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- If you haven't established a credit history or if you have poor credit, you might consider a secured credit card for your business, which involves putting down a cash deposit as collateral for the credit line.
- Before applying for a secured business credit card, review the terms, requirements and benefits to make sure all are reasonable for you.
- It's essential to use a secured business credit card responsibly to build your credit. Be sure to pay off your purchases in full and on time and keep your credit utilization ratio below 30 percent.
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There are numerous reasons to have a dedicated business credit card for your company. Credit cards for business help you separate personal and business spending, which can be immensely helpful when getting your business expenses organized for tax time. Further, many of the top cards offer consumer protections, rewards programs, sign-up bonuses, special interest rates and travel perks.
Unfortunately, unsecured business credit cards tend to require good to excellent credit, so not everyone can qualify for the best offers. People with poor credit may be unable to qualify for an unsecured credit card at all.
If you haven’t established your credit or your credit is damaged, you might consider a secured credit card for your business, where a cash deposit acts as collateral for the credit line. While secured business credit cards tend to offer fewer benefits than business cards that are unsecured, they can help you secure a line of credit and build a positive credit history over time.
First National Bank of Omaha Business Edition Secured Mastercard Credit Card: Best for a flexible credit limit
Why we picked it: For the First National Bank of Omaha’s Business Edition® Secured Mastercard® Credit Card*, you’ll need to put down a security deposit between $2,200 and $110,000, which will serve as collateral for your charges. The security deposit will be 110 percent of your credit limit, which can be between $2,000 and $100,000, subject to credit approval. There is also a $39 annual fee for this card.
While there’s no rewards program, this card does have the Mastercard Easy Savings program, so you can save on purchases (with automatic rebates) from over 40,000 participating merchants when you use the card for qualifying purchases. Additionally, with this secured business credit card, your credit activity will be reported to the consumer credit reporting agencies, which is important for improving your credit score.
- Potential for a high credit limit
- Access to Mastercard Easy Savings program
- Business management tools
- Up to 50 percent off select QuickBooks subscriptions
- Up to $20 off on TurboTax federal products
- $39 annual fee
- Security deposit is 110 percent of credit limit amount
Who should apply: This secured business credit card is best for applicants who need access to an especially large credit line (subject to credit approval).
Who should skip: Keep in mind this card comes with a 25.74 percent variable APR. If you can’t manage to pay your balance off in full each month, you’ll face hefty interest charges.
Bank of America Business Advantage Unlimited Cash Rewards Mastercard Secured credit card: Best for cash back
Why we picked it: With the Bank of America Business Advantage Unlimited Cash Rewards Mastercard® Secured credit card*, cardholders can work on building their credit history while earning unlimited 1.5 percent cash back on all purchases. To make this card even more appealing, there’s no annual fee, no annual cap on rewards and your rewards will never expire.
Upon approval, your credit line will be equal to your deposit amount. But keep in mind there is a $1,000 minimum security deposit required in order to secure a line of credit.
- Unlimited 1.5 percent cash back on all purchases
- Rewards don’t expire
- No annual fee
- High minimum security deposit of $1,000
Who should apply: This card is best for business owners who can put down the minimum required deposit, don’t want to pay an annual fee and want to earn cash back.
Who should skip: This card also comes with a rather hefty variable APR of 28.24 percent. That means this card is not ideal for cardholders who plan to carry a balance.
The information about the Bank of America Business Advantage Unlimited Cash Rewards Mastercard® Secured credit card was last updated on July 10, 2023.
How to choose a secured business credit card
Before applying for a secured business credit card, review the terms, requirements and benefits. The APR and fees should be reasonable for you. If a card you’re considering offers a rewards program, it should be easy to manage and one that you will use for your business.
Want to build your credit with the three major credit reporting agencies? Make sure the issuer reports to them. Because most business cards review consumer credit reports as a contingency for qualification, making sure your credit file is filled with positive data will be essential for ensuring your options are open in the future.
Additionally, it’s important to make sure you can spare the capital required to secure a line of credit with a secured business credit card. You may not have much cash to put down, and even if you do, you may not want to have your excess cash tied up for a lengthy period of time.
How to use a secured business credit card
When you are creating or repairing your credit history or forming a relationship with the issuer, it is essential that you treat your secured business credit card carefully. Use credit responsibly by following these steps:
- Only charge purchases you can afford to repay. That way, you won’t get started in a cycle of debt or wind up paying a ton of money in interest charges.
- Pay your credit card bill on time, every time. By avoiding late payments, you can prove your creditworthiness and boost your credit score over time.
- Keep your revolving debt to less than 30 percent of your available credit. Keeping your credit utilization below 30 percent (or lower) can also improve your credit score.
In the event you fall behind and cannot make your payments, contact the credit card issuer immediately. You may be able to work out a plan so that you keep the account in good standing. If you do not pay as agreed, the issuer can claim the amount that’s owed from the cash held as the deposit.
With a secured credit card (whether it’s a business or a personal card), the money you put down as collateral will be freed up when you close the account with no balance due. Some credit card issuers will convert a secured account into an unsecured account after you use the card responsibly for a certain time frame, so the security deposit will be returned to you after the transition.
How fast can a secured business credit card build credit?
Secured business credit cards are typically best for business owners with poor credit who want the chance to start rebuilding their credit scores. Business owners should see their credit scores improve over time as long as they use their cards responsibly, and they may start to see positive changes to their scores in as little as a few months.
The bottom line
If you’re a small-business owner with no credit or poor credit, a secured business credit card may be all you can qualify for right now. While secured business credit cards don’t come with the same level of rewards and cardholder perks as unsecured credit cards for small business, they can give you the opportunity to either build or repair credit history or form a valuable relationship with the issuer. After that, you may be able to upgrade to a business credit card that does not require a security deposit, and you can reclaim the money held as a deposit.
*The information about the First National Bank of Omaha Business Edition® Secured Mastercard® Credit Card and Bank of America Business Advantage Unlimited Cash Rewards Mastercard® Secured credit card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.