Secured Business Credit Cards
While consumers have more than enough secured credit card offers to choose from it seems to be more of a challenge for small business owners.
If you are having a hard time finding the right secured business credit cards for your company don’t worry because I’m hoping this post will point you in the right direction.
What’s most important is first ensuring that the secured card you select as a business does in fact report to the business credit reporting agencies not your personal files.
Most of the cards you hear about that help rebuild your credit are for consumers and not for businesses. You also have to be careful because some of these cards will hurt your credit rather than help it.
What I mean is that some cards in the marketplace are issued by high risk lenders and by having these types of cards reporting on your files will automatically identify you as a high risk to other lenders in the industry.
For example, First Premier Bank is known as a high risk lender and its rates prove it. They even offer a card with a 79.9% interest rate for the riskiest of borrowers.
So stay away from secured credit card offers from high risk lenders like First Premier Bank. You may want to consider Orchard Bank or some of the other secured credit cards listed in my blog.
Now when it comes to your business I would suggest applying for the CSI Secured Business MasterCard. You will need a minimum of $1,000 to open an account with them and your payments are reported to the business credit bureaus.
Keep in mind that your deposit equals your credit limit but it doesn’t work like a debit card. The money you have on deposit is untouched and is simply security in case you default on your payments.
The larger the deposit you can put down the greater the credit limit your card will be. Best of all the higher the credit limit the better it reflects on your business credit files.
If the funds are a bit of a stretch there are also other secured business credit cards that only require a $500 deposit that report to the business credit bureaus as well.
Once you have a secured card it’s important to keep the account active by using it to make business purchases. Keep the debt to credit utilization low which is typically no more than 30%.
You also need to pay your bill ahead of schedule and if possible increase your deposit at least once every six months. Remember, your goal is to eventually qualify for unsecured business credit cards and it all starts with establishing a solid payment record on your files.
After six months of on time payment history you can also request an account review to see if you qualify for a credit limit increase with no additional security deposit.
So when it comes to secured business credit cards I encourage you to select the right card, make a deposit, make business purchases, pay ahead of time, increase your limits and request a review after six months.
Looking for more secured and unsecured business credit cards that report to the business credit bureaus? Become a member of my Business Credit Insiders Circle and gain access to hundreds of vendors, lenders, business credit cards and funding sources. Submit your name and email below for details and receive a free audio seminar ($597 value) =>
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A step-by-step business credit building system helping small business owners build business credit with no personal guarantee. 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.
November 20th, 2010 at 9:01 pm
I have no credit, and my buddy has bad credit. We are going on a trip in a few months and need to apply online to get a credit card. Mastercard or Visa. Anyone know where?
November 22nd, 2010 at 11:22 pm
Hi Melisa,
Here are a couple of credit cards for consumers with bad credit that you may want to look into.
All the best,
Marco
December 13th, 2010 at 2:01 pm
I really loved this post. You write about this topic very well. Payment through credit cards is great. I don’t like to carry cash everywhere and using a secured credit card for my business makes a lot of sense compared to worrying about interest on an unsecured one.
December 15th, 2010 at 7:50 am
Glad to hear that you enjoyed the post Mike. You may want to check out my post on 7 Mistakes to Avoid When you Apply for a Business Credit Card.
All the best,
Marco
March 16th, 2011 at 2:53 pm
Hi Marco. I enjoyed the article. It appears that the CSI Secured Business Card is no longer available. What other secured business cards could you suggest? You mentioned some with initial deposits of $500. Who are they? Thanks in advance.
March 17th, 2011 at 5:14 pm
Hi Elizabeth,
We do offer many business credit cards including secured business credit cards with initial deposits of $500 in our business credit building system. You can access these sources by becoming a member of the Business Credit Insiders Circle.
All the best,
Marco