A credit card can be a vital tool for small business owners, but one that can feel out of reach when you’ve had problems with your credit. If your business has struggled in the past or you’ve defaulted on some loans as you’ve tried to get your business off the ground, you may have emerged with damaged credit. Thankfully, there are business credit cards that you can use if you have bad credit. Not only will these cards offer you and your company the convenience and security of a credit card, but they can actually help you build your credit when used responsibly.
Business credit cards can help you build both personal and business credit if you pick a card that reports to a commercial credit reporting agency (here’s a quick guide to which issuers report to the business credit reporting agencies.) You can see how your credit cards affect your personal and business credit for free on Nav.
Here are three small business credit cards that you can use to help improve your credit.
1. Capital One Spark Classic
This card is available to small business owners with fair or average credit, yet it still offers rewards for your spending. You earn 1% cash back on all purchases, with no limits and no minimum to redeem. Business benefits include quarterly and year-end summaries, downloadable purchase records and employee cards at no additional cost. Other benefits include theft and damage coverage, an extended warranty policy and travel and emergency assistance services.
The standard interest rate this card for purchases, balance transfers and cash advances is a variable 24.49% APR. There’s no annual fee for this card and, as with all Capital One cards, there are never any foreign transaction fees.
2. Wells Fargo Business Secured Credit Card
If your credit isn’t strong enough to be considered fair or average, then you need a secured card. A secured card works much like a standard, unsecured credit card, except that you must submit a refundable security deposit before your account can be opened. The size of your deposit determines the account’s credit limit. After your deposit is received, a secured card will work just the same as any other credit card. You can make purchases without anyone knowing it’s a secured card, and you will receive a monthly statement. You can avoid interest charges by paying the statement balance in full, or extending payment and paying interest. After a year of on-time payments, many secured credit card users have found that their personal credit score has improved enough to qualify for a standard, unsecured card and receive a refund of their deposit.
There aren’t many secured cards for small business use, but Wells Fargo offers one. The Wells Fargo Business Secured Credit Card offers a credit line of $500 to $25,000 depending on the size of your deposit. This card also offers 1.5% cash back on all purchases, with cash back credited quarterly to your Wells Fargo Business Checking or any other designated business checking or savings account. The standard interest rate for this card is 11.9% APR plus the Prime Rate. There is a $25 annual fee for each card, and you can order up to 10 cards for employees. There are no foreign transaction fees.
3. The Secured Visa® Business Credit Card from BBVA Compass
Here’s another secured credit card for small businesses, however its only available in Alabama, Florida, Texas, Arizona, Colorado, California and New Mexico. If you live in one of these states, then this card can be opened with a minimum deposit of $500. You must also open a Secured Credit Card Savings Account with BBVA Compass. Your available credit will be 90% of the balance of the savings account, but you can add funds to it to increase your card’s credit limit.
This card offers you one CompassPoints reward point per purchase, and there are no limits to the number of points you can earn. Points can be redeemed for purchase credit, travel reservations, gift cards, merchandise, cash back or a charitable donation. Other benefits include purchase security and an extended warranty program. The standard interest rate for purchases and balance transfers is a variable 17.47% APR. There’s no annual fee for this card the first year but a $40 fee each additional year. There’s also a 3% foreign transaction fee for this card.
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