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How to Apply for a Corporate Credit Card

Kristina Russo

By Kristina Russo | American Express® Freelance Contributor

7 Min Read | March 25, 2021

How to Apply for a Corporate Credit Card

A corporate credit card can be a powerful payment tool for your business. Considering the combined benefits of enhanced employee spending control, expense analytics, streamlined processes, and the ability to reinvest rewards, it’s easy to understand why any business might want to apply for a corporate credit card. 

However, every business is not eligible and among those that are, not all decision makers understand how to apply for and set up a corporate credit card program. For example, a company usually can’t apply for a corporate card online, as an individual would for a personal card or even a small business credit card. To apply for a corporate credit card, an authorized officer of the company typically discusses the details of a corporate card program with the card issuer’s special representative. To help you engage with that corporate credit card specialist, this article explains the three main questions most likely to be addressed:

 

  • Does the company meet corporate credit card eligibility requirements?      
  • What’s the best way to handle payment responsibility?
  • How will the company set corporate card program policies for its employees?

Eligibility Requirements for Corporate Credit Card Programs

 

All the major credit card issuers have their own set of requirements, but several eligibility rules are universal. Qualifications for a corporate card program are more stringent than those for personal and business credit cards because of the incremental investments a card issuer makes in each agreement, such as rewards, business tools, and customer service. Eligibility requirements include restrictions on business type, thresholds for company size, and expected activity.

 

In addition, corporate credit cards are issued to a company, not to people, which affects overall credit risk. If a company can’t check the following eligibility boxes, a business credit card – which is available to any type of business – might make more sense. 

 

Business Type: Unsurprisingly, corporate credit cards are for corporations. If your company is a registered C-Corp, S-Corp, or LLC, it likely meets the business form requirement for most corporate cards. Business type is important because corporations are considered legal entities separate and distinct from their owners, unlike sole proprietorships and partnerships where liability is co-mingled with their owners. Some nonprofits and government agencies may also be eligible.

 

Company Size: Corporate card agreements come with a high level of customer service and many perks. In return for these benefits, card issuers have minimum thresholds for applicants in areas such as company size, expected annual spend, and number of active cards. Some card issuers measure size using annual revenue, while others look at cash on deposit. A review of major credit card issuer’s programs indicate that annual revenue eligibility begins at $4 million, while others start at $10 million or even $20 million. Non-traditional corporate cards, such as credit cards for startups, tend to look at cash balances rather than annual revenue. In those cases, applicants may need to have cash deposits of $100,000 or more.

 

Expected Activity: Another aspect of corporate card eligibility is the expected level of spending activity. One way issuers estimate activity level is by the number of employee credit cards to be distributed. Some card issuers set the minimum number of cards at 15. Other issuers have no fixed number, and some may count virtual or one-time use corporate credit card numbers. Another way credit card issuers estimate expected activity level is by requiring a minimum spending quota. A typical quota might be $250,000 for entry level corporate credit cards and escalate for premium level credit cards.

 

Information Requirements: Applying for a corporate credit card is usually done in person, with a representative from the credit card company. Because of the heightened level of scrutiny, online applications are less common. Several documents are usually required to help card issuers assess the company’s financial status and creditworthiness. Since the company is the applicant, each required document is for the corporation, not its owners or executives. The documents include: 

 

  • Financial Statements. Annual, audited financial statements, prepared in accordance with Generally Accepted Accounting Principles (GAAP). Supplementary documents, like bank statements, tax returns, loan agreements, or leases may also be requested as back up.
  • Employer Identification Number. The nine-digit identification number for the company, issued by the IRS. Also known as a tax ID.
  • Credit Reports and Ratings. Credit reports, and credit ratings for the company, usually from one of the three reporting agencies – Dun & Bradstreet, Equifax, or Experian. A DUNS number and PAYDEX score may also be required by the larger credit companies.

Other Requirements: A few corporate credit card issuers may require other qualifications, including: 

 

  • The company be a minimum of one year old.       
  • A distinct business address.
  • An authorized officer of the company as primary point of contact.
  • Some may even require vendor or supplier references.
How to Apply for a Corporate Credit Card

Liability Considerations When Choosing a Corporate Card Partner

 

When applying for a corporate card, it’s important to consider variations in the liability terms of the card agreement. In all cases, it’s the corporation’s credit line. The corporation itself is responsible for paying the balances on its corporate credit cards, not its shareholders or executives. This liability differs from business credit cards where repayment responsibility rests with the business owner. However, sometimes, corporate credit card agreements can include a secondary responsibility from the individual employee cardholders. The differences between corporate liability, individual liability, and shared liability can be significant factors when choosing between different corporate credit card programs.

 

Corporate liability means that the company is completely responsible for any charges made on the corporate cards. The bill goes directly to the company for payment.

 

Some corporate cards are set up where the individual cardholders have the primary responsibility to pay the balance. In this scenario, credit card companies will check an employee cardholder’s personal credit scores and send bills directly to them for payment in accordance with the card’s billing terms. Employees often need to pay the bill out of pocket, which is why their personal credit situation can become an issue. Typically, the employee gets reimbursed from the company after submitting receipts and expense reports, in compliance with the company’s policies. Timing issues can cause issues for employees if there is a lag between payment and reimbursement. Missed or late payments to the credit card issuer can negatively affect the employee’s personal credit score.

 

Shared responsibility is a hybrid approach, where both the company and the employee have joint liability for outstanding balances. In this variation, if the employee has complied with company policies for credit card usage and expense reimbursement, they are not held personally liable for any missed payments. However, if those balances remain unpaid for an extended period of time, the credit card issuer can report the overdue balances to the various credit bureaus, reducing an employee’s personal credit rating. Additionally, employees are wholly responsible for any personal spending or unauthorized spending on the corporate credit card.

Setting Up Company Guidelines for a Corporate Card

 

Once an application is approved, the next step in setting up a corporate credit card program is to establish company policies for using the card. These guidelines explain acceptable activity and the penalties for non-compliance. It’s a best practice to have every cardholder sign the guidelines. Important topics to include are:

 

  • Cardholder responsibilities. These establish, for example, that only the named cardholder can use the card, and only for business expenses. They also set expectations for safeguarding the card, PIN access, and how to handle loss or unauthorized access.
  • Spending limits. Establishes overall spending limits for the employee and tolerances for spending on certain transactions. Limits are especially critical when corporate cards are used for business travel and entertainment.
  • Approvals. Defines the hierarchy of expense approvers, situations that require special approval, and how to handle exceptions.
  • Reimbursement process. Spells out the steps an employee must take to be reimbursed for charges made on the corporate credit card and the documents necessary for reimbursement, which should comply with IRS rules, at a minimum.

 

The Takeaway

A corporate credit card may make sense for your business, especially if you have a significant number of employees making transactions or traveling on the company’s behalf. However, corporate credit card programs are more complicated than a simple extension of credit, entailing additional application requirements and contractual differences. Understanding the application process and company requirements like business structure, annual revenue thresholds, corporate credit ratings, and spending minimums can help determine if your business is ready to apply for a corporate card.

Kristina Russo

Kristina Russo is a CPA and MBA with over 20 years of business experience in firms of all sizes and across several industries, including media and publishing, entertainment, retail, and manufacturing. 

 

This content was written by a freelance author and commissioned and paid for by American Express. 

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