Credit mishaps happen for a number of reasons, and perhaps one has happened to you. The good news is that there are a few business credit cards for bad credit which will give you the chance to build your business credit so that you can qualify for credit increases or new cards without having your personal credit called into question. (Solid business credit scores can open a number of other doors as well).
To save you time, we’ve put together a list of what we think are the best business credit cards for bad credit available to business owners.
The Best Business Credit Cards for Bad Credit
- Best overall option: Capital One Spark Classic for Business
- Best for established businesses: The Kabbage Card
- Best low-fee secured card: Wells Fargo Business Secured Credit Card
- Best rewards secured card: BBVA Compass Business Secured Visa Credit Card
- Best line of credit option: Line of credit by OnDeck
Personal credit cards are another option for small business owners with poor credit; however getting a credit card tied to your business allows you to build credit in the name of your business and, in some cases, keep your business spend off your personal credit report. (Read here which business credit card issuers don’t report to personal credit bureaus.)
1. Best overall pick: Capital One® Spark® Classic for Business
- Annual Fee:
- Rewards: Earn 1% cash back on all purchases
- High interest: APR
- Late payment fee: Up to $39
The Capital One® Spark® Classic for Business card allows cardholders to earn rewards without needing excellent personal credit scores to qualify. As a huge bonus, business owners who make on time payments and keep their balances low can build business credit, however it’s worth noting that your payment history may be reported to personal credit reporting agencies and affect your personal credit scores.
2. Best Card for Established Businesses: The Kabbage Card
This is not exactly a business credit card. Kabbage offers a business line of credit to small business owners who have been operating at least 12 months who don’t necessarily have tip-top credit. Kabbage lines of credit are available up to $250,000, and the application process is quick and entirely online. Business owners with a Kabbage line of credit can then use this card to draw from their line of credit—thus it functions somewhat like a debit card.
- annual fee
- Easy access to line of credit
- No credit card rewards available
Secured Business Credit Cards
For business owners looking to build their business credit, another option is a secured business credit card. These made the list of bad credit business credit cards because they are much easier to qualify for than unsecured cards. A secured card requires a security deposit that can be used to pay your debt if you default. This is a way for credit card companies to minimize the risk of a bad credit borrower. Secured cards usually allow borrowers to charge up to the amount of their security deposit (below you’ll see a case where that isn’t quite true).
3. Best low-fee secured card: Wells Fargo Business Secured Credit Card
- Rewards: 1% cash back or 1 point for every dollar spent: your choice. $50 annual fee after the first year to enroll in rewards program
- Low interest: Prime rate + 11.90% APR on purchases
- 21-day grace period on purchases
- Annual fee: $25 per card
The Wells Fargo Business Secured Credit Card allows cardholders to secure a credit line between $500 – $25,000, depending on how much you are willing to deposit. With this card, the amount of your credit line is equal to the amount you deposit. This card has a very low interest rate and the annual fee is low at $25.
4. Best rewards secured card: BBVA Compass Business Secured Visa Credit Card
- Low interest: 17.49% (or WSJ Prime + 12.99%)
- Rewards: 1 point for every dollar you spend. Choose your own categories in which you’d like to earn double or triple points.
- No rewards enrollment fee
- No additional fee for employee cards
- Annual fee: $40
- Only 90% of your deposit will be available as a credit line
The BBVA Compass Business Secured Credit Card works similar to the Wells Fargo Secured Credit Card, however your credit line will only be equal to 90% of your deposit amount. There is a higher annual fee at $40 per year and no fee to enroll in the rewards program. Additionally, the annual fee for the first year is waived. The rewards for this card include double or triple points in the category of your choice, which is a great perk for business owners who spend a large portion of their credit on one category, such as gas or groceries.
5. An Alternative to Business Credit Cards: Line of Credit
If the above options don’t seem like a fit, a line of credit could provide a good option. This is not a business credit card, but does allow small business owners to have a fund to draw from should they need flexible spending money. You will, however, pay interest on the amount of money you draw, and it’s paid back via a weekly or monthly fee. The APR on this type of financing option can range up to three times that of a business credit card.
OnDeck’s line of credit is available to established small business owners with a personal credit score above 600, and annual revenue of at least $100,000. When you apply, you’ll get a decision on your application in minutes. The average APR on an OnDeck line of credit is 30% APR, so make sure you understand the terms before you start drawing from the line.
Things to Keep In Mind When it Comes to Bad Credit Business Credit Cards
Secured business credit cards or business credit cards for bad credit can be good options for business owners with poor or fair credit who need a small amount of capital now. Even with a low credit limit, these cards can help you build business credit. Before you apply, here are couple things you’ll want to do:
- Know and monitor your credit score. You can monitor your personal and business credit score with a free Nav account.
- Make sure a business credit card is the best option for you, and look into business loans if you think a loan might be a better financing option for your business.
How to Qualify for a Higher Limit or More Rewarding Card
Business credit cards for bad credit are a good option for new or established business owners looking to make purchases on credit and bolster their personal scores. But the most rewarding business credit cards are generally reserved for the lowest risk applicants.
Here are three steps to consider when trying to qualify for the best cards:
- Monitor your credit. There are over 150 places to get your credit score for free, and many services will help identify problem areas where your credit can be improved. For example, high debt utilization is often a problem for consumers and business owners. If your debt ratio is too high, it could be weighing on your scores, and you’ll want to focus on paying that down.
- Keep your business debt off your personal cards. Try to avoid mixing personal and business finances. Getting business debt off personal cards may mean looking into other options for business financing, or starting with a business secured card.
- Be weary of credit inquiries. If you apply for credit many times over a long period, you could end up with multiple credit inquiries on your report. These can weigh down your score, and can affect your score for 12 months or more.
Nav's MatchFactor technology is the only place that instantly shows your approval odds for business loans and credit cards before you apply. See my match scores for free.
This article was originally posted in 2015 and updated on May 10th, 2018.