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- As a business owner, it's important to understand what your personal liability is when taking on any kind of debt on behalf of your company.
- Business credit cards without personal guarantees can offer an appealing level of protection, but getting one isn't always easy.
- If you aren't able to get a business credit card with no personal guarantee, there are several other alternatives that can help you manage your business and personal finances responsibly.
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Business credit cards are valuable tools for managing company purchases, and you can come out ahead with the wide variety of rewards and perks many of these accounts offer. However, most business credit cards require a personal guarantee as a condition for opening the account, which makes you personally responsible for all payments and any resulting debt.
Like all lenders, credit card issuers want to mitigate risk. A personal guarantee provides a measure of assurance to the issuer that the cardholder will handle the account as per the agreement. In this way, the guarantee acts as a type of insurance policy; if you fall behind on payments and default on the debt, the credit card issuer can attempt to collect the debt.
If that prospect makes you uneasy, you may want to consider business credit cards with no personal guarantee. Your options will be far more limited and the qualifications will be more stringent, but a few cards like this do exist.
Here’s what you need to know about the best business credit cards currently available that do not require personal guarantees.
Best no-personal-guarantee business credit cards
Here are the best “no PG” business credit cards that are currently available:
SVB Innovators Card: Best for fast-growing companies
Silicon Valley Bank (SVB) — now a division of First Citizens Bank — offers the SVB Innovators Card* with early-stage companies in mind. To qualify for the card, you’ll need a business banking account with SVB. In addition to not requiring a personal guarantee, there’s no annual fee or fee for cards you want to distribute to your employees. It’s also important to note that this is a charge card, not a credit card. You’ll need to be able to pay your balance in full by the due date, though you won’t incur interest charges or be subject to an APR because you won’t be revolving any debt.
The SVB Innovators Card comes with a business rewards program, too — you’ll earn 2X points for every dollar you spend, and you can redeem points for statement credits.
Brex 30 Card: Best for significant rewards
Not only does the Brex 30 Card not require a personal guarantee, but it also comes with an outstanding rewards program. Cardholders can earn 8X points for payments made daily and up to 7X points on eligible purchases with monthly payments. Like the SVB Innovators Card, the Brex 30 Card is a charge card, so you can’t revolve balances. There are also no hidden fees and no annual fee.
In place of a personal guarantee, however, you’ll need to link your card to a corporate bank account (with a minimum of $50,000) to serve as a security deposit. Your card’s credit limit will be determined by the amount you hold in that account and your spending patterns.
Ramp Corporate Card: Best for flat rewards
The Ramp Corporate Card*, which is also a charge card, doesn’t require a credit check or personal guarantee. It also comes with no fees of any kind, such as annual fees, foreign transaction fees or setup fees. Plus, you’ll get unlimited physical and virtual cards, all of which can be monitored or locked in real time.
The Ramp Corporate Card earns a flat 1.5 percent cash back on all purchases, making it best suited for business owners who don’t want to keep track of bonus categories or worry about meeting certain requirements to earn rewards.
Office Depot OfficeMax Business Credit Account: Best for carrying a balance
With the Office Depot OfficeMax Business Credit Account*, you’ll get $50 off your first purchase of $150 or more (if made within 60 days of account opening), which will be applied as a statement credit. Although this card doesn’t offer rewards, you can earn 2 percent back on select items, including office supplies, furniture and technology, with an Office Depot OfficeMax Rewards membership.
Additionally, this is a credit card and not a charge card, which can help when cash is tight and revolving a balance is necessary. There is also no annual fee and the APR will range from 20.80 percent to 29.99 percent non-variable. Lastly, it’s important to note that this is a closed-loop card, meaning that it can only be used at Office Depot OfficeMax stores.
How to qualify for business credit cards with no personal guarantee
Generally, your business will need to be well established and have an EIN to qualify for a business credit card with no personal guarantee. This is because these types of cards are usually corporate cards. Corporate cards generally don’t require personal guarantees because they are issued to a company rather than to an individual. As such, they are developed for incorporated businesses, such as LLCs, S corps and C corps, and not developed for small-business owners who might be individuals or sole proprietors.
In place of a personal guarantee or a personal credit check, a business card issuer may protect its interests in other ways. You may have to open a deposit account with the bank or link a bank account to your card and keep a certain amount of money in the account. Although not technically a security deposit, the cash in the account underwrites the business card’s line of credit. Or, you may have to demonstrate that your business is profitable and has an especially high monthly or annual revenue stream.
How to minimize personal liability with a business credit card
Choosing a no-personal-guarantee business credit card is the best way to minimize your personal liability for your business’s debts. However, if you aren’t eligible for one, the amount of money you’ll be responsible for if you default on a business card with a personal guarantee depends mainly on the type of personal liability clause you agreed to:
- Limited liability: The issuer can collect on a set dollar limit.
- Unlimited liability: The issuer can collect on the entire amount due, plus financing and legal fees.
If you’re in the market for a new business credit card, opting for one with a limited personal guarantee — rather than unlimited liability — may offer some degree of protection. And if you already have a business card, the type of liability clause that’s attached to your personal guarantee should be outlined in your contractual agreement.
Of course, you can also minimize the amount you would be responsible for by staying in control of your account. Avoid surprises by paying your bills on time and in full, halting all charges when you cannot pay the minimum requested payment and checking your balance frequently.
If your employees have cards connected to the account, review their charges. Many issuers allow primary cardholders to set lower charging limits or locks on employee cards, so take advantage of those features if they’re available.
Are business credit cards with no personal guarantee worth it?
When comparing business credit cards, no-personal-guarantee options may be attractive if you don’t want to be personally liable for business debt. While the credit card company may be able to sue your business for unpaid credit card debt, your personal assets would be kept separate and protected.
There are several downsides, though. Business credit cards with no personal guarantee are typically unavailable to sole proprietors, and meeting the additional requirements (such as minimum account balances or revenue streams) can be challenging. In general, there are few business cards available without a personal guarantee, and they often offer fewer perks and rewards than other business cards, too.
Alternatives to consider
If you’re unable to qualify for a business credit card with no personal guarantee, you may want to consider some of the top business credit cards on the market. These cards are generally a better fit for small businesses. They usually require good to excellent credit, along with a personal guarantee, but they often come with incredible perks and rewards.
In particular, you’ll want to look for rewards that will get you the most points or cash back for the spending you’ll be doing for your business. If you can’t qualify for a business credit card, you may find that a personal rewards card works better for your business, at least at first. As your business grows, your expenses may also grow, in which case you may want a card with a higher spending limit and benefits that suit your evolving business.
Even if your credit score is low, you’ll have options — but you should probably start with one of the best business cards for people with bad credit. Once you’ve established a track record for paying your balances on time, you can apply for an upgrade and start getting better rewards and perks for your business.
If you haven’t yet established credit, you may want to consider one of the best secured business credit cards. With a secured card, you put down a cash deposit as collateral for the credit line. Secured business cards tend to offer fewer benefits and rewards for your business than unsecured cards, but they can help you build a positive credit history for your business. Pay your balances responsibly for at least six months, then consider asking your card issuer if you qualify for an unsecured card.
Note that if your business is brand new, your consumer credit scores are more important than your business credit. Banks will look at your personal score to decide whether or not you’re eligible for loans and credit, and what the terms will be. When applying for your first business credit card, assume the same rules apply for credit scores as for personal cards — the better your score, the better the card.
Once you’ve established your business, a different kind of credit comes into play. Business credit reports and scores are similar to consumer credit scores, but somewhat more complex and designed to reflect your company, rather than you as an individual.
Unless you have a card that specifies no personal guarantee, like those described above, the answer is yes. You are personally liable for any balance you run up on a business credit card. But even cards that don’t require personal guarantees have requirements. Most require you to incorporate your business in order to qualify, or open a business bank account with funds that will dictate the limit of your credit line, as with the SVB Innovators Card.
With a no-personal-guarantee business credit card, the business owner won’t be held personally liable for a business’s failure. That means the lender will not be able to collect the business owner’s personal assets if the business fails to pay its bills.
No — it’s a part of the application process. If you apply for a business credit card with a personal guarantee — which is included with most business cards, unless otherwise stated — you are agreeing to be held personally liable for payment when you submit the application.
A lender will generally enforce a personal guarantee in the same manner that it would handle any debt — it’ll take you to court.
*All information about the SVB Innovators Card, Ramp Corporate Card and Office Depot OfficeMax Business Credit Account has been collected independently by Bankrate and has not been reviewed or approved by the issuer.