Okay, so you have bad credit or little credit history and you’re trying to open a business credit card account for your small business… Plenty of successful business owners have launched their companies with bad credit.
Here, we take a look at the best business credit cards for bad credit—factoring in terms, rewards, fees, and availability.
What is a “bad” credit score?
Generally, a FICO score of 670 or above is considered good (or very good, or exceptional, as you get higher). Anything below 670 is generally considered fair or poor. Fair or average credit is typically in the range of 580-669. Anything under 580 is looked at as poor or bad credit.
These are the barometers we’ll use when looking at our list of options below.
What to look for in a business credit card?
Let’s be honest… With bad credit, your rewards and perks likely aren’t going to be great. But that’s okay—it’s all a natural part of building, or rebuilding, your credit.
There are a few key factors to consider when comparing small business credit cards:
- A low annual fee: Look for cards that offer no annual fees or low fees covered by other perks. This bonus can save you a lot of money over time.
- 0% APR introductory period: This period will prevent you from accruing interest and is a valuable tool if you want to consolidate and eliminate your debt over the course of a year.
- Specific perks: Decide whether you want cash back, points, or rewards for travel, marketing, or other expenses.
- Employee access: How can your employees use the card? Will your card provider issue multiple cards for your business?
- Beneficial reporting: Some credit providers report payments to both commercial and personal credit bureaus. Determine which option is best for building your credit.
- Consumer protections: Certain consumer protection laws don’t apply to small business credit cards. Consider looking for a card that offers the security you need.
The 5 best business credit cards for bad credit
While shopping for the best business credit card, you’ll find dozens of viable options. However, you need to know what you value and what actually constitutes a good deal. Consider a few of our frequently recommended cards and the bonuses they offer.
Best for poor or bad credit
1. Bank of America: Business Advantage Unlimited Cash Rewards Secured Business Credit Card
Bank of America’s Business Advantage Secured Business Card is made for those looking to establish and build credit.
It’s biggest perk? You gain 1.5% cash back on every purchase, with no annual cap.
Card details:
- $1,000 minimum security deposit
- No annual fee
- 28.49% variable APR
- No introductory APR
- 4% balance transfer fee
See the full breakdown of Bank of America’s Secured Business Credit Card.
2. First National Bank of Omaha: Business Edition® Secured Mastercard® Credit Card
FNBO’s secured business credit card allows you to request any credit limit from $2,000 to $10,000, so long as you provide a deposit of the same amount.
Account details:
- Required security deposit matching credit limit amount
- 25.99% variable APR
- $39 annual fee
See the full breakdown of FNBO’s secured Mastercard.
Best for fair credit
3. Capital One: Spark 1% Classic Credit Card
The lowest threshold of Capital One’s Spark credit card series, the Spark 1% Classic card is another good option for small businesses looking to establish and build credit, and earn cash rewards in the meantime.
For a card like this, you’ll likely need a credit score above 600.
Account details:
- 1% unlimited cash back on all purchases
- 5% cash back on hotels and rental cars booked using Capital One Travel
- 29.99% variable APR
- No annual fee
See the full breakdown of the Capital One Spark 1% Classic credit card.
Best for startups and new small businesses
4. Brex
Brex provides credit cards for startups and growing businesses of varying sizes, and of varying credit scores.
Brex credit cards do not require a personal guarantee to open an account—which companies often do, especially when you have poor or fair credit.
The biggest drawback? In general, Brex requires you to maintain a $25,000 cash balance minimum in order to keep your credit limit active.
Account details:
- 18.49%-26.49% variable APR
- Up to 7x points per dollar on select purchases (1x-7x depending on category)
- No annual fee
See the full breakdown of Brex credit cards.
5. Ramp
Ramp is similar to Brex in that it serves startups and growing small businesses. It also serves companies with bad credit or no credit.
What makes Ramp unique is that they use your cash on-hand and business revenue as determinants for qualification. There’s no credit score requirements or credit checks.
Ramp is not your traditional credit card—it’s a charge card. While there’s no interest, you are required to pay your monthly balance in full, every month.
Account Details:
Is a business credit card worth it?
In many ways, a business credit card operates like a personal credit card.
So then, you might read this and think, “if I have bad credit or no credit history… should I build (or rebuild) my credit with a personal account first and open a business account later, or just open a business account?
In most cases, you’ll still benefit from opening a business credit card, even when you have bad credit. Many of the benefits remain the same, regardless of what your credit score is.
Benefits of business credit cards
There are several benefits of opening a business credit card, including:
1. It is easier to qualify for a business credit card.
Credit cards are typically easier to secure than loan funding. While lending marketplaces like Lendio can help you find a small business loan than meets your needs, some lenders are warier of people with bad credit. With a small business credit card, you can get approved faster, though your spending limit might be lower or your interest rate higher. These caveats help the credit provider mitigate the risk of offering credit to someone with a lower credit score.
2. Business cards typically have higher limits.
If you are worried about a low spending limit with your business card, evaluate your company profits and assets before applying for a card. Many business credit cards have higher spending limits than personal cards because they are based on a company’s assets and revenue. This spending flexibility makes it more useful to business owners, especially those who need to pay vendors or make large purchases.
3. Business credit cards help you build up credit.
Having a credit card is an important tool for building up bad credit. Within 30 days, you have an opportunity to show credit providers that you can repay your debts. By continuously paying your debts over time, you can heal your credit and start to qualify for more favorable card terms and business loans in the future.
4. These cards have valuable rewards and incentives.
Like personal credit cards, business cards offer incentives to get people to sign up. You might be able to find a card that offers cash back on your purchases to help you save (and to make paying off your balance easier) or a card that helps you build travel rewards for when you attend client meetings in a different state. These earned rewards are unique to credit cards and don’t come with other loan types.
5. Bookkeeping is easier around tax time.
Tax season is typically incredibly frustrating for small business owners. You need to sort through hundreds of expenses, invoices, and charges for the deductions you deserve. A business credit card can simplify this process. If you centralize your spending in one place—your business credit card—then you can quickly organize all your expenses and streamline your tax filing.
It can feel overwhelming to try and open a new credit card when you have bad credit. But the good thing to know is, there are always options for building and rebuilding your credit.
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