I formed my LLC about two months ago and applied for a business credit card with my bank. They asked for a personal guarantee, which I expected, but they also wanted two years of financials. The LLC has only been around for a few months, so I don't have that. Has anyone else run into this? How long did it take before you got approved for your first business card?
Credit Cards
How long did your new LLC wait for its first business credit card?
Took me about three months. Applied with Chase right after I got my EIN and they approved me for a basic Ink card with a small limit. I think having a personal account with them for a few years helped though.
I waited almost six months and then just went with a secured business card from my credit union. It reports to the bureaus and after a year they unsecured it. Not ideal but it got the ball rolling.
I hadn't considered a secured card. Did the credit union plul your personal credit or just look at the business?
Most banks will pull your personal credit for a new LLC. There's no real business credit history yet so they have nothing else to go on. My first card was with Amex and they pulled my personal score. I think I had the LLC for about four months at that point.
Six weeks for me, but I went through a fintech lender not a traditional bank. Higher fees but they approved based on revenue deposits into my business checking. If you're not set on a big bank that mihgt be a faster route.
Two years is excessive for a small LLC card. Were you applying for a large credit line? Usually the small starter cards just want a personal guarantee and a soft pull.
They pulled my personall credit. I think that's just how it works when the business is brand new.
I applied about a month after forming my LLC and got denied by two banks. The reasons were thin file and no business credit history. Waited another three months, opened a business checking account and made regular deposits, then reapplied with the same bank and got approved. So around four months total.
That's helpful. i do have a business checking account with them already. Maybe I just need to let some activity build up before reapplying.
Yeah, having deposits and a few months of statements seems to matter more than the age of the LLC itself. Also check if they report to Dun & Bradstreet. Some of the starter cards do and that helps you build the business file.
Was the denial from your own bank or a different one? If it was your own bank, I'd ask a branch manager what specifically they want to see before approving. Sometimes it's just a matter of hitting a certain average balance.
Fintech route isn't for everyone but I'll add that I didn't need a personal guarantee with the one I used. That was the main reason I went that way. The APR is higher so I pay it off weekly.
Something else to watch for, the business cards that don't report to personal credit are harder to get with a new LLC. The ones that do report are easier but then they show up on your personal file. Trade off either way.
One more thing, if you're a sole member LLC and you apply as a sole prop with your EIN it can be easier. Some banks treat single member LLCs more like the owner than a separate entity.
Agreed. I think the key is just time plus activity. Two to four months of clean business account history seems to be the sweet spot.
Also don't apply for several cards at once. Each application is an inquiry and a new LLC with a thin file will get flagged. One at a time, wait a few months between ngl.