The Secret Formula to Getting Business Credit Cards

This article provides a comprehensive overview of unsecured business credit cards, including information on different companies that can help your startup business obtain significant amounts of credit, often up to $100,000. Additionally, it mentions that by understanding how to take advantage of incentives, it is possible to secure credit cards with low APR rates and without the need for a personal guarantee or credit check.

What is an Unsecured Business Credit Card?

The majority of credit cards, particularly those used for business purposes, are unsecured. In contrast, consumer credit cards are usually secured to assist in building credit history. Businesses tend to use net or vendor accounts instead of secured credit cards. Vendor accounts often provide terms such as net 15, 30, or 45, which means that the business has that many days to pay back whatever it has borrowed from the vendor.

Choosing Business Credit Cards that Report

When choosing a credit card company for your business, another factor to consider is whether they report to consumer credit reporting agencies, business credit reporting agencies, or neither. As a business owner, it’s beneficial to look for credit cards that specifically report to business credit bureaus. Using consumer credit cards may negatively impact your company’s credit score, since they make up a significant portion of your personal FICO score, around 30%. A prime example is the Capital One Spark card, which is a great business card, but it reports to both government and consumer credit reporting agencies, meaning that using it will negatively impact your personal credit score. The best business credit cards report only to commercial credit bureaus such as Dun & Bradstreet, Equifax, and Experian.

Personal Guarantees on Business Credit Cards

When selecting a business credit card, it’s important to consider whether or not you are required to personally guarantee the credit card debt. In many cases, providing your social security number and undergoing a credit check to get approval for the credit card also involves giving a personal guarantee. This means that as the primary business owner, you are personally liable for the debt if the business is unable to pay off the credit card. This puts your personal assets, such as your bank account, home, vehicles, stocks, and bonds at risk. To minimize this risk, it is advisable to try and avoid personal guarantees and credit checks whenever possible.

How to Get Credit Cards Without a Personal Guarantee

Before you can acquire credit cards without the need for a personal guarantee or credit check, you must first establish creditworthiness for your business. One way to do this is by obtaining vendor accounts with initial startup vendors such as Uline or Granger. These vendors will extend credit to your business even if you don’t have any credit history and will report your payment history to business credit reporting agencies. Once your business has multiple accounts reporting, you can then start getting credit with larger retailers such as Home Depot, Lowe’s, Sam’s Club, Costco, Walmart, Best Buy, and Apple. Once you have a payment history of at least 14 experiences, you can apply for credit cards from major providers such as VISA, MasterCard, and American Express

Personal Guarantee Options

If you are open to providing a personal guarantee, Credit Line Hybrid is a great
option for your business. With Credit Line Hybrid, start-up companies can acquire
credit lines of up to $150,000 with 0% APR rates. It is considered as unsecured
borrowing, which means no collateral is required, and it does not have any
minimum revenue, bank statement, or tax return requirements. The only
requirement is that you have good personal credit, which can be borrowed from a
friend or potential investor. Credit Line Hybrid allows you to receive a credit limit of
5 to 8 times the amount of credit you are able to get. Additionally, many of these
accounts also report to commercial credit reporting bureaus.