For many companies, business credit cards are an essential tool for managing business expenses. They can help your business build business credit and the line of credit offered on these cards can be helpful when cash flow is tight. 

Unfortunately, bad credit or no credit may make it difficult to be approved for a small business credit card account. That’s true whether your business is a startup or well-established, and it’s because a personal credit check is part of the credit card application process, and a good or excellent personal FICO score is often required. If you don’t qualify for a traditional business credit card, and you’re looking to establish or rebuild your credit, then a secured business card can represent a viable option.

Here, we’ll introduce you to secured business credit cards and how they work and examine when you may want one. Then, we’ll help you determine which card is best for your needs.

The Current Economic Climate and How It May Impact Small Businesses’ Access to Credit

While the overall economic climate is improving, small businesses still face significant headwinds, particularly related to debt costs and financing challenges. Access to credit might be more difficult for those with higher existing debt and those affected by rising interest rates. That’s according to findings from the Federal Reserve’s Small Business Credit Survey: 2024 Report on Employer Firms. It found that small businesses are dealing with: 

1. Higher interest rates: A significant portion of small business owners reported being affected by higher interest rates. These translate to increased costs or payments on existing small business loans with 54% of firms citing this issue. Additionally, 37% of firms delayed expansion plans or capital spending due to higher interest rates .

2. Debt levels: Many small businesses are carrying higher amounts of debt compared to pre-pandemic levels. About 39% of firms had more than $100,000 in outstanding debt at the time of the survey, up from 31% in 2019. This increased debt burden can make it more challenging for small businesses to access additional credit.

3. Financial challenges: Rising costs of goods, services, and wages remain a significant financial challenge for small businesses. While 77% of firms faced these rising costs in 2023, this was a slight improvement from 81% in 2022. Making payments on debt was also a notable challenge for 34% of firms, exacerbated by higher interest rates .

4. Operational challenges: Although operational challenges such as supply chain issues have decreased, the costs associated with goods, services, and wages continue to pressure small businesses. This ongoing pressure could limit their ability to manage existing debt and secure new financing.

What Is a Secured Business Credit Card?

A secured credit card is one that requires the cardholder to place a refundable security deposit with the credit card issuer. With many secured cards, the amount of your credit line will be equal to your deposit, at least in the beginning. And in most cases, the issuer will require you to link your bank checking or savings account so the deposit can be deducted directly from your account, but a few issuers will allow you to send those funds to them after you’ve been approved.

But just like a regular credit card, you can use a secured credit card to make purchases. Those purchases are not deducted from your deposit, though. You’ll get monthly statements and you’ll need to make monthly payments. If you don’t pay the balance in full each month, you’ll be charged interest, usually at a fairly high variable APR.

And as with any other credit card, with a secured card your payment history may be reported to credit bureaus. Small business secured cards may be reported to commercial credit bureaus and help you build business credit. (Personal secured cards can help build personal credit.) Most business credit cards don’t appear on personal credit reports unless you default, but the issuer does have the option of reporting payment history for business cards to consumer credit bureaus. 

After a year or so of on-time payments, many secured card users find that they are able to be approved for a standard, unsecured card. 

Unlike standard, unsecured cards, you don’t need good credit to qualify for a secured card. In fact, secured credit cards are often designed for people who have poor credit or who have very little credit history. While they often check personal credit, these issuers are much more flexible in terms of the creditworthiness they require from cardholders. 

For many small business owners, these cards can be the best business credit cards for bad credit. 

While tying up a deposit for a credit card may not be ideal, it may be worth it. A secured business card can be a valuable tool to potentially build and improve your credit. The security deposit assures lenders that, despite your lack of good credit, there will be funds available to pay the debt back if your business cannot.

How a Secured Business Credit Card Works

For the most part, a secured business credit card works like any unsecured credit card for consumers, with the exception that it may help build business credit, not just personal credit.

Like any other credit card, you may be able to access balance transfers to pay off other cards or debt, and you may be able to get a credit card cash advance. (Be careful: these advances tend to have a higher APR or other fees). And just like any other credit card, you’ll receive a monthly statement and you’ll be required to make regular payments before the due date. The security deposit is only used if you default on your account. 

If you pay your monthly bill on time and keep your balance low, then you can build credit over time. This will help you qualify for an unsecured credit card. Keep in mind, though, that a small credit line means that it’s easy to hurt your credit scores with high debt utilization or debt usage. If the balance reported to the credit reporting agencies is close to your credit limits, then  your credit scores may be negatively impacted.

To be safe, try to keep your balances below 20% of your credit limit.

Pros and Cons of a Secured Business Credit Card

Just like with any financing product, there are both positive and negative aspects to consider with a secured business credit card.

How to Choose the Right Secured Credit Card for Your Business

Just as with any other credit card, to find the right secured credit card for your business, you should examine the card’s benefits, fees and rewards, if any. When selecting a secured business card, take a look at both the minimum and maximum security deposits offered. This should be an amount you can afford, but still large enough that you can make needed purchases. 

You should also look at the interest rate and fees offered. Some secured cards have no annual fee, while others have relatively small fees. Finally, if the card offers perks such as cash back rewards, that can be a plus. 

Best Secured Business Credit Cards

There aren’t many issuers offering secured business credit cards, so your choices will be much more limited than if you were searching for an unsecured business credit card.

Nav Prime Card

The Nav Prime Card isn’t technically a secured card because there’s no deposit required, but you won’t have to go through a hard credit check when you apply. Help build your business credit history with up to two tradelines, where your Nav Prime membership payments and Nav Prime Card payments are automatically sent to all major business credit bureaus. The Nav Prime Card is available in most U.S. states.

Secured Self Visa ® Credit Card: The new way to build credit

Secured Self Visa ® Credit Card: The new way to build credit offers a unique way to build credit through a Credit Builder Loan, which can then be used to obtain a secured card. There’s no hard credit check. Pay an annual fee of $25. Your payments will be reported each month to credit bureaus. Once your Credit Builder Loan is paid off, you unlock the money you’ve saved in a CD (minus interest).

Self also offers the Self Visa Credit Card. Start with a credit builder loan and make at least three monthly payments on time with at least $100 saved toward your savings goal. If your account is in good standing you choose your credit limit (secured by your savings progress). This card can also help you build personal credit. 

Bank of America Business Advantage Unlimited Cash Rewards Mastercard Secured credit card

This secured business credit card from Bank of America requires a minimum deposit of $1000 to open. There is no annual fee, and it has a surprisingly robust rewards program for a secured card. You can earn unlimited 1.5% cash back on eligible purchases with no cap. You can redeem cash rewards as a credit card statement or as a deposit into your Bank of America bank account — checking or savings. 

There is no annual fee, but there is a foreign transaction fee of 3%. 

Bank of America will automatically review the cardholder’s credit history, and customers who pay on time and meet other qualifications may be able to transition to an unsecured card. Bank of America business credit cards generally report to SBFE.

*All information about the Bank of America Business Advantage Unlimited Cash Rewards Mastercard Secured credit card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.

Business Edition® Secured Mastercard® Credit Card

First National Bank offers a business secured card with a credit limit between $2,000 and $100,000, in multiples of $50. Your security deposit must be 110% of the credit limit that you want, however you will earn interest on the deposit. There are no rewards points or miles to earn, but there are perks such as Mastercard Easy Savings (automatic rebates on certain purchases) and discounts on Quickbooks Online or TurboTax. There is an annual fee of $39.

*All information about the Business Edition® Secured Mastercard® Credit Card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.

Union Bank® Business Secured Visa® Credit Card

Union Bank has offered a secured card for small business owners with a limit of as little as $500 and as much as $25,000 in the past. However, this card is not currently open to new applications. 

*All information about the Union Bank® Business Secured Visa® Credit Card credit card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.

Wells Fargo Business Secured Credit Card

You may see references online to this credit card, as it was a popular option for business secured cards. However, as of January 2024, it was no longer available.

Personal Secured Credit Cards

If you’re having trouble qualifying for a business credit card due to your credit scores, you may want to consider getting a secured personal credit card. A personal secured card can help you to build your credit history and improve your credit score, as long as you make payments on time and keep debt low. 

Here are some personal secured credit card offers to consider:

Discover it® Secured Credit Card

This personal secured card from Discover carries no annual fee. The minimum deposit is $200 and your credit limit will equal that deposit. After 7 months, Discover will begin reviewing your account to see if you are eligible to convert to an unsecured credit card and get your deposit back. 

*All information about the Discover It Secured Credit Card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.

Platinum Secured Credit Card from Capital One

This personal credit card from Capital One features a refundable minimum security deposit of  $49, $99 or $200. There’s no annual fee for this card and Capital One will automatically start reviewing your account after 6 months to see if you qualify for an unsecured card. There is no annual fee and the card carries a purchase rate of 25.74% variable APR.

*All information about the Platinum Secured Credit Card from Capital One has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.

Building Business Credit With a Secured Card: Action Steps

A secured card can be a useful tool for building business credit. A business secured card can help establish business credit if payment history is reported to business credit bureaus. To make the most of this opportunity:

Always pay on time. Payment history is the single most important factor in both personal and business credit scores. 

Keep balances low. High credit utilization can affect your credit scores. Try to keep low balances, especially when you’re actively trying to build credit. 

Get other accounts that report. To effectively establish business credit, you’ll need several accounts that report to business credit. Here are other tradelines that can help you boost business credit. 

FAQS Secured Business Credit Cards

Is a secured credit card the same as a debit card?

No, a secured credit card is a different product than a debit card. With a business debit card, for example, when you make a purchase the funds are almost immediately debited from your business checking account. With a secured credit card you pay for purchases later. 

Is a secured credit card the same as a prepaid card?

No, a secured credit card is a different product than a prepaid card. With a prepaid card you load funds onto the card, and when you make a purchase those funds are subtracted from your balance. With a secured credit card you need to pay for purchases later. 

Is a business secured credit card the best way to build business credit?

A business credit card that is reported to business credit bureaus is a great way to build business credit but it’s not the only way.

Another way to build business credit is to get tradelines, including net-30 accounts, that report to business credit. You can use those accounts to make purchases your business needs, and by paying on time you can build business credit references. Most vendor accounts do not check personal credit. 

Is a charge card the same as a secured credit card?

A charge card and secured card are two different products. A charge card does not typically require a security deposit. The balance must be paid in full on a daily, weekly or monthly basis. Some business charge cards are available to consumers with bad credit, but others require good to excellent credit scores. 

A secured card is a type of credit card that requires a security deposit. These cards usually offer the option to make minimum payments or pay in full. Secured credit cards are often available to individuals with bad credit, fair credit, or no credit.

What is the difference between a secured and unsecured business credit card?

The difference between a secured card and unsecured card is the security deposit. An unsecured card does not require a security deposit; a secured credit card does.

How much does a secured business credit card deposit cost?

Security deposit requirements vary for these cards. For secured consumer cards, minimum deposits start as low as $200. Currently, for available secured cards the minimum deposit requirement is $1000.

What credit score do I need to get a secured business credit card?

With secured credit cards, low credit scores are rarely a barrier. Most of the time, these business credit cards are available to those with limited credit histories and/or bad credit. The deposit helps reduce the risk for the card issuer, making these cards more widely available.

Can I get a rewards program with a secured business credit card?

There’s nothing stopping an issuer from offering rewards on a business secured card. Typically you’ll see fewer rewards on secured cards than unsecured cards. However, the cash back business secured card mentioned earlier in this article currently offers 1.5% cash back with no cap; a very competitive offer for a secured card. It may be worth checking out if you can set aside the money needed for the deposit.

How long does it take to build business credit with a secured card?

How fast you can build or rebuild strong business credit scores depends on a lot of different factors. That said, many business owners see progress within months if they are proactive about the credit building process. Your results may vary.