Credit Cards for Bad Credit Solution

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.

Secured Business Credit Cards

For business owners looking to build their business credit, another option is a secured business credit card. 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).

Our Top Picks:

1. Wells Fargo Business Secured Credit Card

Pros:

  • 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 + 9.90% APR
  • 21-day grace period on purchases

Cons:

  • Annual fee: $25
  • $50 annual fee after first year to enroll in rewards program

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. The only big drawback is that cardholders who wish to earn rewards points on their purchases will have to pay an annual enrollment fee of $50.

2. BBVA Compass Business Secured Visa Credit Card

Pros:

  • Low interest: 16.49% (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

Cons:

  • 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, but there is 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.

Keep In Mind…

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.

Know More About Credit Card FAQs

Smart business owners can use credit cards to their advantage, whether it’s to amass valuable rewards or to access funds to take advantage of a potentially lucrative opportunity.

In this short webinar, you’ll learn how to make the most of your credit cards, as well as avoid pitfalls. Then peruse the questions below from business owners like yourself to learn more.

What is required to get a business credit card?

Business credit card issuers usually are most interested in the owner’s personal credit scores, income and credit qualifications. Nav’s MatchFactor can help you understand which cards you are most likely to qualify for. It uses a proprietary algorithm to help you understand your likelihood of qualifying for specific cards. It’s free with a Nav account.

How do business credit cards impact my personal credit scores?

Most issuers don’t report business credit card activity to the owner’s personal credit cards unless they default. (This chart shows how major credit card issuers report to personal credit.) However, since issuers check the owner’s personal credit reports when evaluating these applications, there will be an inquiry on one of the owner’s personal credit reports. Inquiries shave just a few points off credit scores, and after a year they generally don’t count.

Can a new startup qualify?

Generally, you can get a business credit card as soon as your business is established, as long as you meet the issuer’s credit and income requirements. Again, most issuers will look at the owner’s personal credit qualifications when evaluating an application.

Does my business have to have a certain amount of revenue to qualify?

Typically, no, as long as your personal income is sufficient to qualify. And if you aren’t drawing a paycheck in your business, you may use income that’s available to you to pay the debt, such as a spouse or partner’s income.

How can I get higher limits?

Issuers are often eager to extend higher credit limits to customers who qualify and may consider your request in as little as six months after you get the card. When you request a larger credit line the issuer may review your past activity on the account to create an internal score. For example, they may look at factors such as: How much do you charge? Do you pay on time? Do you always carry a balance or do you sometimes pay the card off? They may request updated information about your income as well. Keep in mind that issuers may review your credit and that may create a hard inquiry.

Should I spread expenses over several cards or use one to the max?

There can be a number of advantages to spreading your purchases over several credit cards.
The first is that you’ll keep accounts active, so your issuers are less likely to close the account. (Tuck a credit card in the back of the drawer and your issuer may decide to close the account for lack of activity.) Even a small regular purchase on a card may be enough to keep your account open.

Next, you may be able to maximize rewards. For example, let’s say you have one card that earns 3x points for purchases in a certain category, such as office supplies, so you use that card for all purchases you make at office supply stores. You have another card that earns a higher level of cash-back rewards at gas stations so you use that card when fueling up. And perhaps you have a cobranded airline card that gets you free checked bags when you fly, so you use that card for travel. By using multiple cards, you are able to make the most of your rewards.

Finally, your credit scores are less likely to get penalized for high debt usage. High balances in comparison to credit limits can hurt your scores. If you “max out” a card, your scores are likely to suffer. Business credit scores tend to be more forgiving for this factor than personal scores.

However, if you do use multiple cards, make sure you set up a system to track due dates so you don’t accidentally pay late.

Is it a good idea to use credit cards to establish business credit and should you pay the balance when the statement comes?

Yes, business credit cards can often help establish business credit. Most issuers report these cards to at least one commercial credit reporting agencies, so they can provide a valuable credit reference, provided they are paid on time.

Paying the balance early can help you avoid running up debt and can help reduce the balance reported to the credit reporting agencies, since most issuers report balances around the statement closing date.

Business Credit Card Guide

Business credit cards offer a quick and secure way for business owners to get the funds they need to run their business smoothly, take advantage of growth opportunities, provide breathing room when business is slow, safeguard personal finances from actions of the business, and more.

We created this guide to set you on a path to make the most out of business credit cards. Here’s a taste of what’s inside:

  • The incredible advantages of business credit cards
  • How business credit cards affect both your business AND personal credit
  • How to find our your approval odds before you apply
  • The type of business card you should avoid
  • Hacks to earn rewards and flights from your business credit card

Why wouldn’t I just use my personal credit card?

Well, glad you asked. Here are three serious advantages to using a business credit card for business purchases:

  1. Having a business credit card allows you to keep your personal and business expenses separate. You’ll be able to track business expenses more easily, making tax time, as well as maintaining a company budget, much less of a headache.
  2. By getting a card in the name of your business you’ll start to establish a business credit scoreseparate from your personal one. That means that if you have to make a late payment, your business credit will take the hit instead of your personal credit (there are exceptions—read about which business credit cards report to personal credit bureaus here).
  3. As you start to establish a business credit profile, you’ll build your business’s credibility. When it comes time to apply for other business financing, solid business credit scores can help you qualify for more financing at better rates.

How Many Types Of It

The SBA, Small Business Administration, provides loans to small businesses through financial institutionssuch as banks, microlenders, and online lenders. These SBA loans are government guaranteed, meaning lenders will offer them to small businesses at low interest rates because the government has promised to pay back 85% of the loan in the event of default.

The three most talked about SBA loan types are:7(a) Loans: the most popular loan provided by the SBA, available to new and established businesses with a FICO SBSS Score of 140 or above.

504/CDC(Certified Development Company) Loans: long term financing available for businesses to purchase real estate or high-cost assets they need to run their business.

Microloans: small loans up to $50,000 available through non-profit community lenders to new and established businesses.

But wait… there’s more! In fact, there are over 12 different types of funding provided by the SBA.

The following list of additional SBA loans are either for specific types of businesses or for more specific purposes. Some of these loans fall under the umbrella of one of the above loans. It’s worth taking a look to see if you qualify for one or more of these loans.

Special Eligibility Loans

Community Advantage Loans

Part of the 7(a) loan program, this loan type is for newer businesses in low-to-moderate income areas. Employees of the business must be considered low income or reside in an area that is a low-to-moderate income (LMI) area. Whereas most 7(a) loans require a FICO SBSS score of 160 or above, you’ll only need a 140 or above to qualify for a community advantage loan. Community Advantage lenders offer these loans up to $250,000.

Rural Business Loans

Another loan categorized under the 7(a) program, these loans are for businesses in rural areas that need funding for working capital, equipment, real estate, and certain types of debt refinancing.

These loans are actually provided by the U.S. Department of Agriculture. The business’s majority stakeholder must be a U.S. citizen or permanent resident, and the borrower must reside in an area with fewer than 50,000 inhabitants. If you think your business qualifies, the best place to start is by contacting your state Rural Development Field Office.

CAPLines

A CAPLine is like a (potentially enormous) line of credit. Businesses can secure up to $5 million for short-term working capital needs. These are meant to help businesses take on more public and private contracts and purchase orders. A CAPLine can take on four forms:

 

Revolving line of credit — similar to inventory financing or invoice financing. Your assets or account receivables will be looked at to determine how much you can get on your line of credit.

 

Seasonal line of credit — for businesses that need to build up inventory for an upcoming season of high sales.

 

A contract loan — for businesses that need to fill contracts or purchase orders.

 

A builders line of credit — for contractors looking to construct or rehabilitate a commercial or residential property.

CAPLines fall under the 7(a) umbrella.

U.S. Community Adjustment and Investment Program

This program was created specifically for businesses in areas of the country that are adversely affected by the North American Free Trade Agreement (NAFTA). This program is not a loan, rather it gives businesses in affected areas a break on SBA 7(a) and 504 loan fees. Businesses that save will also face a job creation requirement— one job created for $70,000 saved on 7(a) fees and one job created for $65,000 saved on 504 fees.

Best Business Credit Cards

Business credit cards are an underutilized option when it comes to making purchases for your business. In addition to providing a great source for emergency cash, business credit cards offer a few additional perks.

1. Minimize the impact on your personal credit. Businesses tend to make larger purchases than individuals. If you end up with large outstanding balances on your personal card because of business expenses, your personal credit score could take a hit. Use a business credit card that doesn’t report to personal credit bureaus and, as long as you are on time with your payments, your personal credit will not be affected. (Some business credit card companies will report your business credit information to personal credit bureaus. Find out which ones do here.)

2. Build your business credit. Making on-time payments on your card will help you build strong business credit scores, allowing you to secure lower rates and longer repayment terms on business financing, as well as better terms with your vendors and suppliers.

3. Protect your business. Business credit cards offer more protection than business debit cards. They are covered by the Truth in Lending Act, which caps maximum liability for fraudulent purchases at $50.

The Best Business Credit Cards

Business credit cards offer a variety of different features from rewards points to miles to freebies. The following are some of this year’s top business credit cards for four popular categories: cash back, travel rewards, low APR/balance transfer cards and credit builder cards.

Chase’s Ink Business Cash Credit Card makes sense for business owners who make significant purchases of office supplies and telecommunications services. The card has a 0% introductory APR for 12 months and no annual fee. The rewards system is structured as follows:

  • 5% back per dollar spent on office phone, internet and cable (on up to $25,000 in purchases annually).
  • 2% back per dollar spent on gas and dining, up to $25,000 annually.
  • 1% back elsewhere without limit.

 

One of the neat perks of this card is that cash-back rewards are offered as points in Chase’s Ultimate Rewards program. This means your points can be redeemed for one cent each as cash back, but if you also have a Chase Sapphire Preferred or Sapphire Reserve card, you also have the option to transfer your points to airline and hotel partners.

How to Choose Credit Cards for Travel

Business road warriors are used to packing their bags. But wouldn’t it be more exciting to get ready for your upcoming trip if you knew there were sweet rewards involved?

That’s where business credit cards come in. You probably know of or have a personal credit card that rewards you for your purchases with miles or points that you can spend on flights or hotel stays. But business credit cards for travel sometimes offer even better rewards than personal cards, along with a host of other perks including helping you separate your personal and business finances and build business credit.

Here are some of the best business credit cards for travel we’ve identified for frequent flyers that could be a big win for your business.

The Platinum Delta SkyMiles card from American Express is a great card for frequent Delta travelers who plan to make a large amount in purchases ($50,000+) on their card each calendar year. This card has a killer signup offer of 35,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) if you spend $1,000 in the first 3 months. MQMs help you get closer to reaching Medallion status in the Delta SkyMiles program. As an added bonus, you’ll get a $100 statement credit after you make a purchase on Delta using your card within the first three months.

Added benefits:

  1. Two miles per dollar spent on Delta purchases, and one mile per dollar on all other purchases.
  2. No foreign transaction fees.
  3. Earn more miles with boost programs: 10,000 bonus miles and 10,000 MQMs after $25,000 in purchases each calendar year, as well as another bonus after $50,000.
  4. Earn a domestic, round-trip companion pass each year you renew the card.
  5. Added Delta bonuses: free checked bag, priority boarding, 20% savings (via a statement credit) on eligible purchases made in-flight.

Drawbacks:

  1. If Delta isn’t a convenient airline for you, this won’t be the best card.
  2. $195 annual fee.

The Starwood Preferred Guest Business Credit Card from American Express offers a flexible rewards program for frequent flyers of many different airlines who enjoy comfortable resort and hotel stays. New cardholders will earn 25,000 bonus points after they spend $5,000 in the first 3 months. Along with a generous rewards program, new cardholders will earn additional bonus points if they spend even more. Earn SPG Gold status after 30,000 in purchases on your card in a calendar year, which allows you to score more hotel upgrades, late checkouts, welcome gifts during hotel stays, and more.

Added benefits:

  1. Five “starpoints” per dollar spent at Starwood Hotels, two points per dollar at Marriott Reward hotels, and one point on all other purchases.
  2. Points can be redeemed at over 1,300 hotels and resorts, and over 150 airlines within the SPG program.
  3. No foreign transaction fees.
  4. Free Boingo WiFi at over 1M Boingo hotspots.
  5. Access to Sheraton Club Lounge.

Credit Cards for Startups

As the founder of a startup, there are plenty of good reasons for you to consider using a business credit card. Not only can it help you keep personal and business finances separate, it can come in handy for covering cash flow, building your credit history, and saving money through various perks and rewards.

Not all business credit cards for startups are equal, however, and you’ll want to choose one that best fits the needs of your business. If you’re required to travel often, for example, you might want to go with a card that offers great airfare and hotel rewards. If you’re looking to transfer existing debt from a high cost loan or credit card, you’ll want to choose a card with a low or zero balance transfer fee. Others who plan to carry a balance might choose one with a low interest rate.

 

Why wouldn’t I just use my personal credit card?

Well, glad you asked. Here are three serious advantages to using a business credit card for business purchases:

  1. Having a business credit card allows you to keep your personal and business expenses separate. You’ll be able to track business expenses more easily, making tax time, as well as maintaining a company budget, much less of a headache.
  2. By getting a card in the name of your business you’ll start to establish a business credit scoreseparate from your personal one. That means that if you have to make a late payment, your business credit will take the hit instead of your personal credit (there are exceptions—read about which business credit cards report to personal credit bureaus here).
  3. As you start to establish a business credit profile, you’ll build your business’s credibility. When it comes time to apply for other business financing, solid business credit scores can help you qualify for more financing at better rates.

Established businesses with good to very good credit

Funding Circle sits at the top of our list as one of the only online lenders as a lender that has consistenly improved their loan offerings by lowering costs for the best borrowers and expanding what they can offer. Their loans range $25,000 – $500,000 with 1 – 5 year repayment terms. Funding Circle’s interest rates range from 5.49% – 22.79%. Their origination fees range from 0.99% – 4.99%. If you miss a payment, there is a missed payment fee charged at 10% of the total missed payment, and if your payment bounces, there is a  $35 insufficient funds fee.

Businesses can be funded in under two weeks. Funding Circle requires collateral on their loans in the form of a lien on your business assets and a personal guarantee from the primary business owners.

Requirements to qualify:

  • 2 years in business (or qualified franchises)
  • $150,000+ in annual revenue
  • Owner must have a personal FICO score of 620 or above
  • Owner must have a history free of bankruptcies, current tax liens, judgments or criminal activity.

Able has introduced a new lending model to the marketplace, which allows borrowers to crowdfund a percentage of their loan from friends and family in order to receive a lower interest rate. On average, they ask borrowers to find backers to fund 25% of the loan.

They offer loans from $25,000 – $500,000 with interest rates between 6% – 16% plus a 3 – 5% origination fee. Loans can be paid back over 1 to 5 years, and payments are made monthly and equally amortized over the term of the loan. The average APR on an Able loan is 10.9%.

Requirements to qualify:

  • 6 months or more in business
  • $50,000 or more in annual revenue

SmartBiz: For businesses with excellent personal credit and solid business credit

SmartBiz is an SBA loan provider whose entire application process is online, making it much more flexible process for business owners than many other SBA loan providers. They offer 7(a) loans with interest rates starting at 6% (Prime Rate + 2.75% – 4.75%). The total financing cost or Annual Percentage Rate (APR), will include associated fees: referral fees, packaging and guarantee fees, and estimated closing costs. SmartBiz boasts that their APR ranges from 6.96% to 9.06%.

SmartBiz loans are available up to $350,000. If you need a larger loan, Celtic Bank is another great option that offers SBA 7(a) loans $350,000 – $5M.

Requirements to qualify:

  • FICO SBSS score of 160 or above (get your FICO SBSS score with a Nav Premium Plus account).
  • Must have 2+ years of tax returns filed for the business
  • The SBA has a few additional requirements, including:
    • Business must be a small business. The definition of “small business” will vary based on your industry.
    • Business location must be in the U.S., and some business must be done in the U.S.
    • Applicant must have reasonable invested equity. This means the applicant must own a significant portion of the business (>20%).
    • Must be able to demonstrate a need for the loan, and that the loan will be used for a reasonable purpose.
    • Must not be delinquent on any existing debt obligations to the U.S. government.