When is the best time to apply for a business credit card?

Managing finances effectively brings regular challenges. This is where a business credit card can help, offering flexibility, better cash flow and even provide rewards on your spending. But when’s the right time to apply? 

The answer isn’t one-size-fits-all. It depends on where your business is in its journey and what your current needs are. Here, we look at some key indicators for when a business credit card could make sense.

When you’re starting out

In the early days, you’re likely focused on getting your business off the ground. You might be using personal funds or loans to cover initial costs. At this stage, a business credit card could help separate your business and personal expenses. As a result, accounting is easier and you can start building your business’s credit profile.

New businesses, however, may find it harder to qualify for a card with favourable terms. Lenders often want to see a track record of revenue and responsible credit use. If you’re just starting, you might consider alternatives like a secured business credit card or a card with a lower credit limit.

At the momentum-building stage

As your business grows, you’ll likely have more regular expenses and cash flow to manage. It’s at this point when a business credit card can come in handy. You can use it to cover day-to-day costs, from office supplies to travel expenses. Many cards offer rewards on these purchases, which can add up to significant savings over time.

At this stage in your business’s journey, you might be in a better position to qualify for cards with higher limits and better perks. Your business will have a longer history and (hopefully) stronger financials to show lenders.

When you’re scaling up

When your business is ready to expand, a credit card can provide the flexibility you need. You might use it to buy inventory in bulk, invest in new equipment or cover the costs of hiring new staff. The right card can help smooth out cash flow bumps as you grow.

The scaling-up stage could also be a good time to look at cards with higher credit limits or more substantial rewards programs. As your spending increases, the benefits of these cards become more valuable.

The moment your business becomes established

Even if your business is well-established, there might be reasons to consider a new credit card. Perhaps you’re looking to take advantage of a sign-up bonus or a 0% introductory APR offer. Or maybe your current card isn’t meeting your needs anymore.

Established businesses are often in the best position to qualify for premium business credit cards thanks to the foundation they’ve built. Cards available might offer perks like airport lounge access, higher cash back rates or travel insurance.

When you’re a seasonal businesses

If your business has predictable busy and slow seasons, timing your credit card application can be strategic. Applying just before your busy season could help you make the most out of sign-up bonuses or introductory offers. You’ll have higher spending during this time, making it easier to meet minimum spend requirements for these bonuses.

Before you make a big purchase

If you’re planning a large business expense, it might be worth applying for a new card beforehand, especially if you don’t want to cover payments initially with business income. Many cards offer introductory bonuses for spending a certain amount in the first few months. 

A big purchase could help you easily meet any requirements. Some cards also offer 0% APR periods on purchases. If you time it right, you could effectively get an interest-free loan for your big expense.

When your credit improves

If your business credit score has recently improved, it might be a good time to apply for a new card. Better credit often means access to cards with lower interest rates, higher limits and more enticing rewards.

When you need specific features

Sometimes, the best time to apply is when you need a specific feature. For example, if you’re starting to travel more for business, you might want a card that offers travel rewards or has no foreign transaction fees.

Or perhaps you’re looking to better manage your cash flow. In this case, you might consider options like FlexiPay from Funding Circle. This isn’t a traditional credit card but rather a flexible line of credit that lets you spread the cost of business expenses over 1, 3, 6, 9, or 12 months. It’s interest-free, with you only paying a simple fee per transaction. 

When you want to earn rewards

If you’re spending consistently on business expenses, you might be leaving money on the table by not using a rewards card. The Funding Circle Cashback credit card, for instance, offers 2% cashback on all spending for the first six months (up to £2,000), then 1% cashback after that.

Making the most out of a cashback card gives you the opportunity to get something back when you spend. It’s a helpful incentive that rewards your business and gives you something extra after a transaction. 

Aspects to consider before getting a business credit card

Remember that the best time to apply for a business credit card is when it aligns with your business needs and financial situation. Before applying, make sure you understand the terms, including interest rates, fees and any rewards programs.

It’s also worth checking your credit score before applying. A higher score generally means better chances of approval and more favourable terms. This is by no means set in stone, but it’s a good benchmark to consider before applying. 

Lastly, don’t forget to shop around. Different cards offer different benefits, and what’s best for one business might not be right for another. Take the time to compare options and find the card that best fits your business needs.

Summary: Choosing the right time for a business credit card

Whether you’re just starting out or running an established business, a well-chosen business credit card can be a valuable financial tool. By timing your application right, you can maximise the benefits and support your business growth.

02/10/24: 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.