Can a Secured Business Credit Card Help My Company Build Credit?
Having access is to a business credit card is esse credit, traveling for business or purchasing new equipment in a pinch might be difficult. The solution? A secured business cr ntial if you want to reserve your business’ working capital, finance travel or other business-related expenses. Without access to business credit, traveling for business or purchasing new equipment in a pinch might be difficult. The solution? A secured business credit card. Secured business credit cards can help you improve your business credit score, allowing you access to financing in the future.
Unlike a traditional credit card, a secured business credit card requires that you deposit a specific amount of money. The deposited amount will determine your limit. Then, you can use your secured card just as you would an unsecured card. At the end of the month, you make a payment on the card–which will determine your credit limit.
Having access to your funds quickly, is just one advantage. The biggest: many institutions report to credit agencies. And for some secured business credit cards, on-time payments will help lending institutions consider you for an unsecured account.
Here are some secured business credit cards that will help you build your business credit.
ultimately allowing you access
Establishing Business Credit
One of the most important financial mistakes an entrepreneur will need to avoid is mixing personal and business finances. And as a new business, this might seem tempting–especially since you might finance your business through your personal funds. The BBVA Secured Business Credit Card is a step in the right direction. For the first year of being a cardholder, there is no annual fee. After the first year, the fee is $40 annually. There are many resources online to help business owners manage their finances, as well as business rewards to save you money.
To open a secured credit card, you will need to open a secured credit card saving account. You’ll need to apply for the card in-person and live in Alabama, Arizona, California, Colorado, Florida, New Mexico or Texas. If you meet these requirements, a deposit of at least $500 is required to open an account.
Metro Credit Union Visa Secured Business Card will also help your new business have extra credit available on a rainy day. There aren’t any rewards, its APR is 13%–much lower than many other secured business credit cards. A minimum deposit of $1000 is required, and payments are reported to credit agencies.
Sole Proprietors and Freelancers
If you are running your business as a sole proprietor or freelancer, check out the Capital One Secured Mastercard. The beauty of this card is that it can help you build your personal credit–which will be a determining factor in you being able to obtain business funding.
The Capital One Secured Mastercard may carry a variable APR of 26.99% but there is no annual fee. You can put down as little as $49 as security on the card. And here’s the biggest caveat to this secured credit card: after you have made your first five monthly payments on time, you will be eligible to gain access to a credit limit that won’t require a deposit.
Travel internationally as part of your business? The Wells Fargo Business Secured Credit Card is an option to research. This secured card has no foreign transaction fees for cardholders. As a bonus, there’s cash back of 1.5% on every dollar spent. You also have the option to earn a point for each dollar spent when your company spends at least $1,000 per month.
To gain access to this card, you will have to deposit a minimum of $500 and a $25 annual fee. Wells Fargo does not report payments to consumer credit agencies but to the Small Business Financial Exchange.
Wells Fargo reviews secured cardholders periodically to see if cardholders are eligible for an unsecured card or other funding options.
Remember that in many ways, secured credit cards act in the same way as unsecured cards. If you’re hoping to improve your business credit, use only a small portion of your credit line. Be sure to pay your bill on time so that it can be reported positively to credit agencies.