There are plenty of reasons to pick up a dedicated business credit card, and they extend well beyond the rewards you can earn. Business credit cards help you separate personal and business spending, which can be immensely helpful when it comes to getting your business expenses organized for taxes each year. Many of the top cards for business also offer important consumer protections and travel benefits, which you can take advantage of just for being a cardholder.
Since business credit cards require good credit, however, not everyone can qualify for the best offers. In fact, business owners with poor credit or limited credit history often have to start their journey with a secured credit card that requires a cash deposit as collateral.
Bankrate’s picks: Best secured business credit cards for 2021
While secured credit cards for business tend to come with fewer benefits, they can help you secure a line of credit and build valuable credit history. The best small business secured credit cards of 2021 are featured below.
- Wells Fargo Business Secured Credit Card: Best for high credit limits
- BBVA Compass Business Secured Visa Credit Card: Best for earning rewards
- Discover it® Secured Credit Card: Best secured card for freelancers
Wells Fargo Business Secured Credit Card: Best for high credit limits
The Wells Fargo Business Secured Credit Card really stands out due to the high credit limit you can enjoy if you’re willing to put down enough collateral. Business owners who sign up for this card can get a credit limit between $500 and $25,000 with no annual fee required.
Cardholders also get the chance to earn rewards on their spending. Specifically, you can earn 1.5 percent cash back, or 1 rewards point per $1 spent and 1,000 bonus points when your company spending equals $1,000 or more in any monthly billing period. Note that this card doesn’t charge foreign transaction fees, and that you can get employee cards for up to 10 employees.
Also, keep in mind that the Wells Fargo Business Secured card can help you build up your business credit score but not your personal credit score. Wells Fargo fine print says that they report your payment and usage behavior to the Small Business Financial Exchange. However, they do not report your credit movements to the consumer credit bureaus.
BBVA Compass Business Secured Visa Credit Card: Best for earning rewards
The BBVA Compass Business Secured Visa Credit Card lets cardholders earn lucrative rewards on their spending. Once you sign up, you’ll earn a flat 1.5X points for each dollar you spend, which you can redeem for statement credits or gift cards.
You can secure your line of credit with a minimum deposit of $500, although you can put down a larger deposit in increments of $100. Note that the money you put down to secure your line of credit will be set aside in a savings account with the bank. From there, you’ll be able to access up to 90 percent of your savings account balance (which you may add to at any time) as a line of credit you can use for business purchases or supplies.
This card does charge a $40 annual fee after the first year, but you will get perks like free employee cards, auto rental collision damage waiver, purchase protection against damage or theft, travel accident insurance and extended warranties.
Discover it® Secured Credit Card: Best secured card for freelancers
The Discover it® Secured Credit Card isn’t a business credit card per se, but it is a secured card option that can work well for freelancers who can apply for a business credit card as a sole proprietor. This card doesn’t charge an annual fee, and you can secure your line of credit with as little as $200. Interestingly, this card also comes with no foreign transaction fees, no over-the-limit fees and no late fee on your first payment, After that, up to $40.
Rewards enthusiasts will also be happy to know the Discover it® Secured Credit Card lets you earn cash back. Cardholders get the chance to earn 2 percent on the first $1,000 spent at restaurants and gas stations each quarter (then 1 percent), as well as 1 percent back on all other purchases. Discover will also match all the rewards you have earned after the first 12 months of card ownership.
Benefits of using a secured business credit card
- Secured business credit cards can help you build credit. If you cannot get approved for a traditional unsecured credit card, then a secured credit card could be the easiest path to building credit. If you want to make sure your personal credit score has the change to improve, just make sure you select a secured business credit card that reports your credit movements to the three credit bureaus—Experian, Equifax and TransUnion.
- You get the chance to earn rewards on your spending. While small business secured credit cards require you to put down a deposit, you get the chance to earn rewards for each dollar your business charges. These rewards can add up to substantial sums over time, and you can usually redeem them for statement credits or gift cards.
- Learn to use credit wisely. Finally, a business secured credit card can help you build positive credit habits. You’ll learn how to make charges you can afford to pay off, then how to pay your credit card bill early or on time each month. With enough responsible use, you may build up your credit enough that you can upgrade to an unsecured credit card.
Downsides of secured business cards
The biggest disadvantage of business credit cards for bad credit is the fact that you have to secure your line of credit with a cash deposit. This means that, if you want to be able to access $5,000 in available credit, you’ll typically need to put down a cash deposit of at least that much.
Many business owners don’t have that kind of cash to put down, which is understandable. If you’re short on cash, it may be smart to sign up for a secured credit card that only requires a small deposit. This way, you can still build credit with small purchases, access cardholder benefits and earn rewards on your spending.
Is a secured business credit card worth it?
Business owners should consider a secured business credit card if they want some of the benefits of credit but they cannot qualify for a traditional business credit card. Secured credit cards for business don’t come with the same level of rewards and cardholder perks, yet they do give cardholders the chance to build credit so they can have the opportunity to upgrade to a better business credit card later on.
Secured business credit card FAQ
The following questions and answers can help you learn more about secured credit cards for business owners.
Which credit card issuers offer secured business cards?
Wells Fargo and BBVA Compass both offer secured credit cards for business. Still, you should note that there are some business credit cards available for individuals with “fair credit,” including the Capital One Spark Classic for Business.
Also, be aware that plenty of other card issuers—including Citi, Capital One and Chase—offer secured credit cards for individuals. While personal secured credit cards aren’t geared to business owners, they can help you build credit and earn rewards on your personal spending.
Do business secured credit cards report to credit bureaus?
Most business secured credit cards will report to the credit bureaus, although there are exceptions. For example, the Wells Fargo Business Secured Credit Card does not report your credit movements or payments to Experian, Equifax or TransUnion.
Do secured business credit cards report to D&B?
The Wells Fargo Business Secured Credit Card reports your credit balances and payments to Dun & Bradstreet. This card is available with no annual fee, and you can secure a line of credit in amounts up to $25,000.
The bottom line
Business owners with poor credit may not have a ton of options when it comes to getting a credit card, yet secured credit cards for business are easy to qualify for. If you decide to give one of these cards a try, do your best to charge only what you can afford and pay your bill early or on time each month. With enough responsible credit use and some time, you may boost your credit score enough to qualify for a better credit card.
The information about the Wells Fargo Business Secured Credit Card, BBVA Compass Business Secured Visa Credit Card, and Capital One Spark Classic for Business has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.