Corporate cards may be an exception to the rule that most small-business credit cards require a Social Security number in addition to an employment identification number.
You can apply for a small-business credit card if you have an employer identification number (EIN), which is a nine-digit tax ID number granted to your firm by the IRS. However, you will nearly always be asked for your Social Security number.
This is due to the fact that most small-business cards require applicants to personally guarantee the card’s debt. In other words, even if your firm fails, you are still accountable for repaying any debts.
As a result, when you apply for a small business card with an EIN, the issuer will most likely verify your personal credit using your Social Security number. For acceptance, many small-business cards need strong to exceptional personal credit (usually a FICO score of at least 690).
Keeping Professional and Personal Lives Separate.
The activities on your small-business credit card will not necessarily display on your personal credit record, notwithstanding the personal guarantee.
If you like to keep your personal and professional accounts separate, seek a card that only reports to commercial credit agencies rather than consumer credit bureaus. You might also hunt for one that doesn’t declare any payments.
Bank of America®, Citigroup, and Wells Fargo do not report small-business card activity to consumer credit bureaus. Small-business card activity is not reported to any of the credit agencies, consumer or commercial, by BBVA, which offers the BBVA Visa® Business Rewards Credit Card.
If the card does report to consumer credit bureaus, as Capital One and Discover do with their small-business cards, the impact can be positive or negative: If you pay on time and maintain a low credit usage ratio (preferably less than 30%), the account may help you boost your credit score. However, if you skip payments and accumulate a large amount of debt, your credit score may suffer.
Your Personal Liability.
Whether or not your small-business credit card reports to the credit agencies, the personal guarantee remains: Even if your small business fails, you are still liable for repaying the credit card.
These regulations are frequently spelled out in the terms and conditions that come with the card. You may read the terms and conditions before signing up for a card and check for phrases like “personally accountable” and “liable” to discover exactly what you’re getting into.
There Are Several Exceptions To The Norm.
Some credit card companies demand an EIN but not a Social Security number when applying for a card. For example, the Brex Card is a startup-friendly corporate card that doesn’t require an SSN or a personal guarantee. Instead, it looks at elements like the company’s cash flow and spending trends to determine trustworthiness. To qualify, you’ll need a $50,000 bank balance ($100,000 if you’re self-funded).
However, corporate cards — in which the corporation is responsible for the debt rather than the individual cardholder — are only offered to established firms with proven credit records, not to new or extremely tiny enterprises.
It will be tough to locate a small-business credit card that does not require your Social Security number in addition to your EIN if you have just launched your store or are running a one- or two-person operation.