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Is your business credit in rough shape? Well, good news — it doesn’t have to stay that way. A well-managed business credit card can help you get your scores moving in the right direction. However, it can be hard to get approved for one with bad credit (or no credit). So, where should you turn? Here are our picks for the best business credit cards for poor credit in 2023, along with all you need to know when shopping for one.
What to look for in a credit-building business credit card
Shopping for business credit cards and repeatedly getting denied is frustrating. So, what are the key things you should be looking for before applying? Here’s a quick checklist.
Affordable security deposit
Credit-building business cards may offer credit lines in exchange for security deposits. For example, you may be asked to pay $500 to get a $500 credit line. The card issuer then holds your deposit just in case you default. However, if you make all your payments on time, issuers may end up refunding your deposit and/or transitioning the account into an unsecured account. When shopping around, check if cards require a security deposit. When they do, look for the minimum and maximum deposit limits to ensure it’s a good fit for your budget and needs.
Low-to-no fees
Some card issuers try to reduce their risk by charging fees to credit-challenged applicants. The main fee to watch out for is the annual fee which is charged to cardholders each year just for having the card. But also watch out for late fees, foreign transaction fees, balance transfer fees, etc.
Competitive reward programs
Most credit cards nowadays offer you some sort of kickback on your purchases, including cards for poor credit. Be sure to check the reward programs on the cards you’re considering. Credit-building cards often offer around 1% back on all purchases.
Low annual percentage rates (APRs)
The APR tells you the percentage you’ll pay per year on any balances that carry over beyond a billing period. If you pay off your balance in full each month, you won’t have to worry about this. However, if you don’t, it can become an important factor. Look for the lowest APR when comparing cards.
Helpful benefits
Most credit cards come with benefits, some that can provide your business with significant value. For example, you can get access to your Experian business credit score with Tillful which can provide a savings of $189 per year. Other benefits include fraud liability protection, roadside assistance, and more. So be sure to check the benefits each card offers and factor them into your overall decision.
No personal guarantees
A personal guarantee is a commitment from an individual to be liable for a debt if the primary borrower can’t pay as agreed. In the case of a business credit card, it means that if your business can’t pay off its outstanding balance, you (as the business owner) will pay it off. If you don’t pay, the credit card issuer can pursue you with collection efforts. Some business credit cards require personal guarantees while others don’t.
Credit bureau reporting
To build credit, you need positive accounts on your business credit reports. However, to get positive credit accounts, the business creditors you borrow from must report your accounts to the major business credit bureaus (Experian, Equifax, and Dun & Bradstreet). Unfortunately, not all credit card issuers do so. Further, those that do, may only report to one or two bureaus. It’s important to understand a card issuer’s credit reporting practices so that all your credit-building work pays off.
Suitable application requirements
Lastly, it’s important to check a card issuer’s application requirements to ensure they’re a good fit for your situation. For example, you may need to have a certain business structure or a specific amount of time in business. It’s helpful to find out in advance so you don’t waste your time applying for a card you can’t get.
4 Best Business Credit Cards For Bad Credit
Now that you know the basics of what to look for in a good credit-building business credit card, here are the best four of 2023.
1. Bank of America Business Advantage Unlimited Cash Rewards Secured credit card
Quick facts:
- Minimum deposit: $1,000 minimum
- Annual fee: $0
- Rewards: 1.5% cash back on all purchases
- APR: 26.49% variable APR
- Benefits: $100,000 in travel accident insurance, auto rental insurance, emergency ticket replacement, lost-luggage assistance, legal and medical referrals when you’re away from home, and free Dun & Bradstreet business credit scores
- Personal guarantee: Yes
- Credit bureau reporting: Equifax for Small Business
- Application requirements: Personal and business information (name, address, EIN, and SSN)
The Bank of America Advantage Unlimited Cash Rewards Secured credit card offers a good way to break into the world of business credit. The card has no annual fee, it offers 1.5% cashback on all purchases, and it has a solid lineup of benefits. But the main reason it made this list is — it allows you to open a business credit line without any business credit history.
While the $1,000 minimum security deposit is a bit high, it’s not too bad and results in a $1,000 credit line. Further, if your credit history improves, the bank may transition you into an unsecured card. The APR of 26.49% is pretty standard but can result in expensive interest charges if you end up carrying a balance.
As for the personal guarantee issue, this card is backed by your personal credit, but it won’t show up on your personal credit reports unless you fail to make your payments on time. Bank of America does, however, report to Equifax for Small Business, so you can build a positive credit record that helps you establish business credit.
2. Tillful Card
Are we biased? Yes. Is it a good one? Also yes.
Quick facts:
- Minimum deposit: $500 minimum
- Annual fee: $0
- Rewards: 1% rewards on business purchases
- APR: 0% APR
- Benefits: Free Experian Intelliscore Plus monitoring through the Tillful app
- Personal guarantee: No
- Credit bureau reporting: Experian, Equifax, Dun & Bradstreet
- Application requirements: Valid EIN, incorporated business in the US for at least three months, compliant Tillful credit account, and personal details of owner to verify identity (no personal credit pull)
The Tillful card is designed to help business owners establish positive credit as quickly as possible. The main standout features? The company doesn’t check your personal credit at all. You will need to provide your social security number but only to verify your identity. Beyond that, it is a secured card but allows for security deposits as low as $500, it has a 0% APR, and it doesn’t require a personal guarantee.
Additionally, the card’s activity is reported to all three of the major credit bureaus, which can help you leave a wider business credit footprint. Just keep in mind you’ll have to self-report to Dun and Bradstreet. You’ll also earn 1% rewards on your business purchases and can monitor your Experian Intelliscore for free through the Tillful app.
3. Capital One Spark Classic for Business (1%)
Quick facts:
- Minimum deposit: None but must have fair credit (personal)
- Annual fee: $0
- Rewards: 1% unlimited rewards
- APR: 29.74% variable APR
- Benefits: Extended warranty on purchases, travel benefits, and roadside assistance
- Personal guarantee: Yes
- Credit bureau reporting: All three personal credit bureaus, and reports to business credit bureaus (doesn’t specify which ones)
- Application requirements: Fair credit, business owner information (social security number, name, and address), and business information (name, address, and business tax ID number), and approval is based on personal credit scores
The Capital One Spark 1% Classic for Business is an unsecured business credit card from Capital One. It’s designed to help business owners with at least fair personal credit to build business credit. It also happens to be the only business credit card Capital One offers to customers with less than “Excellent” credit.
On the upside, the card offers 1% cash back on all purchases and 5% back on hotels and rental cars booked through Capital One Travel. You also won’t have to worry about an annual fee and can enjoy some perks like roadside assistance and extended warranties on eligible purchases. Further, Capital One says it reports Spark business accounts to the business credit bureaus, although it doesn’t specify which one(s).
On the downside, the card requires a personal guarantee from business owners, a hard pull of your credit report, and fair personal credit. It also has an APR of 29.74% which is on the high end.
If you’re a Capital One loyalist and want to stick with the company as you build business credit, this card may be a good fit. It also can help you to skip the security deposit, but you’ll need to have at least fair personal credit and be okay with a personal guarantee.
4. American Express Blue Business Cash Card
Quick facts:
- Minimum deposit: None
- Annual fee: $0
- Rewards: 2% cash back on up to $50k in eligible business purchases per year, 1% cash back on all other eligible purchases, a welcome bonus of $250 after you spend $3,000 in the first three months, and 0% APR for 12 months
- APR: 17.74% - 25.74% APR
- Benefits: Auto rental insurance, global assist hotline, extended warranty, purchase protection, and expense management
- Personal guarantee: Yes
- Credit bureau reporting: Small Business Financial Exchange (SBFE) and Dun and Bradstreet
- Application requirements: Good personal credit, business and personal information (name, address, EIN, and SSN)
The American Express Blue Business Cash Card is an unsecured card with attractive rewards and no annual fee. You can get 2% cash back on up to $50k in eligible business expenses and 1% back on everything else. The card also comes with a 0% intro APR offer for 12 months and a $250 statement credit if you spend $3,000 in your first three months.
On the downside, approval for the Blue Business Cash Card is based on your personal credit and it requires a personal guarantee. Additionally, it doesn’t report to all of the major credit bureaus and has an APR that will apply after the promotional introductory period.
Note: While we considered the FNBO Business Edition® Secured Visa® Card, it didn’t quite make the list due to the combination of a high minimum deposit ($2,200), an annual fee of $39, and no rewards.
Discontinued business credit cards
Wondering why some cards you’ve heard of are missing from the list, such as the Wells Fargo Business Secured Credit Card, Divvy Credit Builder Card, and the BBVA Compass Secured Visa Business Credit Card?
While all of these cards were previously popular business credit cards for people with poor credit, they’ve been discontinued by their issuers.
Other credit card types to consider
In addition to the top cards, you may want to look into business credit cards from stores you frequent and your local bank or credit union. Further, a personal credit-building card could help you qualify for more business cards in the future.
Store business credit cards and fuel cards
Store business credit cards, like The Sam’s Club Business Mastercard, are credit cards offered to business owners from a particular store. In some cases, they are closed-loop which means they can only be used in that store. In other cases, they are co-branded and open-loop which means they can be used anywhere the card network (Visa, American Express, etc.) is accepted.
While the rates, terms, and rewards vary from one store card to the next, these can be a great way to start building business credit while earning rewards on your normal business expenses. Think about the places where you frequently spend money for your business and check out their store card offerings.
See our top 10 picks for store cards
See our top picks for fleet (fuel) cards
Local bank or credit union business credit cards
Another potential route you can take is to visit your local bank or credit union. If you’ve established a relationship with a financial institution in your area, you may be able to lean on that trust to get approved for a business credit card, despite poor credit.
Why? When applying to large financial companies online, all they have to base approval on is the records they pull (like your business or personal credit histories). In other cases, a security deposit is requested to compensate for the risk you present. When you have a personal relationship with a bank or credit union, your banker may know you and be able to base their decision on the history of your accounts there.
However, be sure to ask if any business credit card offered will be reported to one or more of the business credit agencies regularly. Also, check if a personal guarantee is required.
Personal credit-building cards
Approval for many business credit cards relies on the business owner’s personal credit. If your personal credit needs some work, you can look into personal credit cards designed to help you improve. For example, Petal, Capital One, and Credit One all provide entry-level personal credit cards for people with poor-to-fair credit. By increasing your personal credit scores, you can widen the options available to you on the business credit front.
FAQs about business credit cards for poor credit
Here are answers to some common questions about business credit cards and poor credit.
What is the difference between a secured and an unsecured business credit card?
A secured credit card requires the cardholder to pay a deposit to get a credit line. These types of cards are often marketed to cardholders who don’t yet have credit established, or who have derogatory marks on their credit reports.
If you get a secured card and can’t pay your outstanding balance, the card issuer can use your deposit to pay off the balance, which helps to limit the risk of extending an account to you. On the other hand, unsecured business credit cards don’t require cardholders to pay a deposit. Instead, approval typically requires a minimum credit score that’s fair or better.
What is the difference between personal and business credit?
Personal credit refers to a collection of credit reports that are linked to an individual’s social security number. Within the reports are records of how the individual has managed credit accounts like loans, lines of credit, and credit cards in the past. The three main credit bureaus that keep credit records on individuals are Experian, Equifax, and TransUnion.
Business credit works similarly, but the credit reports are linked to a business’s Federal tax identification number (EIN). The records track how businesses have managed loans, credit cards, and vendor accounts. Again, three main credit bureaus track business credit activity. In this case, they are Experian, Equifax, and Dun & Bradstreet.
Learn more about the difference between personal and business credit
What is considered poor credit?
Each credit bureau has a proprietary way of measuring creditworthiness so the definition of “poor” can vary depending on which one you check. Here’s a look at how the definition varies across the major credit bureaus.
Poor personal credit scores:
- Experian: 300 to 579
- Equifax: 300 to 579
- TransUnion: 300 to 660
Poor business credit scores:
- Experian: 1-49
- Equifax: 50-70 (CI)
- Dun & Bradstreet: 0-49 (PAYDEX Score)
What do you need to qualify for a business credit card?
To qualify for a business credit card, you’ll need an EIN for your business, contact information for your business, a business owner’s social security number, and contact details for the business owner. Depending on the credit card issuer you choose, you may also need to meet a minimum personal credit score requirement. However, approval for business credit does not always rely on personal credit. You may be able to pay a security deposit instead of securing the account with your personal credit profile. To find out, check the specific requirements of any credit card issuer you consider.
Are there business credit cards that don’t require a personal credit check?
Not all business credit card issuers check your credit. Tillful, for example, does not. However, all card issuers will need to collect your personal information (including your social security number) to verify your identity.
What are the perks of a small business credit card if you have poor credit?
A small business credit card can be a great way for small business owners to build credit for their companies. As you use the card and pay it off on time, a positive credit record will be established that can help you get credit line increases and access to additional credit accounts with better rates.
A business credit card can also provide you with rewards for the business purchases you’re already making. In many cases, you can get a percentage of your expenses back in the form of cashback. Some cards also come with perks like intro APR promotions, roadside assistance, warranties, or free access to your business credit report.
How can you improve bad credit?
You can improve bad credit by settling negative accounts, building positive credit accounts, and waiting for negative accounts to drop off your record. One of the easiest ways for people with bad credit to begin establishing positive accounts is with the help of a secured credit card. You must manage it properly, though, or it can work against you. That means no late payments and keeping the credit utilization at 30% or less.
Learn more…
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