Secured Small Business Credit Cards

From LoveToKnow Creditcards

If you are looking to establish or re-establish your business credit, secured small business credit cards may be for you. There are differences between an unsecured credit card and a secured credit card as well as other credit options. Read on before you apply for a secured credit card.

An extension of business credit.

Secured Small Business Credit Cards

Fees

Secured small business credit cards usually require the cardholder to open a special savings account and make a specific minimum deposit before the credit card can be issued. Some secured cards will only extend credit that is equal to the amount deposited into the account. There may also be higher rates and fees associated with a secured business credit card account such as:

  • Application fees
  • Higher interest rates
  • Annual fees

Benefits

By using a secured small business credit card, you may be eligible for certain benefits not offered to people with personal secured credit cards. Benefits for small business owners may include:

  • Protection from unauthorized transactions
  • Theft and damage coverage
  • Extended warranties on business equipment
  • Discounts offered through the credit card issuer
  • Travel insurance
  • Auto rental insurance
  • Spending reports
  • Overdraft protection

Secured Credit Card Companies

The following companies offer secured credit cards to consumers which can be used by small business owners looking to establish or re-establish their credit:

Why Apply for a Secured Card?

The owner of a small business may have poor credit or they want to establish credit for their business. A poor credit rating or a lack of credit history can affect a person’s ability to get the credit they need. A solution for this is to open a secured credit card account.

A small business that has suffered financial setbacks that required them to settle accounts or declare bankruptcy may find themselves needing credit again once they are back on their feet. A secured account can help them re-establish their credit.

A secured card may not be the solution for every small business, but it is a way to establish or re-establish credit.

Alternative Options to Secured Credit Cards

A small business owner may need credit for a variety of reasons:

  • To buy business equipment
  • To pay for business trips and other business expenses
  • To easily track expenses

There are other ways to get credit. These options may have lower fees than a secured credit card, and should be explored before applying for a secured credit card.

Starter Business Credit Cards

Starter unsecured cards are perfect for new small business owners that have good personal credit. Many credit card companies are willing to open business accounts for people in this situation. The following companies offer starter unsecured business credit cards:

Converting Existing Personal Accounts

Individuals that have just started their small business and already have established credit with a credit card issuer may ask that issuer to open a business account for them. In most cases, if that credit card issuer has a business division, they are willing to either open a new account for the business, or convert the existing personal account into a business account.

Conclusion

Small business owners should consider all of their options before opening a secured credit card account. Secured accounts may have higher fees than other small business credit cards, and in most cases they can tie up your cash flow because they require cash deposits to cover your credit line.

Business owners that have good credit should consider opening new accounts with credit card issuers that offer perks for small businesses. These starter accounts usually have competitive rates, good benefits and company discounts for their card members.

Individuals that already have accounts in good standing with their credit card issuer may inquire if they can open a business account or convert their existing account into a business account. This will usually save the business owner application fees and it may ensure they get the best rates available..

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Comments

Richard, you are correct that it is not easy to find secured business credit cards in today's economic climate. There are, however, some lenders still offering this product. You can find links to two of these lenders in the comment below yours. Thank you for your comment and for visiting LoveToKnow Credit Cards.

-- Contributed by: Tamsen Butler

Stop telling people they can get a secured business credit card. Show me specifically where and I'll eat YOUR hat... B/A, wells fargo do NOT offer secured biz cards

-- Contributed by: Richard

Steve,

No. And, in fact, in the current (1/2009) credit tightening by banks, these cards do not seem to be available. Many card issuers have discontinued credit cards such as secured cards which are designed for those with less than average credit scores. If you need a secured card, you might need to go with a card like the Millenium Bank Secured Card or the Applied Bank Secured Card.

-- Contributed by: SusanWeber
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