Q: Where can I apply for business credit cards with poor credit?
A: Business cards have always been a different breed than regular credit cards. Here are some things they DON’T offer…
If an individual has bad credit, they can just get a secured card to rebuild their credit (where their credit line is equal to their security deposit).
Unfortunately, this same option doesn’t exist for businesses. I do not know of a single secured business card that’s available in the United States. However there are many banks that offer secured loans. For example, you can take out a $10,000+ business loan on a $10,000 savings account/CD as collateral at Bank of America. But as far as bad credit business credit cards that are secured, I have yet to come across any.
Approval with average business credit?
During the 90’s and 00’s small business credit cards were often available to businesses with limited credit history. That all changed after the economic collapse and the Great Recession, unfortunately.
Nowadays, in order to have your application approved under your business credit alone (with no personal guarantee) typically your company must have been in business for 2+ years, meet certain revenue requirements, and already have a good business credit history established.
There were no bad credit business cards available before the Great Recession, yet during that time, as many as 1 in 7 business card accounts were defaulted on. For this reason, we really can’t blame the banks for being more strict today.
So what are your options in 2013?
Getting a business card for bad credit unfortunately is not an option. That being said there are a couple alternate routes you can take:
Rebuild business credit using loans & other accounts
As mentioned above, a secured business loan might be a good way to rebuild your company’s credit if you have cash collateral to put up.
There are also credit accounts available at some office supply stores, building supply stores, etc. that may be more lenient towards bad credit. If you go this route, make sure they actually report your account to Dunn & Bradstreet (via your DUNS number).
Get a great business card using a personal guarantee
If your personal credit is still okay, then you can apply using your SS# as a personal guarantee (even if your company has bad credit!). The personal guarantee is actually the technique I used to open a card for my new company.
If you do it just remember you will be personally liable for any debts on the business credit card. Also, make sure your card issuer actually reports your company’s credit history to Dunn & Bradstreet. Much to my dismay, I found out that AmEx business cards do not report. However Chase does, which is why I recommend them as the best choice for building business credit. Compare and contrast the current Chase Ink offers which are available.