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.
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.
For example CSI offers a secured Business MasterCard that reports to Corporate Experian. They require a minimum of $1,000 security deposit but 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 secured and unsecured 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 premium vendors, business credit cards, merchant cards, 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 is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and 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 Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.
January 25th, 2010 at 8:50 pm
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
January 26th, 2010 at 7:49 am
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!
January 26th, 2010 at 9:53 am
Thanks Marc and always appreciate feedback from fellow small business owners like yourself.
January 26th, 2010 at 9:55 am
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.
January 29th, 2010 at 9:05 pm
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!
January 31st, 2010 at 2:51 pm
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.
January 31st, 2010 at 5:04 pm
Your welcome Rich. Appreciate the feedback!
April 23rd, 2010 at 4:40 pm
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!
April 23rd, 2010 at 7:42 pm
Your very welcome and appreciate the positive feedback Allyson!
All the best,
Marco
April 27th, 2010 at 5:25 am
Thank you for your post share. I really like your blog and I have learned something from it.
May 12th, 2010 at 5:46 am
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!
May 30th, 2010 at 8:37 pm
Excellent info Marco. We work with businesses who have bad credit all of the time and this is a really great article with great tips for them.
May 31st, 2010 at 8:47 am
Thanks Craig, by the way send me your contact info so we can touch base. My email is ceo@startbusinesscredit.com
All the best,
Marco
August 8th, 2010 at 8:56 pm
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.
August 10th, 2010 at 6:34 pm
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