The Best Prepaid Business Credit Cards

The Best Prepaid Business Credit Cards

The Best Prepaid Business Credit Cards

The term prepaid business credit cards can be used to describe any credit card for business owners that requires the prepayment of funds before it can be used. Unlike most standard credit cards, these cards don’t require a good or excellent credit score. This makes these cards useful for small business owners who have a limited credit history and those who have had significant credit problems. 

Just like other business credit cards, prepaid business credit cards are ideal for paying for business expenses and employee spending. However, these cards will have spending limits that are based on how much you have prepaid. 

How Do Prepaid Business Credit Cards Work?

There are two types of prepaid business credit cards available. First, there are secured cards that require the payment of a refundable security deposit before an account can be opened. After that, these cards work just like standard, unsecured cards, as you make purchases normally and must make a minimum payment each month. When used responsibly, secured credit cards allow account holders to add to their positive credit history and improve their credit score. At the same time, secured credit cards offer a convenient and reliable method of payment, just like any other credit card. 

The other kind of prepaid business credit card offers you the chance to place money on deposit, which is used to pay for your credit card. These newer types of prepaid business credit cards differ from secured cards in that when you make a purchase, the funds that you have on deposit are automatically used to pay the charge. These types of cards can also be a great way to establish business credit as these cards report your balance and payment history to the business credit bureaus, rather than the ones for consumers. And like secured credit cards, these cards don’t require a strong credit history, and some don’t even require a check of your personal credit at all. 

Keep in mind prepaid business credit cards aren’t business loans. So if you need business financing, it’s best to look elsewhere. 

Best Prepaid Business Credit Cards

Divvy Credit Builder for Business

The Divvy Credit Builder for Business is a credit card that doesn’t require a check of your personal credit, and one that automatically debits your account to pay for charges. But Divvy isn’t just a prepaid business credit card, it’s also a spending and expense management platform for business. The company provides funds for startups and small businesses as well as tools to manage budgets and expense reports. The Divvy Credit Builder for Business is part of the Visa payment network and can be used for payment anywhere Visa credit cards are accepted. 

The Divvy Credit Builder for Business program builds business credit and doesn’t require a personal credit history or a personal guarantee of repayment. Instead, businesses pre-fund their credit line and are then able to spend up to that amount. Divvy Credit Builder for Business accounts can be pre-funded via wire or ACH transfer from your checking account or business bank account. Or, you can fund it directly via the payment portal on your Divvy Dashboard (this may be subject to a 4-day hold). Divvy offers virtual cards and free employee cards too. 

There’s $0 annual fee for this card. All charges made on this charge card are due and payable when you receive your periodic statement.

Citi® Secured Mastercard®

While the Citi® Secured Mastercard® isn’t a small business card, it’s still a valuable secured card that you can use to make business purchases and build your personal credit. This card, which is marketed to consumers, is available to new applicants with virtually any credit profile. But you must submit a refundable security deposit of at least $200 before your account can be opened. 

You can also submit a deposit of as much as $2,500, and the amount you submit becomes your credit limit. Afterwards, this card works just like any other credit card. In fact, it doesn’t even say “secured” on the card, so retailers won’t know it’s not a standard credit card. You can use this card to make purchases anywhere that Mastercard is accepted. This card will report your balance and payment information to the major consumer credit bureaus. With a record of on-time payments, you’ll build your positive credit history and increase your credit score. This is a relatively simple card that offers no cash back rewards and $0 annual fee. This card does have a 3% foreign transaction fee imposed on international transactions.

How to Qualify for a Prepaid Business Credit Card

Thankfully, there’s not much that you need to do to qualify for a prepaid business card. These cards are open to nearly everyone, regardless of your credit problems or credit history. In most cases, you’ll simply need to prove your identity and not have a pending bankruptcy or foreclosure. And while you can have poor or bad credit, you shouldn’t have any accounts that are currently delinquent or in default. 

What You Need to Apply for a Prepaid Business Credit Card

First, you’ll have to provide your personal information such as your address, date of birth, and your  Social Security Number (SSN) or Employer Identification Number (EIN). You’ll also have to provide other information such as your company name, your job title, your phone number and the number of employees. The application may also ask you if you’re incorporated and what your position is in the company. For most small businesses, the applicant’s position will be the owner. You may also be asked to provide your projected business revenue, expenses and profits.  Some prepaid card issuers also require that you link your card to a checking account. 

Alternatives to Prepaid Business Credit Cards

There are several alternatives to prepaid business credit cards. First, you could consider a business credit card for fair credit. There are several cards offered for those who have had credit problems, but don’t have bad credit. These cards will have higher standard interest rates than cards designed for those with good or excellent credit, and they will offer modest rewards such as cash back. But these are good cards to have to build your credit without having to submit a security deposit. And as your personal credit improves, you could qualify for a business credit card that doesn’t require any prepayment. 

Another alternative is to use a personal card for business purposes. These cards won’t offer business features like expense tracking, reporting and quickbooks integration. But there are a wide selection of subprime and secured cards available for personal use. Some even include perks like purchase protection and travel insurance. However, you should expect that the subprime cards available to those with credit problems will also have high interest rates and fees. 

Then, there are other kinds of prepaid cards including prepaid business debit cards. These cards don’t require any personal credit history or even a credit check. And with these cards, there’s no way it can help or hurt your credit score. You simply deposit funds and make purchases up to the amount of these funds. This is similar to the debit cards offered by most checking and savings accounts. Like those cards issued to bank account holders, many prepaid debit cards can be used at ATMs too. And because these cards are reloadable, you can add funds as needed. Many even accept money via direct deposit from your bank account. The disadvantage is that many prepaid debit cards have fees such as monthly fees, ATM fees and possibly even transaction fees. 

Bottom Line

Just because you don’t have good or excellent credit, it doesn’t mean that you can’t use a credit card for your business. In fact, there has never been a better time to look into the different prepaid credit card offers for business and personal use. By finding the product that best meets your needs, you can be sure that your business has access to a secure and convenient method of payment, and possibly one that can help you build you business and personal credit at the same time.

This article was originally written on March 31, 2022 and updated on April 4, 2022.

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One response to “The Best Prepaid Business Credit Cards

  1. Hello, Nicely explained about business credit cards. Your blog is really interesting and very helpful. Thank you for this valuable information. It is really helpful for me.