Don’t Fret: We Have a List of Business Credit Cards for Bad Credit

Don't Fret: We Have a List of Business Credit Cards for Bad Credit

Credit cards can be a valuable tool for small businesses. They can offer a convenient way to separate personal and business expenses, as well as a flexible solution for varying cash flow. Plus, employee cards can come in handy when employees need to make purchases on behalf of your business.

Credit cards can also help your business develop a credit history, which is important should you want to secure business financing or more favorable credit terms in the future.

However, many new and small business credit cards are issued based on the credit history of the business owner. That means if you have a negative personal credit history, it can be difficult to qualify for a business credit card.

But all is not lost if you have bad credit and want to get a credit card for your business — you have options!

The downside to many of these options? The credit cards you can qualify for with bad credit may not have the same kinds of terms, benefits and perks as credit cards for those with better credit. For example, they may have higher fees, lower spending limits or require a security deposit. Some business credit card features to consider when making your decision include:

  • Annual fees
  • Annual Purchase Rate (APR)
  • Reward programs
  • Availability of employee cards

Here, we’ll discuss these items and more to determine the best business credit cards for people with bad credit.

Business Credit Cards for People With Bad Credit

Capital One Spark Classic for Business

If your credit is fair to average, the Capital One Spark Classic for Business could be a good choice. It charges no annual fee. However, with a high interest rate of 24.49 percent APR, you’ll want to pay off your full balance every month. If you make a late payment, the rate will go up to a steep 30.90 percent!

Under the card’s rewards program, you can earn unlimited 1 percent cash back on every purchase for your business. You can also get quarterly and annual summaries of your spending, as well as additional cards for employees at no charge.

Secured Credit Cards

Secured credit cards offer a way to have access to a credit card while rebuilding your credit by using it responsibly. When you use a secured credit card, you put a refundable deposit down that generally determines your spending limit on the card. This is used as security for the credit card company in case you should default. The card issuer will hold on to this amount; your card purchases will not be deducted from it.

Otherwise, the card works like any other credit card. You can use it to make purchases up to your spending limit, and then you pay the card back. Consistently paying off any balances in full and on time will also help rebuild your credit score.

While paying a deposit up front isn’t an ideal scenario, it does offer an option if your credit record prevents you from qualifying for a regular business or personal credit card.

Secured Business Credit Cards for People With Bad Credit

There are a few secured cards specifically created for businesses, which can help you build strong business credit. Keep in mind, though, that if you’re a sole proprietor, you will probably be required to guarantee the credit card yourself — meaning you are personally responsible for paying off any debt. Also, note that activity on your business card may be reported to your personal credit file.

BBVA Compass Secured Visa Business Credit Card

The BBVA Compass Secured Visa Business Credit Card is only available in seven states:

  • Alabama
  • Florida
  • Texas
  • Arizona
  • Colorado
  • California
  • New Mexico

In order to get the card, you must open a BBVA Secured Credit Card Savings Account with a minimum deposit of $500. Your credit limit on the card will be 90 percent of the amount in your savings account.

The card has no annual fee for the first year; after that, the fee is $40 annually. The regular APR of 17.74 percent goes up to a penalty APR of 28.74 percent if you make a late payment.

You can also add employee cards to your account at no additional cost and set spending limits for each employee; employee purchases are itemized on your statement. The card offers a rewards program in which you can earn one point for every $1 in purchases.

Wells Fargo Business Secured Credit Card

The Wells Fargo Business Secured Credit Card has an annual fee of $25 per card, and you can get up to 10 cards total for employees and yourself. The minimum deposit to open an account is $500, and your spending limit is 100 percent of your security deposit. With this card, your interest rate is the prime rate plus 11.90 percent on purchases (for a current total APR of 16.65 percent).

The rewards program allows you to earn 1.5 percent cash back on purchases. Another nice feature of this card is that Wells Fargo regularly reviews the account and recent credit history for opportunities to upgrade to an unsecured business credit card.

Secured Personal Credit Cards for People With Bad Credit

Another option to get a credit card for your business is using a personal secured credit card. These do not separate your business expenses from your personal ones (or offer business benefits such as employee cards), but they can still give you an opportunity to use the card for your business while you build your personal credit.

Discover it Secured Credit Card

Discover charges no annual fee on this card, and you can open an account with a refundable security deposit of at least $200. Your credit limit on the card is equal to your security deposit. The card comes with a 24.49 percent APR, but paying late won’t raise your APR — and you won’t be charged a late fee for your first late payment.

The card offers a robust rewards program: earn 2 percent cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter, and get 1 percent cash back on all other purchases. At the end of your first year, you’ll get a 100 percent match on all the cash back you’ve earned at the end of your first year.

Once you’ve had your account for eight months, Discover will begin reviewing to see if you can transition to an unsecured line of credit. It will also notify you of any new credit cards, mortgages, car loans or other accounts opened on your Experian credit report, and you will be able to access your credit score for free.

Options and Opportunity

Rebuilding your credit can take some time, but these options can help you fulfill your credit card needs while rebuilding your credit for a better business future.

Which business credit cards have worked for you with bad credit? Let us know on Twitter @Revenued_com.

Jennifer Sokolowsky writes about finance, legal and tax topics for publications and companies including The Puget Sound Business Journal, Avalara, and Avvo.
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