Concept of Credit Card Application
A credit card created particularly for company costs can rapidly become an indispensable tool in the wallet of any business owner. Although applying for a credit card is a very simple process, company owners must be careful to disclose income and revenue accurately. On a business card application, a credit card provider typically demands gross annual income from the preceding year. Before taxes and costs, the applicant must submit all income.
Why is it necessary for a business to generate revenue?
Credit card companies look at three factors to determine whether an applicant will spend wisely and make monthly card payments on time:
- business revenue
- estimated monthly spending
- personal income
This information is often used by issuers to calculate a credit limit. The higher the revenue of the application business, the more likely it will be approved—and the higher the cap.
What should be reported?
Most company credit card application demands a minimum of one year’s gross yearly sales. This includes any funds received from sales of goods or services, stock sales, or any other source of revenue. Make sure you don’t deduct any expenses or taxes from the annual revenue (profits or net revenue don’t need to be shared).
Make sure not to present revenue predictions as sales (unless the issuer specifically states this is acceptable). Only revenue that can be verified should be disclosed in most cases.
Small business owners may choose to record both business and personal income, or may be required to do so, in order to assure the issuer that they will be able to make monthly payments on their business card. Keep in mind that a business card application does not have to be a registered business to be eligible. Small business credit cards are also available to sole entrepreneurs (such as freelancers or Uber drivers). Simply provide revenue from the prior year’s results (before taxes).
What should be left out?
Be careful not to report revenue or income that can’t be verified with pay stubs, receipts, invoices or other documents. Credit card issuers may ask for hard proof that shows the applicant earned what they claimed.
Don’t include any personal income that isn’t related to the business you’re applying for. Fast food salaries, for example, should not be listed as business revenue if the applicant works full-time at a fast food restaurant and is applying for a business credit card for their graphic design side hustle. (Fast food wages, on the other hand, can be reported as personal income.)
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What if an applicant hasn’t yet generated any revenue from their business?
Not having any business revenue isn’t always a deal-breaker when applying for a business credit card. Applicants can declare $0 as revenue if they can later in the credit card application list personal income. On the application, any income from a part-time or full-time job, a spouse’s salary, or earnings from a business can all be recorded as personal income. This information will be used by the credit card issuer to decide if the application will be approved and the credit line size.
Some applicants may be able to put sales predictions from new enterprises as revenue, depending on the issuer. To find out if this is acceptable, the applicant should call the issuer. This should not be done without the issuer’s specific authorization. Any projection documentation should be kept on hand in case the issuer requests proof.
Above all, don’t make any false statements on your application. This is against the law and might result in hefty penalties or even incarceration.
Bottom Line
Business credit cards are available to sole entrepreneurs and business owners. On the credit card application, provide your gross annual revenue (before taxes and expenses) from the previous year. Personal income can help increase approval chances, especially if a new business owner doesn’t yet have any revenue to disclose. Be wary about lying on the application, as this could result in serious penalties.
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