Remember your very first credit card? Even with zero credit history, an individual can still get approved for a student or secured credit card.

But is there anything similar for new businesses? A basic no-frills card that will approve a company with limited to no credit history?

The answer is both yes and no, let me explain…

Retailer cards?

When I opened my LLC, I figured the easiest business credit card to get would be one from a retailer, such as Staples or Office Depot. Wow… was I in for a big surprise!

You would think that these types of cards would have very loose credit requirements. After all, it’s not like some office supply store is anything special, right? Well apparently they feel otherwise. Upon reviewing the application, here’s what I discovered…

That’s right, just to get approved for a measly office supplies store card, your corporation/LLC needs to be raking in $5 million in annual revenue AND have been around for 3 years. Obviously, this is not a business credit card for a new business to get!

Of course you can still apply for a retailer card like that if you’re willing to co-sign with personal liability (so it’s not just under your business credit). But the question is… if you’re going to do that, why would you apply for such a low-level card? Wouldn’t it make more sense to apply for the Chase Ink or other major business credit card with rewards, benefits, and universal acceptance?

Conclusion? If you think store cards will be a good credit card for your new business, think again.

Major business cards?

As you know most of the big banks offer credit cards for businesses: Chase, American Express, Citi, Capital One, Discover, Bank of America, and others. So how many of those offer cards without a personal guarantee requirement? The answer is zero.

Whether it’s a major bank (such as the above examples) or a small regional bank, they all have one thing in common – in order for you to apply and get approved using only your company’s credit, you can’t be a new business. The qualifications are comparable (and sometimes even stricter) then the aforementioned Staples card.

Out of the major issuers, American Express seems to have the lowest bar to jump over. Back during the Great Recession they imposed a minimum of $5 million in annual sales to be approved (which is comparable to other banks). However after the economy improved, in 2012 they significantly lowered the requirements:

AmEx Green Corporate ($55 annual fee)

Have $10,000 per month in revenue and 6 months operating history.

AmEx Gold Corporate ($100 annual fee)

Have $2 million in annual revenue and 6 months history history

AmEx Platinum Corporate ($395 annual fee)

Have $2 million in annual revenue and 6 months history

Note: By definition, corporate cards are the only ones which do not require a personal guarantee. Regardless of the bank, anything called a “business credit card” or “small business credit card” will require you to co-sign using your Social Security number. If you don’t want personal liability, then what you want is a corporate card.

With all of the above (and any corporate card out there) you will have to prove your qualifications. When I called AmEx’s customer support and asked, they said that during the application you will have to provide your company’s bank account info – they will then call and verify deposit amounts and other information.

As you can see, the Green Corporate is one of the best business credit cards for new business, but not a brand spanking new one. Your LLC/corporation needs to have been around for at least 6 months and pulling in a minimum of $10k per month in sales.

On the other hand, the requirements for the Gold and Platinum Corporate are the same… $2 million in annual sales. If you’re just starting a new business, these probably won’t be options for you until down the road. All the other banks have similar minimums ($2-5 million annually) which makes the Green’s qualifications substantially below average.

Brand new businesses?

Obviously the American Express Corporate Cards are the best to aspire to… but none of them are for new businesses. So what should you do meanwhile?

If you’re comfortable doing so, your best bet will be to get a jumpstart on the credit building process by signing up for a biz card using a personal guarantee. Why? Because that way you can get one, even if your company is only a day old and has zero revenue.

Then once your company has an established operating and revenue history, you can apply for a corporate card (and cancel your business card if you want). The nice thing about doing it this way is that you will have already started to build a credit history for your corporation or LLC, even before you get the corporate card.

So which is best to start with? My vote is for the Ink by Chase and it’s what I use myself. I also have AmEx business cards but the caveat with those is that they don’t report to Dunn and Bradstreet or Equifax Business credit bureau (so while AmEx small biz cards are great for benefits, they’re not useful for credit building).

Compare my favorite business credit cards here

A question many cardholders are asking is “Why is Advanta freezing my credit card account from new charges and transactions?” Well, don’t take it personally, it’s not just you. On June 10th, 2009, Advanta will be freezing its entire credit card portfolio… preventing new charges, balance transfers, cash advances, or any other transaction on all of its cardmembers’ accounts.

Why? Simply put, too many customers are defaulting on their bills. Advanta only issues small business credit cards, and as we know, many of these businesses have been hit especially hard by the economic downturn.

It is unclear as to what Advanta plans next. They were offered TARP funds months ago, but refused. Many feel this was an irresponsible decision, being that even then, their stock was trading for pennies and they were sustaining out of control losses.

The rewards card was one of the most popular credit cards issued by Advanta

Cardmembers that carry a balance or are dependent on using their cards are now left in the dark. They have just a few weeks to find a replacement card. Unfortunately, small business credit cards have dried up and it is extremely difficult to get one now, and if you do qualify, the credit limits are a fraction of what they normally would be. In turn, many small business owners are having to open personal credit cards as their replacements. For those that pay their balances in full each month, the best charge cards may be a good option to consider. For those that carry balances, unfortunately all of the best 0% balance transfer offers have been watered down significantly. I suppose the best solution would be to take what you can get and hopefully in a few months, you will be able to change it over to a better balance transfer offer.

Originally written May 2009