The best business credit cards for poor credit
When you are a small business owner, having poor business credit can hinder you from growing your business. In a catch-22, the best way to build credit and boost creditworthiness is to obtain and responsibly use credit. The right line of credit can go a long way in managing cash flow, helping you through seasonal demand spikes and even to steadily expand your operations. However, it can be a steep hill to climb for businesses with poor credit to achieve an improved credit score.
There are a few reasons why business owners may find themselves with poor business credit. Businesses that are just starting out may not have had enough time and opportunity to build business credit history. Another group that may have poor business credit are businesses who have encountered misfortune or used credit irresponsibly (in the eyes of credit bureaus and lenders) in the past. If you're a business owner in this tough spot, rest assured that you haven’t reached a dead end.
How can you qualify for a business credit card with poor business credit? Well, not all credit cards assess eligibility purely based on credit history. Some credit card issuers give more weight to factors such as revenue, while others offer cards with secured credit lines. We’ve done the research and narrowed down the best business credit cards for bad credit. Most of the cards we've included also report to the major credit bureaus, ensuring that you can build business credit as you spend. Without further ado, here are our top picks for business credit cards that don't require good credit.
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Wells Fargo Business Secured Credit Card
The Wells Fargo Business Secured Credit Card reports your payment and usage behavior to the Small Business Financial Exchange. While this helps you build business credit history, it will not help you build personal credit since the information is not reported to consumer credit bureaus.
Before applying for this credit card, you will need to open a Wells Fargo business checking or savings account. Once your card application is approved, your cash deposit will be used to fund the credit line. You will be entitled to a $500 to $25,000 credit line depending on the amount of funds you deposit into your account.
Your recent credit history and usage of the credit card will be periodically reviewed. After some time of responsible usage, you may be eligible to upgrade to an unsecured business credit card. However, it is important to note that this upgrade is not guaranteed or offered automatically regardless of the length of time your account has been open.
One great benefit of the Wells Fargo Business Secured Credit Card is that it allows you to choose between cash back or rewards points. Cashback of 1.5% is earned for every $1 spent on net qualifying purchases and will be credited to your account each quarter. Meanwhile, the reward program lets you earn 1 point for every $1 spent on net qualifying purchases. Cardholders also stand to earn a maximum of 1,000 bonus points if your total company spend is at least $1,000 in the monthly billing cycle. Other rewards include a 10% point credit when points are redeemed online, and extra bonus points or discounts from participating merchants.
Since you’ll need to make monthly payments, the Business Spending Report that is available through Wells Fargo Business Online will be helpful in monitoring spending patterns and setting monthly goals. You will also be able to automate your monthly credit card bill payments and avoid overdraft with the Overdraft Protection feature.
While there are no annual or foreign transaction fees, cash advance or balance transfer fees may still apply depending on your customer agreement. As for APR, an interest rate of 11.90% and 20.74% is applied on purchases and cash advances, respectively, on top of the bank prime rate.
Business Edition Secured Visa Card
If you are looking for a card with a higher credit limit and can afford a larger security deposit, the Business Edition Secured Visa Card would be a good choice for you. Depending on your business credit score, you will be entitled to choose between a $2,000 to $10,000 credit limit (in multiples of $50) when you apply for the credit card.
However, you will need to deposit 110% of the credit limit you want. This may be a tough requirement for small businesses, but you will be able to earn interest on your security deposit. Unlike some of the other credit card options, this one charges an annual fee of $39. There is also an annual percentage rate (APR) of 20.24% on purchases and balance transfers that will vary with the market based on the prime rate.
This card does not come with a cash back or rewards program but you can enjoy automatic discounts on qualifying purchases under the Visa SavingsEdge program. Take note that the issuer First National Bank of Omaha’s offerings differ depending on your location, but the website allows you to insert your zip code and business details to check if you pre-qualify for the card.
Brex Business Credit Card
There are two types of Brex Business Credit Cards - one that is paid daily and the other that is paid monthly. While companies of any size and bank balance can qualify for the daily version, the monthly version is only for eligible companies that meet certain size and revenue criteria. Overall, the Brex Business Credit Card is a great option for startups that have a thin credit file but are well-funded.
The Brex Card does not require a personal credit check. In addition, since there is no personal guarantee required on this card, your personal assets will not be at risk should your business fail. However, this credit card requires you to maintain $50,000 in a bank account connected to Brex at all times, or $100,000 if you do not connect your bank account. The Brex Business Credit Card reports on-time payment information to Experian and Dun & Bradstreet which goes towards filling out your business credit report.
With the monthly version of the Brex Card, your credit limit will be 10x-20x higher than other corporate cards. The rewards program on this card also lets you earn points 8x on rideshare, 5x on Brex travel, 4x on restaurants, 3x on recurring software, 3x on eligible Apple purchases and 1x on other expenses. Plus, it comes with unlimited employee cards.
Brex charges no annual fees, foreign transaction fees and interest rates. Do note that this is because it is a charge card — you will have to pay in full at the end of each billing period. It earns money from Brex Cards by charging merchants a fee for each purchase you make with the card. While this card is desirable with its zero fees and many benefits, certain businesses such as sole proprietors and mom-and-pop shops may face difficulty meeting the eligibility criteria.
The Divvy Card offers a business credit card and expense tracking software solution that can be useful for your budgeting and financial management needs. By paying your Divvy Card bills on time, you get to build your business credit history and score since Divvy reports customer credit performance to the Small Business Financial Exchange (SBFE).
Divvy is industry-agnostic and bases approval off bank statements in addition to credit score. It does require three years minimum time in business as well as a strong financial history, which means it may not be a great fit for new businesses whose poor credit is due to not having any credit history. Even so, Divvy prides itself on being flexible and assessing each application individually, so it may not be a bad idea to apply anyway.
Benefits of the Divvy card include its fast approval and easy 6-step application process. It also provides the opportunity of a scalable line of credit as your business grows. The rewards program earns you the most points with weekly payments at 7x on restaurants, 5x on hotels, 2x on recurring software subscriptions, and 1.5x on everything else. There are also rotating special offers that you can earn through its corporate partners such as Google Ads, Amazon Web Services and Bamboo HR. Similar to the Brex card, the Divvy card comes with unlimited virtual employee cards.
As a charge card, it does not come with annual, monthly, initiation or hidden fees. This means that you will need to pay off the balance in full at the end of every billing period, and won’t be able to carry a balance like you would with a credit card.
Last word on the best business credit cards for poor credit
As a business owner with a thin credit file or poor business credit score, you may find yourself hard-pressed for the ideal credit card for your business needs. However, bear in mind that obtaining one of these credit cards is just a starting point to build your credit history. With time, as your credit standing improves, you will qualify and be able to upgrade for business credit cards with better rewards and perks.
In order to build credit and not hurt your business credit score, it is important to meet your monthly credit card payments on time and keep your credit utilization in check. Doing so will have the added benefit of helping you avoid late fees and interest charges. Of course, your business credit card can be a handy safety net to help manage your business expenses and cash flow during unexpected times. Even so, it's a good idea to stick to a budget and plan in order to not lose track of your spending.
Think of your small business credit card and your business credit score as a means for opening doors for business growth. Once you are deemed creditworthy, you will be more likely to qualify for larger lines of credit to scale your business upwards.