Credit Cards

Business credit card for new corporation?

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  • Jun 23rd, 2020 4:26 pm
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[OP]
Sr. Member
Feb 18, 2019
507 posts
659 upvotes

Business credit card for new corporation?

Can anybody recommend a credit card for a newly formed corporation, or does this even exist? How does a new corp with no credit history get a card? According to TD's website, they need 2 years of tax returns. RBC doesn't have information, and they're number to call states "urgent matters only" due to Covid-19. CIBC offers business card tied to your personal credit profile... But these are not real business cards, they're just personal cards for "business" purposes which (I assume) do not help a company build credit. Are these "business cards based on personal credit" the only ones you can get until you have a couple of years of tax history?
6 replies
Deal Addict
Feb 26, 2006
3423 posts
1463 upvotes
Ottawa
You don't need a business credit card.. And they don't help you build credit in the way you're thinking with a credit score... Lenders look at corporate financials, not credit scores, at some levels Dun and Bradstreet can be used but.. Never mind.. Point is.. Use any card and go on w life. Just use it exclusively for your corp. Don't mix business and personal.
Sr. Member
Nov 22, 2012
562 posts
549 upvotes
NS
AMEX Business cards are normally the easiest to get approved for. Unlike most banks, AMEX does not typically ask for formal business documents and 2 years of tax returns.
Sr. Member
User avatar
Dec 20, 2017
651 posts
774 upvotes
Amex small business cards are likely the easiest to get approved for. That said, it'll report on your personal credit profile.
Sr. Member
Dec 8, 2017
508 posts
237 upvotes
I have the Scotiabank Business Momentum.
3% cash back on Gas, Office Supplies, Restaurants and Reoccurring Bills.
49$ Annual Fee

In terms of credit check, they just pulled my personal one.
Deal Expert
Feb 29, 2008
26000 posts
3277 upvotes
Montreal
Most corporate credit applications for "one man business shows" use your personal credit score and report to your personal credit rating. They show on your personal Transunion record.

Note that there is no obligation from an accounting point of view to use a corporate card. You just need to segregate your expenses.
Newbie
Jun 20, 2020
8 posts
6 upvotes
DonkeyDoo wrote: Can anybody recommend a credit card for a newly formed corporation, or does this even exist? How does a new corp with no credit history get a card?
Corporate credit works very differently than personal credit.

Typically a corporation pays invoices on 30 days credit terms by cheque or banking transactions, not on a credit card.

Usually a corporation will obtain a line of credit, which is always backed by assets and is also a PITA. For instance, if based on receivables, like issuing invoices to customers, that would generally be something like the lesser of 30% of average monthly receivables or a portion of average monthly receivables less average monthly expenses. You typically also need to hold certain amounts of bank balance. They do this to show you are liquid and can support full payment basically within 60-90 days if everything goes bad.

In a case of Corporate Credit cards based on your corporate history, you need to be in the millions of revenue and also helps if you have assets they can seize in event of default.

With American Express, I had 5 cards for me and staff. Busn was doing about $1.1mill in revenues, and I was turning $250k in spend on the cards per year. I was assigned a rep, and we were told that when we get $2.0m of revenues they would generally approve the switch to Corporate credit and off my personal credit. Due to having a fixed lease in place and 5 ft employees and the volume of spend I had, they were willing to grant an exception and let us do that at $1.5 mill revenues.

So it is possible, but that was also a 20 year old company.

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