Can a business credit card boost your side hustle?

Side hustles can make cash but there are also costs. A business credit card could be the right choice if you a serious about growing your side hustle.

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Side hustles grow organically, from very small beginnings. The nature of a side hustle may not be big business, but even so, there can be some essential start-up costs or ongoing expenses. Applying for a business credit card is one way to get funding and develop your side hustle into something more profitable.


Is a business credit card the right choice for a side hustle?

First of all, it’s essential that you’re making enough money in order to meet any repayments. Setting up a full-time small business involves making a business plan, but side hustles are different. The ideal side hustle is flexible rather than a full-time commitment. It’s important to think carefully about borrowing. 

Many people begin a side hustle with no clear idea of how successful they are going to be. That’s fine if the only outlay is time. In order to get a business credit card, you need evidence of sufficient business income. Alternatively, you must be able to forecast convincingly how much money you are going to make. It’s not a good idea to borrow money without a reasonable commitment to keeping your side hustle going. Borrowing can be a positive move if your intention is to expand.

For those who are ready to make their side hustle more central, a business credit card could help with the costs of that transition

When should you apply?

For a new venture, it’s better to wait before applying for a business credit card if you have no essential costs early on. Once the profits start to roll in, you might benefit from a flexible way to borrow money in order to build your side hustle.

In addition, you may be able to get 56 days interest-free credit. When you need help with cash flow, that could be a good time to apply. 

Is it easy to get a business credit card?

Independent contractors, freelancers and sole traders are eligible to apply in their own name, as long as they are registered as self-employed. In practice, it’s not so simple to get credit for a side hustle.

Each provider will have conditions that might include a minimum turnover, a business bank account or other stipulations that could be hard for a side hustle to meet. For example, the Barclaycard Select Cashback Business Credit Card is only available to those with a turnover of over £10,000 or more. Others, like the Capital On Tap Business Rewards Credit Card, are exclusively for limited companies. 

One way to get a business credit card is through the bank you already have an account with. For example, you can get a Business Credit Card if you have an account with Santander.

There are advantages to persevering with finding and applying for a suitable buisness credit card:

  • Some of the rewards and incentives can be very tempting.
  • It’s easier to separate your business and personal spending and be more organised.
  • You can begin to create a positive credit rating for your business.

You might want to think twice about an additional credit card if you have a tendency to overspend.


Is a personal credit card a good choice for funding a side hustle?

As a sole trader, you are personally liable for business debts. Business credit card repayments on top of personal borrowing could seem risky. This is especially true if one of the reasons you started a side hustle was to pay off debts. Your personal credit score will be taken into account as well. 

It’s still possible to have a separate card for your side hustle, even if it doesn’t have the word ‘Business’ printed on the front. An existing credit card, or a new credit card with 0% on purchases, can still offer rewards and should be just enough to pay for start-up costs, like tools, equipment and materials.

Any credit card can help to separate side hustle costs from personal spending. Then you can continue the habit when you become eligible for a business credit card or open a separate bank account.

You can’t use a business credit card for personal expenses, but there’s nothing to stop you from doing it the other way around. 

Is it better to avoid borrowing money for a side hustle?

It’s wise to try saving money to fund your side hustle in the first instance and for as long as it’s still at the stage of being a hobby that makes a little cash. 

For very new and micro side hustles, there may be more suitable ways to pay business costs and expenses, which should be small.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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