Business credit card jargon terms, simplified

Getting a business credit card can help manage expenses and even earn rewards. But you want to give yourself the best chance of being accepted, so it’s important to avoid common pitfalls. From choosing the wrong type of card to overlooking eligibility requirements, simple mistakes can lead to rejection and potentially impact your credit score. Here’s what to watch out for when applying for a business credit card, and how to improve your chances of approval.

Check your eligibility before applying

A common mistake some people make is rushing to apply without first checking if they meet the basic criteria. Most business credit card providers have specific requirements around:

• How long you’ve been trading
• Minimum annual turnover
• Business structure (sole trader, limited company, etc.)
• Credit history
• Number of directors

With Funding Circle, for example, you’ll need to be a UK-registered limited company or LLP with at least one to two years trading history and around £40,000 minimum annual turnover.

Regardless of who you apply with, it’s worth taking time to review the eligibility criteria and, where possible, use the provider’s eligibility checker to get an indication of your chances without impacting your credit score.

Make sure your finances and credit score are in order

Before applying for a business credit card, take time to review your business’s financial health and credit profile. Lenders will look closely at your aspects like your business and personal credit scores. 

If you spot any issues, like late payments or mistakes on your credit file, try to resolve these before applying. A good credit score can help you secure better rates and higher credit limits. You can check your business credit score through agencies like Experian, Creditsafe or TransUnion.

It’s also worth gathering key financial documents in advance, as you may need these during the application. Having clear, up-to-date records demonstrates that you run a well-managed business.

Choose the right type of card for your business

Different business credit cards serve different purposes, so it’s important to match the card to your needs. For example, will you look for rewards from your card, such as cashback? If so, Funding Circle’s Cashback card could be valuable due to offering 2% cashback for the first six months (up to £2,000) and 1% uncapped after that. 

Perhaps you need to spread the costs over a longer period and make payments your way. If so, a product like FlexiPay from Funding Circle might be more suitable as it lets you spread payments over 1, 2, 3, 6, 9 and 12 months. Not only that, but you can transfer funds directly to suppliers or into your business bank account, giving you maximum flexibility in how you manage your payments.

Think about how you’ll use the card. You may want an option for everyday expenses, something for larger purchases or maybe both. And what credit limit will you need? Some cards offer higher limits than others. At Funding Circle, you can borrow up to £250,000. 

Take time to compare different cards’ features, fees and interest rates too. The lowest APR isn’t always the best choice if another card’s benefits would save your business more money overall.

Consider the application timing

Timing your credit card application may improve your chances of approval and help you get better terms. Consider applying when:

• Your business has had several months of consistent or growing revenues
• Your credit score is at its strongest
• You have recently filed up-to-date accounts
• You have a clear need and plan for using the credit
• You’re not in the middle of applying for other forms of credit

Avoid applying just after taking on other debt or during periods of unstable cash flow. If you’ve recently been rejected for credit, it’s worth waiting at least three to six months before trying again, as multiple applications in a short period can harm your credit score.

Keep in mind that once approved, it typically takes seven to 10 working days to receive your physical card, so plan accordingly if you need the credit for a specific purpose or timeframe.

Making the most of your business credit card

Managing your business credit card can help build your credit profile and maximise the benefits for your business. Here’s how to make the most of your new card:

Set up automatic payments

Set up a direct debit for at least the minimum payment to avoid late fees and protect your credit score so you never accidentally miss a payment date.

Track your expenses

Keep detailed records of all business expenses and store receipts properly for tax purposes. Funding Circle’s app lets you track your transactions and download statements, making it easier to monitor your spending.

Monitor account activity

Review your statements regularly to spot any unusual transactions and stay on top of your spending patterns. Many providers offer real-time alerts and spending notifications.

Maximise rewards

If your card offers cashback or rewards, make sure you understand how to earn them. Plan your spending to take full advantage of any promotional periods or bonus categories.

Manage your credit utilisation

Stay well within your credit limit, ideally using no more than 30% of your available credit. This helps maintain a good credit score and shows responsible card use.

Plan repayments carefully

For flexible payment solutions like FlexiPay, align your repayment schedule with your cash flow to make sure you can comfortably meet the installments when they’re due.

Set your business up for success

Being approved for a business credit card relies on the right preparation and timing. Knowing the eligibility criteria, getting your finances in order and choosing the right card for your needs can help increase your chances of approval. 

While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.