For many small business owners with good credit history, getting approved for a business credit card is quick and easy. They can walk into their choice of banks, fill out an application and be approved for a business credit card with no problems, DESPITE being a brand new business!
But what about small business owners who have average to bad credit? Does this mean they can never obtain a business credit card?
No! But there are a few things you need to do BEFORE you start applying for a business credit card.
Check Your Credit Report
Before applying for a business credit card, you should first pull your credit. If you are a new business owner, you want to check your personal credit report.
If you are an established business, and you are applying for a business credit card using only your business credit, you need to pull your business credit report. You can look at your business credit by contacting Experian business credit or Dunn and Bradstreet (2 main sources).
Where To Get An Unsecured Business Credit Card
If you have average to bad credit, you should check out companies like Applied Bank® VISA® Business . They have a business credit card that they market to start up businesses with very flexible credit guidelines.
Getting a Secured Business Credit Card
Another option for business owners with less than perfect credit is to apply for a secured business card. Most banks will have a secured business credit card option.
Issuers of secured business credit cards are more lenient in reviewing applications in a sense that even those with bad credit or no credit history can qualify. However, to make up for the high risk, applicants are required to submit a security deposit to the issuer.
Thus, in case the secured business credit card holder defaults from payments, the issuer can tap in the security deposit to pay off the existing charges.
The value of the security deposit usually determines the credit limit that will be given to the secured credit card holder. If you need at least $1,000 of credit limit per month, then you should be prepared to submit the same amount of security deposit to your issuer.
Secured Credit Cards Look JUST LIKE An Unsecured Credit Card
Nevertheless, some entrepreneurs may hesitate to acquire a secured business credit card for fear that it can affect their company’s reputation. The good news is, nobody will have to know that you are using a secured business credit card except for your issuer.
When you present your secured business credit card to a supplier, there will be no sign or hint that your credit card is a secured one. It would look just like any other credit card for business.
An Opportunity To Start Over
Most importantly, secured business credit cards can be wonderful tools for rebuilding business credit. Use it to meet your business’s spending needs but see to it that you can pay off your debts before your due date of payment. By doing this consistently, you should be able to raise your business credit in matter of six months to a year.