Can a new business get a credit card?

With a total of 5.51 small businesses in the UK, and 801,006 new businesses formed in 2022–2023 alone, it’s fair to say this is an exciting time to become a business owner.

While starting a new business can be invigorating and rewarding, it can also form a financial strain. That’s why many businesses turn to credit cards to help manage expenses.

But how soon can you get a business credit card and what should you watch out for when applying? Find out here.

Can new businesses get credit cards?

Yes, new businesses and start ups are able to apply for credit cards. If you meet certain eligibility criteria (and depending on the lender) you may be able to get a credit card quite soon after founding your new business.

Usually, when a business applies for a credit card, the submission process includes company details including annual revenue. However, while processes vary from lender to lender, if you have a very limited track record you may be asked to provide a personal guarantee and a credit check may be run in your personal name. Be sure to check with the lender in advance of your application being submitted to find out exactly what will be required of you.

Some lenders tailor credit cards specifically to new businesses. Applying to one of these may increase your chances of being approved, but bear in mind that the slightly riskier nature of lending to a newer business may result in increased interest rates and less favourable terms.

What is a personal guarantee?

As mentioned, it’s possible you’ll be asked to provide a personal guarantee. What does that mean?

A personal guarantee means that you are personally liable for the debt. If your company shuts down, the debt will still need to be repaid by you.

If you do decide to provide a personal guarantee, your credit score (which is a measurement lenders use to assess how likely you are to repay a loan) may be impacted. You’ll likely be negatively impacted if you go into arrears.

How do credit cards impact businesses?

There are lots of great benefits to business credit cards, here are just a few you may encounter:

• Miles: If you travel on business a lot, travel-focused credit cards may provide you with airline miles. Collect enough miles, and you may be able to take a free trip.

• Cashback: With some business credit cards that come with rewards, payment made with your card may be eligible for cashback, which helps you save on essential purchases.

• Cash flow: Offering 30-day payment terms has become industry standard for B2B businesses. But often, you don’t have 30 days to make your payments to suppliers. Credit cards can help manage cash flow by bridging the gap between your accounts receivable and accounts payable.

While credit cards can be a suitable solution for plenty of businesses, if not managed correctly, they can lead to financial difficulty. They’re not suitable for everyone. Contact our support team on 0333 344 1015 or [email protected] if you ever face difficulties making your repayments. Be aware that late repayment can cause you serious money problems.

Apply for a credit card as a new business with Funding Options by Tide

Find a lender from our network of over 120+ industry leading providers offering between £1000 and £20M to eligible borrowers. Just click the link below and submit your information to find out if you’re eligible for our brokerage service.

Apply for a business credit card

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.