There are very few banks that offer business secured credit cards, in fact, there is not a single major bank in the US that does so. The main reason is they are not very profitable for the bank, and it is far more costly to report business credit information to the credit reporting agencies. Whether accurate or not, the banks assume that you have poor personal credit and you are likely to never take advantage of their more costly and profitable services.
Alternatives to Business Secured Credit Cards
There are some alternatives as most business do require the ability to purchase airfare, hotels, rental cars, and other services where a check card does not work well. Here are a few ideas that may work for you:
Personal Credit Card
When you are just starting out with a new business, there is little chance you will ever obtain any credit without a personal guarantee. With that in mind, there is only one real difference between a business secured credit card and a personal one. The difference is the business one, if it existed, would not report to your personal credit file and would presumably report buy vcc to the business. From an accounting or tax perspective, it does not make a difference. One option is to obtain a personal secured card and use it exclusively for business expenses.
If you search around and look at the various programs available, you will find some secured cards that have excellent terms and offer a lot of reporting features. This is helpful when you have to manage business expenses as a lot of these cards even categorize expenses for you. Where possible, you should try to get the secured card at the same bank your business accounts exist. Some people have luck getting a business banker to convert these into a non-secured business credit card after as little as one year.
Unfortunately, this option will report to your personal credit file. However, keep in mind that up until around 10 years in business, everything will report to your personal credit file. The days of obtaining credit on the business name alone went away with the recent recession.
Build Business Credit
This won’t be much help today, but it is never too early to start thinking about your business credit file. Once you build credit and more importantly build a relationship with a bank, your chances of obtaining a traditional business credit card go up dramatically. In addition, building business credit is not very difficult and with a few tips you can have a business file within a few weeks.
1. Ask your vendors for net 30 terms on every single purchase you make. We tend to only think about revolving credit, but anyone that extends you credit for even a day, is a creditor. Many companies report this to the credit agencies. If they do not allow net 30 terms, explain you are trying to build your business credit file and ask for help. Often a business will work something out with you; perhaps 50% upfront and the remainder net 10 or something similar. It really doesn’t matter as long as they are extending you some credit.