One of the questions I get time and time again is about business credit cards. Can anyone apply for business credit cards, or are they in fact restricted to small business owners?
Why would you want to get business credit cards? Well, there are currently several that offer some of the most outstanding signup bonuses available in Canada – ones that dwarf the bonuses offered by most personal credit cards.
Consider the cards in the American Express Membership Rewards family, which we've discussed at length here on the blog. The Business Gold Card offers 40,000 Membership Rewards points when you spend $5,000 within the first three months.
The Business Platinum Card offers 75,000 MR points when you spend $5,000 within the first three months, and also gives you 25,000 MR points for each referral you earn, making it one of the most powerful cards to hold.
Most often, what I hear from miles and points newbies is, "But I don't have a business. Can I still get these cards?"
The Short Answer
In the case of American Express, the answer is an unequivocal YES. That's because Amex allows you to apply as a sole proprietorship, which means that on the application form, when prompted for your "Legal Business Name", you just put your own name.
You don't need to have registered a business or anything, since a sole proprietorship is not a legal entity of any kind. Instead, it merely refers to a situation in which one person (you) owns the business and is personally responsible for its debts.
Indeed, whether or not you're approved for the card depends solely on your personal credit score. No business credit information of any kind is required.
The Long Answer
There may be an ethical line coming into view here, but there are two facts that, in my opinion, make it certain that we steer clear of crossing that line.
First, even if you don't think you're a business owner, most people have conducted some business-like activities. Ever provided babysitting, tutoring, dog-walking, or lawn-mowing services? Ever sold anything on Craigslist or eBay? Perhaps you run a website or a popular blog in your spare time? Or perhaps you like to trade coins or stamps?
Any transaction in which you provide a good or service in exchange for compensation, however minimal it might be, can be viewed as business activity. And since sole proprietorships aren't legal entities, you can legitimately claim those activities as your business if Amex were to ever ask.
That brings me to the next point: Amex doesn't care if you're the kind of business with big suppliers, lots of inventory, and a sizeable client base (i.e., what most people think of when they hear the word "business"), or the kind that operates out of a personal residence and earned $5 in revenue last year.
In fact, when applying for American Express business credit cards, there are no terms and conditions for what sort of business you need to have. It's more of the case that these cards are geared towards small business owners, rather than there being a specific requirement that only business owners can apply.
The cards are certainly best suited for those operating a business – for example, both the Business Gold and Business Platinum have rather high minimum spending requirements ($5,000 in three months), and the Business Gold allows you to pick three "suppliers" from a list of over 40 merchants where you can earn 2 MR per dollar spent. But there's nothing barring you from applying if you aren't a business owner in the traditional sense. So go ahead and apply – after all, those gigantic bonuses aren't going to earn themselves.
Other Business Cards
Below is a selection of a few other solid business credit cards available in Canada. As with personal credit cards, the bonuses on the non-Amex cards aren't as outstanding, but can still be a great value proposition.
The TD Aeroplan Visa Business Card currently offers 20,000 Aeroplan miles upon your first purchase, an additional 10,000 miles upon spending $1,000 in the first 90 days, and a further 5,000 miles upon adding an authorized user, for a total of 35,000 Aeroplan miles. The annual fee is $149.
The CIBC Aerogold Visa Card for Business currently offers 20,000 Aeroplan miles upon your first purchase. The $180 annual fee isn't waived, though first year fee waivers pop up pretty reliably every few months, and the bonus on this card is sometimes as high as 25,000 miles as well.
The RBC Visa Business Platinum Avion currently offers 20,000 Avion points upon approval, and if you apply before May 31, 2017, RBC are offering a first year fee waiver for the $120 annual fee.
Out of the above three banks, TD and CIBC operate pretty similarly to American Express. They'll usually approve your application without asking any questions (as long as your personal credit score is up to scratch), and if they do ask you about the nature of your business, they are usually satisfied with any variety of "sole proprietorship" answers. This is where your dog-walking or cat-sitting experience will be useful to recount.
On the other hand, RBC is typically a bit stricter, and will make you submit documents like previous years' business tax returns before approving you. So it may be a little more difficult applying for RBC's business credit cards as a sole proprietorship, but that doesn't mean it's impossible.
Applying for business credit cards is often a point of hesitation for many new practitioners in the miles and points game. Business credit cards often come with very attractive signup bonuses, but many people wonder whether they're eligible for these cards if they aren't a small business owner in the traditional sense.
The answer is that it depends on the financial institution that's issuing the card. Some lenders, like RBC, are a bit stricter and might want to see business tax returns as proof of small business ownership. However, the issuers that offer the best bonuses – American Express, TD, and CIBC – are more than happy to approve your application as a sole proprietorship.