There are endless reasons why business credit cards are a good idea, especially as a credit-building tool. Those with poor credit are often left in a lurch. A business credit card can help repair a credit score, but you need a good credit score to get one.
Bad credit happens. Rebuilding your credit is a battle that takes time, energy and patience. In the meantime, a prepaid or secured credit card such as the Bento for Business card or the Capital One Secured Mastercard allow you to work towards a higher score while getting some of the same benefits of an unsecured card.
Why You Should Get a Business Credit Card
You already know your there are limits to your options, so why get a business card at all? Business credit cards have many benefits, even if you don’t qualify for the most elite cards. First, secured credit cards help build credit, which will get you out of the rut created by a bad credit score. This can help you repair your score. Eventually, you may for more financing like a better credit card or a small business loan. They can help manage bookkeeping and give you access to employee credit cards. These cards may also allow you to easily keep track of spending.
Bento for Business
The Bento for Business is a prepaid credit card.. Though it cannot help you build your credit, it is still a great choice. However, say you want to start giving your employees a spending allowance—this card allows you to add users and control how much they can spend.
In addition, Bento can connect with QuickBooks, allowing you to keep track of spending at ease. And in some aspects, the Bento for Business offers more control over employee spending than a traditional business credit card would because funds through this channel are prepaid and thus work more like an allowance.
Capital One Secured Mastercard
Unlike the Bento for Business, the Capital One Secured Mastercard is an actual credit card that can be used to improve your credit score. It’s a secured personal card, so you’ll have to pay a security deposit in order to qualify. Unlike other secured cards, the Capital One Secured Mastercard doesn’t require your security deposit to be equivalent to your credit limit. Based on your credit score, Capital One will adjust the deposit amount. So, for example, you could pay a $49 deposit for a $200 credit limit.
The Capital One Secured Mastercard has no hidden charges or annual fee. This is a breath of fresh air for anyone working toward financial security. Plus, if you struggle to pay your deposit in full, Capital One will allow you to pay in installments, as long as the balance is fully paid within 80 days of opening the account.
BBVA Compass Secured Visa® Business Credit Card
If you’re looking specifically for an option that allows you to have employee credit cards and want to build credit, the BBVA Compass Secured Visa Business Credit Card is a great choice. Expect to put down a security deposit of 10% your total credit line, with a minimum deposit of $500. You may waive the $40 annual fee for your first year.
You’ll get free employee credit cards and one reward point per $1 spent on purchases that qualify. There’s also an opportunity to take advantage of bonus points in a category of your choice. Because BBVA reports to the credit bureaus, this option allows you to build your credit.
Discover It® Secured Card
The Discover It Secured Card is another personal card, not a business credit card. If you’re an entrepreneur, it’s a good option for improving your personal credit. This ultimately affects your eligibility for a business credit card. You can choose how much cash to add to your credit line with a $200 minimum. After eight months, Discover will decide if you qualify for an unsecured amount and, if so, refund your security deposit.
The Discover It Secured Card has no annual fee. The card gives you the opportunity to earn 2% cash back when you purchase food or gas up to $1,000 dollars. You can also receive 1% cash back on spending elsewhere. Plus, at the end of every year you’ll get a dollar-for-dollar match on all the cash back you’ve already earned. Though this card is not business-specific, as long as you use it for only business purposes, you can get get many of the same benefits from it while rebuilding your credit at the same time.
Capital One Spark Classic for Business
The Capital One Spark Classic for Business is the only unsecure card on this list. If your credit score is about 580+, you should seriously consider this card. While they do have some credit minimums, it is a great option for those in the high 500 range and up. Since Capital One reports to all three major credit bureaus, it’s a great business card for anyone with less-than-stellar credit hoping to improve their score.
The Capital One Spark Classic for Business offers 1% cash back on all purchases with no cap. The card also charges no annual fee. You’ll get year-end summaries, free employee cards, and fraud protection. Additionally, you get access to Visa® SavingsEdge, an online portal that offers 15% at vendors like gas stations, restaurants, and hotel chains.
Even with bad credit, a business credit card can be a great tool for many small business owners. Though a secured or prepaid card may not be your ideal choice, they can be great temporary alternatives until you are able to build your credit score and qualify for higher end cards with larger limits.
Meredith Wood is the Editor-in-Chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Prior to Fundera, Meredith was the CCO at Funding Gates. Meredith is a resident Finance Advisor on American Express OPEN Forum and an avid business writer. Her advice consistently appears on such sites as Yahoo!, Fox Business, Amex OPEN, AllBusiness, and many more.