Business Credit Application

Thursday, June 7, 2012 at 7:54pm by Site Administrator

Was Your Business Credit Card Application Denied?

A business credit card will help keep your records and expenses in check. It can help plan budgets and build your company’s creditworthiness. Applying and getting one can be a boon to your business’s reputation and future.

So what happens if your application is rejected?

They’ll provide a letter that explains why in the most basic terms. But you won’t receive that for a week or more. In the meantime, there’s no way of knowing if applying elsewhere will net the same results. Plus, continuing to apply and getting denied will only impact negatively you and your company’s reputation.

While a credit agency might have any number of reasons for dismissing an application, there are some general standards that always lead to rejection.

Reasons for Rejection

  • The application was filled out incorrectly
  • It’s all about the red tape. Many applications are rejected simply because someone forgot to sign it. So leaving out vital information can definitely lead to being denied. Review the application carefully before submitting. Be sure nothing pertinent has been omitted. Don’t risk your business’s credit chances because you forgot to complete line 5a on the application.

  • Your business doesn’t meet the card’s requirements
  • There are many different types of business credit cards. If you apply for the wrong one or the credit agency believes you have, there’s the likelihood you will not be approved. This is regardless of how strong your company’s financial foundation is. Be sure to understand if you’re applying for a corporate card or a merchant card and if its terms and conditions pertain to your business needs.

  • There’s a limited credit history
  • A business can be hurt by its lack of credit history. If the financial history is too short, or has failings, such as heavy debt, rejection can be inevitable. Another unfortunate Catch-22 can be your company has no credit history at all. Without some sort of credit background, a credit card agency may reject your application for a business credit card outright.

  • Too many attempts to get a business credit card
  • It might seem sensible to apply for as many cards as possible and let the chips fall where they may. The fact is this is a dangerous approach to applying for business credit. Too many inquiries will negatively impact your financial standing and will most certainly get your application denied. Spread out your applications and be careful about applying to the right credit card companies.

  • Your business owes too much money
  • Ironically, the worst time to apply for business credit is when you need money. If your business’s debt and loan balances are high, credit card issuers will always be wary of extending a business credit card. The reaction will be you won’t necessarily be able to pay them either. Regardless of how much you need the credit, avoid applying unless your existing debt is manageable.

  • There is already too much credit
  • This applies to the personal and business history behind the company. Personal credit history can be influential when applying for a business credit card, even if those accounts are in excellent standing. There is no standard limit on how many cards any individual is allowed to have, but there are card issuers that will decide you already have too much credit and can’t handle more.

Rejected? What Now?

For a lot of companies, business credit cards are the only option for building growth and establishing financial stability. This is especially true of start-up companies. A lot of businesses prefer credit cards to securing bank loans for working capital. This can be attributed to the ease of applying for credit as opposed to loans. In fact, it’s not unusual for a bank to suggest business credit cards instead of small loans.

If you do find yourself on the wrong end of a rejection, here are a few things that you can do:

  • Let some time pass
  • As stated above, the more applications, the more rejections. Pull back after no more than two denials, at least until you get some kind of handle on why it’s happening.

  • Consider a secured credit card
  • Plenty of businesses use an up-front security deposit and accompanying credit card to build company credit. A lot of credit companies reward good customers by converting secured cards to unsecured cards.

  • Speak with a financial advisor
  • It’s likely they could offer viable solutions to your credit problems.

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