Business Credit Card Without Personal Guarantee?

Posted by CreditCardGuru

Q: How can I apply for a small business credit cards without a personal guarantee? Every card I check requires a Social Security number, is there some technique that I am missing?

a generic credit card with no business name specifiedA: That’s an excellent question. Below I will go over the strategies for getting one, both with and without personal credit (as well as one important warning about them, which I’ve updated for 2013).

Without a personal guarantee?

As we all know the majority of new businesses fail within two years. I’m not going to quote any exact percentages here or anything like that, because I prefer to keep the discussion here positive and optimistic. But the only reason I bring that point is up is to demonstrate that yes, it is actually risky for banks to loan to newer businesses.

For this reason, can we really blame them for not offering new business cards without personal guarantees? As a small business owner myself, I wish just as much as you that it business credit cards were easier to get but in all fairness, I do understand  (to a degree) why they’re tight-fisted with giving us business credit.That being said, it is possible but it will be hard for new businesses. The exact requirements may vary by issuer but they are usually more or less consist of the following, if you want major business credit cards without personal guarantees:

  • 2+ years in business: Every major business credit card application, including those from American Express and Chase, clearly state on the application that you should have been in business for at least 2 years.
  • Business credit history: All major issuers that I know of require this. For example, at the top of the application for the Amex Business Gold Rewards card says “it is best for an established business with a strong credit history.” So if your business doesn’t already have a few trade lines reporting on your D&B file, then it’s going to be tough.
  • Positive cash flow: This of course means you can’t be hemorrhaging cash flow (or worse yet, if you have no cash flow at all). But how much positive cash flow do you need to get a no personal guarantee business credit card? Well, there’s no universal answer, but what I can say is if your numbers aren’t strong, then charge cards (where your balance is due in full) will probably be easier to get than credit cards (where there’s an ability to carry a balance).

Not easy requirements for a newer business to meet, huh? If you’re not quite there yet but still want to build your credit, then here are a couple different ways credit cards may be able to help you:

Non-major credit cards from stores/gas stations: These will usually have looser credit requirements than major credit cards. Even for 2013, in order to a get a Staples card without providing a personal guarantee, you had to be in business for 3+ years and annual sales of $5 million or more (obviously that’s out of the question for most of us!).

However some gas stations offer business credit cards (that can be only be used at their locations) which might be more lenient. I checked a few online and some, like the ExxonMobil card, had the same strict requirements as the Staples card. Others didn’t discuss the requirements so it would be best to call and check if you’re interested in trying to get one.

Major business credit cards that report to D&B: If you’re a new business and don’t come close to the qualifications for getting a business credit card without a Social Security number, then you may want to consider getting one with a personal guarantee. This will probably be the easiest, quickest way a newer business card get a credit card (assuming your personal credit score is good).

Be warned: not all business credit cards will help…

If you do decide to use a personal guarantee, it’s important to know that not all the cards out there will be useful for building business credit… in 2013 only some report accounts to D&B street if you apply with a personal guarantee.

Credit Card Forum advertises business cards from Chase, American Express, and many other heavy-hitters. Among them, the only ones I currently know of that report to D&B if you apply with a personal guarantee are the Chase Ink cards. Unfortunately the AmEx cards do not. To find out more, read my Chase Ink card review.

Here is the one I personally use for my own newly formed LLC:

16 comments... read them below or add your own

  1. ssgh January 15, 2014 at 12:35PM

    I have been in business since 2009, gross annual revenue over $200,000 but I have a personal credit rating. How can I get a small business loan and/or credit card?

  2. MicM December 16, 2013 at 10:06AM

    My question, is my personal credit score is low. I just opened a business account and must use my personal credit and my EIN number to get credit, I am being denied due Any idea how to build my business credit?

    • Daryl Conner January 17, 2014 at 11:03PM

      Try Hawkeye management. Really great at what they do.

    • EpsilonBusinessCredit February 23, 2014 at 7:17PM

      I’m sorry, but this is quite a long process from scratch. It goes something like:
      - Obtain DUNS (ie D&B) number
      - Apply for DUNS reporting vendor credit (eg for Staples) and pay early every month
      - Obtain a secured business credit card. Use and pay off early every month
      - In time you should be able to apply for an unsecured credit business card from the same company (sometimes they just add a credit limit to your secured card)

      But think months, if not years, for all this to get traction.
      Of course in the meantime you can try to repair you personal credit too.

      Hope this helps (and isn’t too disappointing).

      Chris
      Epsilon Business Credit

      • Justin April 19, 2014 at 11:50PM

        Chris,

        Well put!

        Justin

  3. Frank Chris June 27, 2012 at 8:04AM

    There is a business credit card with my personal guarantee. I am not sure that the credit card debt is fully mine, but I can not get the credit card company to respond to this question. Now they have an agency working with them trying to get me to pay a discount price. I have considered it to get them off my back. They asked what I wanted, and I told them how much i would pay if they would provide a letter that this would not be used against my personal credit. What was said I believe is a lie: They said that it was a business charge with a personal guarantee and if I paid off the reduced amount it would not go against my credit. I don’t believe it but would like suggestions.

    • Sam C December 9, 2013 at 5:16PM

      I was told the EXACT same thing when dealing with a business bank account that had ended up being overdrawn due to repetitive attempts when my card was stolen causing it to be negative $516! But they told me that as long as I payed $350 that it would show up on my credit report as fully satisfied even after I said to them the same things you just mentioned.

    • mike March 23, 2014 at 3:33PM

      Sir
      What you can do is dipute the validityof the debt…do not let it go past due if debt reported in error dispute it and have it removed. I do not advise settlement for less than balance as this will incur tax liability and also be listed on tradelines…hope this helps

  4. David May 6, 2012 at 3:52PM

    Do you know if Citibank reports business credit cards with personal guarantees on personal credit reports. I have had a business credit card from Citi for years and it has never showed up on my personal credit report. Is there a way to find out if a personal guarantee is on my card without raising suspicion? I would hate to not have one and call to ask about it and they say no you dont but we now need one or we will close your account.

  5. cj4388 February 24, 2012 at 11:14AM

    I have had an LLC for 5 years and recently got a DB number. No credit history. How can I get a corp card or funding ?

    • CreditCardGuru February 24, 2012 at 10:29PM

      Sorry not possible. Please read above re: requirements.

  6. Chase Boa January 25, 2012 at 9:26PM

    Point of clarification: “A credit card doesn’t report to my personal credit” there are three types of Liability on a credit card: Personal, Joint and Several, and Corporate. Almost every card a business uses is personal or joint and several. J&S cards WILL NOT show up on a credit report if there is no negative information. THAT DOES NOT MEAN IT IS NOT AFFECTING YOUR PERSONAL CREDIT. It is still counted in your “debt to income ratio” as well as other aspects.

    Call the toll free number on the card and ask this question, “Is there a personal guarantor on this account” 99% of the people who think their credit isn’t affected will find out the answer is YES!!!!!!!!!!!! That means you are personally guaranteeing the debt with your personal credit. IT DOES AFFECT YOU!!!!!!!!!!!!! Please, every business owner who thinks they have a “corporate card” try this trick. Unless you have an American Express that says CORPORATE on the front, you are liable. IF YOUR AMEX SAYS BUSINESS CARD, YOU ARE LIABLE!!! Each card holder may be personally liable!!!!!

    Please, call the number and post your results. Please – let us know what card you have, i.e. Chase Ink, Capitol One Venture, or so on.

    • CreditCardGuru January 26, 2012 at 5:28PM

      Thanks for your comment, but it sounds like you didn’t read my post because that was my point :)

      In order to get a business card without a personal guarantee it’s next to impossible (because of the requirements I outline above). For this reason, business cards will affect your personal credit if you default.

      However you are incorrect about them affecting your debt to credit ratio on your personal credit file. AmEx and Chase do not report to your personal report unless you default/pay months late. So as long as your account is within good standing, it won’t show up on your personal credit report, and hence, FICO will not use it in your score calculation. This is why I’m such a big fan of their cards and use them myself.

      • Tony September 24, 2012 at 3:40PM

        I think that you are wrong about the debt to credit ratio. I have had a Chase Ink card for seven years with a personal guarantee. I have never used the line of credit very much in the past and have always paid it off in full each month. It does NOT show up on my personal credit report and never has, however, recently and for the first time ever, I cashed a credit card check for $5K on the Chase Ink account(because interest rate was zero for 12 months), all of a sudden my FICO score dropped five points the month following this transaction. There is absolutely no other reason for a five point FICO score drop other than the fact that I used up five thousand of my nine thousand dollar credit line in one month. My point is – Chase Ink business line of credit/credit card debt did affect my personal debt to income ratio and personal credit score….even though the actual credit card, payment history…and line of credit does not show up on my personal credit report. They will get you no matter what you do! This is 100 percent true and accurate.

  7. dwayne October 9, 2011 at 1:43PM

    Our problem is that we have been in business for 5years and have a D&B street number from the begining and they do not report correct information so what do you do in a case such as this?

    • MikeM December 29, 2011 at 9:29PM

      You can pay D&B and add trade references to your report as well as monitor yoru D&B score/report.

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