Establishing Business Credit with a Secured Business Credit Card

Secured Business Credit Card

 

Recently I posted how credit restoration is a viable strategy for small business owners in personal credit recovery. In addition to repairing your personal credit you should also focus on building and if necessary repairing your business credit as well.  One of the best ways to start establishing business credit is through a secured business credit card. secured business credit card

These types of credit cards are specifically designed for businesses with no credit or less than perfect credit history. When you apply you are required to submit a security deposit that will establish an initial credit line. In most cases a minimum deposit of $500-$1,000 is required and once you begin using your card you will receive invoices like a standard unsecured business credit card.

As you pay your invoices your payments will get reported to the business credit bureaus. I always encourage my members to use a secured business credit card along with vendor credit lines because it will allow you establish a strong blend of account types on your files.

Some of the secured business credit cards we have listed report solely to one bureau like Corporate Experian while others report to two or all three of the major business credit bureaus. Keep in mind that your deposit is only used to pay off the debt in the event that you default on making payments.

As soon as you receive your card you can start using it to make purchases for your business. When you charge a purchase just simply pay the invoice when it comes due. Now remember the whole purpose of using the card is to build credit so don’t be late on your payments. After six months you can request that your account be reviewed for a credit limit increase without requiring a larger security deposit.

Some other benefits of a secured business credit card include:

  • Universal Acceptance
  • Cash Back Programs
  • Online Expense Management
  • Easy Funding Options

Before you apply you will need to have your company’s business license, articles of incorporation, address verification, federal tax ID#, banking reference and general business information. You will also need to list authorized users and how many cards you are requesting.

You can send your security deposit via wire transfer and typical turnaround times take 7-10 business days. Keep in mind that before you select any secured business credit card make sure you read the terms and conditions completely and verify which business credit bureau they report to.

Another advantage to using secured business credit cards is the separation between your personal credit and business credit. In my opinion these types of business credit cards are ideal for every small business owner because it not only establishes business credit but also controls spending, eliminates personal liability and protects your personal credit files.

Looking for the best secured business credit cards?  Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to secured business credit cards, vendor lines of credit, fleet cards, business credit cards with and without a personal guarantee, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

 

Marco Carbajo

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle.  He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author  author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Comments

  1. says

    Interesting site!As an owner of a small business myself I appreciate your input & tips for the entrepreneur such as myself and others looking for new ways to increase sales and make sure the customer is secure as well. Thumbs up! Marc

  2. says

    Very informative information here! I’ve never thought about going this route in order to establish business credit since it is so hard to get approved for this type of CC now-a-days. I see more people going with a cash advance loan instead. Thanks for sharing!

  3. says

    Your welcome Gary! Secured cards for small business are a great way to not only build business credit but also control spending and debt accumulation. Similiar to a charge card but not too many charge cards in the marketplace report to the business credit bureaus. :)

  4. says

    Thanks for this input. It’s always important to have the ability to build your business credit. Building your credit will do wonders in the long run, and it if it’s as simple as getting approved for a secured card, then later on down the road it will be easier to get a small business loan if need be. This was very helpful information. I appreciate blogs and good content like this!

  5. says

    Marco, thank you for the article. I had no idea that the idea of secured credit cards had migrated to the small business space. I will keep it in mind and let my small business clients know. Thanks for the information.

  6. Allyson Landevos says

    Someone I work with visits your blog regularly and recommended it to me to read too. The writing style is superior and the content is top-notch. Thanks for the insight you provide the readers!

  7. says

    Considerably, this post is really the greatest on secured business credit cards. I agree with your conclusions and ook forward to your future updates. Simply just saying thanks will certainly not just be sufficient, for the fantastic clarity in your writing. I will definitely grab your rss feed to stay abreast of any updates. Genuine work and also much success in your business!

  8. chirs harton says

    I was wanting to know if i have to use my social securty # when applying for a secured businesss credit card,just my ein#.because when they pull your credit a hard inquiry is posted to my credit score,and that hurts it.

  9. says

    Hi Chris,

    No, you do not have to supply your social security number for a secured business credit card. You will need to supply your EIN number as well as your DUNs number with most companies. That’s one of the great benefits to these types of cards because there is no personal credit check or personal guarantee.

    All the best,

    Marco :)

  10. says

    Great info here Marco! So many people don’t realize that a bad credit history can be repaired for both personal and business. Keep up the great work.

  11. WILLIE says

    I wanted to know is it true once you redflag you’re business credit you can’t fix it?

  12. says

    Hi Willie,

    It depends on what triggered the red flag and if it can be corrected and or changed. For example, if a company’s classification code is in a high risk industry and it decides to enter into a different type of industry then the classification code would need to be updated which will impact the risk associated with that company.

    Be sure to check out my post titled => Business SIC Codes

    All the best,

    Marco

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