- Benefits of Business Credit Cards for Startups
- The 5 Best Business Credit Cards for Startups with No Credit
- Factors To Consider When Choosing a Startup Business Card
- Frequently Asked Questions about Credit Cards for Startups with No Credit History
Starting a new business is exciting but also challenging, especially when it comes to financing and managing expenses. One way to manage those expenses is with a business credit card. There are myriad benefits, but most cards require a personal credit check. If you’re looking for a business credit card for your startup but have no credit history, here are options to consider.
Benefits of Business Credit Cards for Startups
There are lots of ways new business owners can benefit from business credit cards. Here are the top ones:
Separate Business and Personal Expenses
Start your business with a clear line between your personal finances and business finances, and you won’t regret it. Bookkeeping and tax time are a lot easier when you use a business credit card for business expenses and personal credit card for personal expenses.
This is important even if you operate your business as a sole proprietorship, but even more important if you have formed a business entity such as a Limited Liability Company (LLC) or Corporation. That’s because commingling business and personal expenses can jeopardize the asset protection benefits of your business.
Build Business Credit History
Business credit card payment history that is reported to business credit bureaus can help establish business credit, and an on-time payment history can continue to help boost business credit scores. Along with tradelines that report, business credit cards that report can provide a valuable credit reference.
Get Startup Financing
If your business needs financing, you’ll likely discover that it can be hard to get small business loans and financing as a startup. It’s not impossible, but many lenders prefer to lend to small businesses with solid revenues and at least a year or two in business. Business credit card issuers, though, often offer cards to business owners that have good to excellent personal credit scores and sufficient income from all sources (not just the business) to repay the debt. This makes business credit cards helpful for short-term, start up financing if you qualify.
Earn Rewards/Cashback To Reinvest in Your Business
Business credit cards may offer lucrative rewards including travel rewards (points or miles), cash back rewards and perks like extended warranties. If you pay your balance off in full, these rewards can be like “free money” for your business; and you can reinvest what you earn back into your business or use those rewards to pay yourself back for all the work that went into getting your business off the ground.
The 5 Best Business Credit Cards for Startups with No Credit
1.
The offers . While many business credit cards require excellent credit scores, this card is more flexible. Foreign transaction fees:
2.
This card is a charge card. . The annual fee is .
3. Nav Prime Card*
The Nav Prime Card* a business charge card. There is no credit check or security deposit required. Link your business checking account for daily repayment. The Nav Prime Card is submitted as a tradeline to major business credit bureaus as a charge card.
The Nav Prime Card is available exclusively to Nav Prime members.
The Nav Prime Card is not available in CA, NV, ND, or SD.
4. 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. The initial credit line will be equal to the deposit. It offers a rewards program featuring an 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’s credit card page.
5. 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. It doesn’t offer rewards points or miles, or cash back, but it does offer perks such as Mastercard Easy Savings (automatic rebates on certain purchases) and discounts on Quickbooks Online or TurboTax. The annual fee is $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’s credit card page.
Factors To Consider When Choosing a Startup Business Card
When you’re looking for the best credit card for your business, here are some factors you’ll want to consider:
Likelihood of Approval
This is key. After all, if you won’t be able to qualify for a card, there’s no point in applying. You’ll likely just end up with another credit inquiry on your personal credit and no card.
While there are many startup business credit cards, there are far fewer that are available to entrepreneurs who have no or very limited credit history, or bad credit.
Most major credit card issuers make a decision based on personal creditworthiness (you’ll need to provide a Social Security number for the credit check) and require good credit or excellent credit. (That often means FICO scores of about 680 or higher.)
Some cards don’t check personal credit, but when they don’t, they may require documented business revenues and will only take applications from businesses that are LLCs or corporations, not sole proprietors.
The cards featured above are exceptions.
Intro 0% APR Period
If you want a business credit card to finance business purchases, you may want to consider a card that offers an introductory APR of 0%. Keep in mind, though, that card options with low intro APRs often require good to excellent credit. It will be hard to qualify for one of these offers if you have poor credit, fair credit, or no credit.
Ongoing APR
If you carry a balance, your ongoing interest rate will often be more than 20%. This can seem expensive, and it is, though it may be lower than other types of business financing. Most cards offer a grace period, allowing you to avoid interest charges if you pay your balance in full.
Rewards Program
If you’re choosing a rewards card, understand how you’ll earn rewards. Will certain types of purchases earn higher rewards? How do you redeem rewards? Is there a sign-up bonus that allows you to earn additional points or miles if you spend a certain amount of money within a certain amount of time after account opening?
Keep in mind that cards with the highest levels of rewards tend to go to applicants with excellent credit, so you’ll likely need to establish personal credit before qualifying for a premium rewards card.
Fees
The main fees small business owners will be concerned with are annual fees and foreign transaction fees. Cards with no annual fee may be especially attractive to startups with
Final Tips for Applying for a Business Credit Card with No Credit
Understand that if you haven’t established good personal credit, you’ll have fewer options than someone with excellent credit. But there are cards that can provide many of the top benefits of business credit cards while you establish credit.
Most business credit cards will require a personal guarantee, but as long as you repay the amount you charge they won’t generally impact your personal credit scores.
If your business is brand new and you don’t have credit, you’ll likely start with a smaller spending limit. Pay on time and you’ll likely see that increase over time. With a small initial line of credit, you may want to use your card for essential purchases and pay the balance off quickly to establish a positive payment history.
Once you’ve paid your card on time for at least six months, you may want to ask the issuer whether you qualify for a credit limit increase.
A business credit card can be a great way to get your business off to the right start, and provides numerous benefits. Manage it well and you’ll continue to grow your credit as your business grows.
Frequently Asked Questions about Credit Cards for Startups with No Credit History
Do I Need an Employer Identification Number to Qualify?
Most card issuers don’t require an EIN to get a small business credit card, but some do. Still, it can be helpful to request a free EIN from the IRS and use that when you apply for a business credit card. It can also be helpful when you open a business bank account and/or apply for small business loans.
Should I Get Employee Cards?
If you have employees in your business, you may want to consider employee cards. Keep in mind that if you authorize an employee to use a credit card, your business will be responsible for the charges they make.
Do Startup Business Credit Cards Check Business Credit?
Many small business credit card issuers check personal credit, rather than business credit. However, many of these cards will report payment history to business credit bureaus, which helps to build business credit.
* DISCLAIMER: Nav Technologies, Inc. is a financial technology company and not a bank. Banking services provided by Blue Ridge Bank, N.A., and Thread Bank, Members FDIC. The Nav Visa® Business Debit Card is issued by Blue Ridge Bank, N.A., and the Nav Prime Charge Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa cards are accepted. Your funds are FDIC-insured up to $250,000 through Blue Ridge Bank, N.A., Member FDIC.
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