to make ends meet. 

Many people are spending less on entertainment, clothing, travel, and other discretionary purchases during COVID. Federal student loan borrowers have seen temporary relief from their loan payments. These expenses will most likely rise again after the pandemic, and many people who committed to a new home with a large mortgage will struggle to keep up. 

I often speak with clients and prospective clients who want to buy a home before they have a strong financial foundation. Buying a home is not only one of the largest purchases you’ll make in your lifetime, but it’s also a huge commitment that’s extremely hard to undo if you have buyer’s remorse

It’s important to make a thoughtful, informed decision when it comes to a home purchase. Before you take the plunge into homeownership, check for these signs that you’re not quite ready to buy. 

1. You have credit card debt

Credit card debt can be a drain on your monthly budget, and when combined with student loans and a car loan, it can lead to high levels of stress. 

Generally, more debt means higher fixed expenses and little opportunity to save for long-term financial goals. Your financial situation will only get worse with the addition of a mortgage. I always recommend that clients be free of credit card or other high-interest debt before they consider buying a home. 

To rid yourself of credit card debt, take some time to get a good handle on your cash flow. Take an inventory of your spending over the last six to 12 months and see where you can cut back. From there, develop a realistic budget that includes aggressive payments to your credit cards. 

There are several strategies to help you knock out credit card debt fast. Regardless of the method you choose, stick with the plan and track your progress along the way. Once you pay off your credit cards, you can allocate your debt payments to savings, which can help you avoid this situation in the future.  

2. You have bad credit

Bad credit is not only a sign that you may not be ready to take on a mortgage, it can also signal a high risk to

mortgage lenders
. A high-risk status results in higher interest rates and more strict requirements to qualify for a loan. A mortgage is one of the largest loans you’ll take out in your lifetime, and if you get behind on payments, you could lose your home. 

Just as with credit card debt, bad credit could be a result of past financial mistakes. Dedicating the time to repair bad credit and improve your credit score will help you beyond purchasing your dream home. 

Start by pulling a recent credit report from each of the three credit bureaus so you can review it for errors. Dispute any errors, address past-due accounts, and bring your overall debt balances down. It’s helpful to learn what has a negative effect on your credit score so you can avoid these mistakes in the future. 

3. You don’t have an emergency fund (or an inadequate one)

If you’re unable to save for a rainy day, you probably don’t have enough money to buy a house. Owning a home is a big responsibility, and unexpected expenses pop up all the time. In addition, you could lose your job, have a medical emergency, or another unexpected expense unrelated to the home. Maintaining an emergency fund is a good sign that you have discipline and are prepared for the responsibility of homeownership.

Many financial experts recommend saving at least six months of living expenses in an emergency fund. If you have variable income, own a business, or own a house, you should save more. To build an emergency fund, set money aside from each paycheck and automate transfers to make the process easier. Give your emergency fund a boost when you receive lump sums such as bonuses or tax refunds. Start by saving one month of living expenses and build from there. 

4. You don’t have separate savings for your home

I always advise clients to set aside savings for a home in addition to an emergency fund. It’s a bad idea to start homeownership with no savings. Whether you have unexpected expenses related or unrelated to the home, having no emergency fund after a home purchase will lead to unnecessary stress — and possibly more debt. 

When purchasing a home, you’re responsible for a down payment and closing costs. While a 20% down payment is ideal to avoid private mortgage insurance, a down payment of at least 3.5% is typically required. Closing costs can range from 2 to 5% of the home’s value. 

Also, you will have moving costs, costs to spruce up your new place (like new furniture or light cosmetic updates), and any initial maintenance and repairs. Be sure to budget for these items to know how much to save on top of your emergency fund. It doesn’t hurt to boost your emergency fund, too, in preparation for homeownership. 

5. You have a low savings rate

It’s much easier to develop good savings habits before you have a lot of responsibilities. To get on track for financial independence, several studies show that you should save at least 15% of your income. The longer you wait, the more you’ll need to save. 

If your savings rate is low before you purchase a home, it will most likely worsen after becoming a homeowner. Even if your mortgage is similar to your rent, ongoing maintenance and repairs, higher utilities, and homeowners association fees can wreak havoc on your budget. 

Take a look at your current savings rate and see if you’re on track for financial independence. If you’re saving less than 15 to 20% of your income, work to improve your savings rate before you consider buying a home. A strong savings habit can help you build your home savings fund faster and ensure that a home purchase doesn’t impede your long-term financial goals. Finally, understand how much house you can afford so you can avoid being house poor. 

Buying a home can be rewarding, and when done the right way, it’s a way to build wealth. Before you decide to buy a home, it’s important to understand your numbers and ensure that you’re ready for the commitment. Without preparation, your dream home could be detrimental to your long-term financial goals.

Chloe A. Moore, CFP, is the founder of Financial Staples, a virtual, fee-only financial planning firm based in Atlanta, Georgia and serving clients nationwide.

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