When you have bad credit, it can seem insurmountable and leave you feeling like a pariah. Lenders approach you with caution, and every loan or line of credit comes with nearly impossible terms. How can you grow your business and improve your credit if you can’t get the financing you need?
You aren’t alone. Plenty of successful business owners have launched their companies with bad credit. Often these business owners choose the flexible financing solution of a business credit card.
What Are Business Credit Cards?
In many ways, a business credit card operates like a personal credit card. You are approved for an account that has a spending limit and issued a card that you can use for both major and minor purchases.
At the end of each month, you need to pay off what you spent or at least pay the minimum amount to stay in good standing with the card provider. When you can’t pay off your cards, you accrue interest ( money that you owe the credit card company because of your debt).
Many companies use business credit cards for day-to-day expenses. They will cover small costs like employee travel per diems or monthly software subscriptions. The money from a business credit card is easy to access, and you can typically find flexible payment solutions through the card’s app or online portal.
Why People With Bad Credit Could Use Credit Cards
A business credit card is a viable financing solution for any entrepreneur. You don’t need a large business to take out a commercial credit card, and you may get approved even if you’ve just started your venture.
There are several benefits of opening a business credit card:
It is Easier to Qualify for a Business Credit Card
Credit cards are typically easier to secure than loan funding. While lending marketplaces like Lendio can help you find a small business loan than meets your needs, some lenders are warier of people with bad credit. With a small business credit card, you can get approved faster, though your spending limit might be lower or your interest rate higher. These caveats help the credit provider mitigate the risk of offering credit to someone with a lower credit score.
Business Cards Typically Have Higher Limits
If you are worried about a low spending limit with your business card, evaluate your company profits and assets before applying for a card. Many business credit cards have higher spending limits than personal cards because they are based on a company’s assets and revenue. This spending flexibility makes it more useful to business owners, especially those who need to pay vendors or make large purchases.
Business Credit Cards Help You Build Up Credit
Having a credit card is an important tool for building up bad credit. Within 30 days, you have an opportunity to show credit providers that you can repay your debts. By continuously paying your debts over time, you can heal your credit and start to qualify for more favorable card terms and business loans in the future.
These Cards Have Valuable Rewards and Incentives
Like personal credit cards, business cards offer incentives to get people to sign up. You might be able to find a card that offers cash back on your purchases to help you save (and to make paying off your balance easier) or a card that helps you build travel rewards for when you attend client meetings in a different state. These earned rewards are unique to credit cards and don’t come with other loan types.
Bookkeeping Is Easier Around Tax Time
Tax season is typically incredibly frustrating for small business owners. You need to sort through hundreds of expenses, invoices, and charges for the deductions you deserve. A business credit card can simplify this process. If you centralize your spending in one place—your business credit card—then you can quickly organize all your expenses and streamline your tax filing.
What Should You Look for in a Good Business Credit Card?
Once you decide to pursue a business credit card for your company, you can start shopping around for the best business credit card for your needs.
There are a few key factors to consider when comparing business credit cards:
- A low annual fee: Look for cards that offer no annual fees or low fees covered by other perks. This bonus can save you a lot of money over time.
- 0% APR introductory period: This period will prevent you from accruing interest and is a valuable tool if you want to consolidate and eliminate your debt over the course of a year.
- Specific perks: Decide whether you want cash back, points, or rewards for travel, marketing, or other expenses.
- Employee access: How can your employees use the card? Will your card provider issue multiple cards for your business?
- Beneficial reporting: Some credit providers report payments to both commercial and personal credit bureaus. Determine which option is best for building your credit.
- Consumer protections: Certain consumer protection laws don’t apply to small business credit cards. Consider looking for a card that offers the security you need.
With the right priorities in mind, you can easily comparison shop to find a business credit card that will improve your poor credit.
5 Cards to Consider Using for Your Business
While shopping for the best business credit card, you’ll find dozens of viable options. However, you need to know what you value and what actually constitutes a good deal. Consider a few of our frequently recommended cards and the bonuses they offer.
1. Blue Business Plus Credit Card from American Express
This credit card is ideal for business owners with bad credit because it offers a 0.0% introductory APR for 12 months and no annual fees. These features give you a year to build up your company’s revenue to the point where you can pay off the card in full each month.
The Blue Business Plus Credit Card from American Express is a basic card that doesn’t offer any introductory awards, but it’s optimal for small businesses that won’t rack up a significant number of charges. This card has been named Lendio’s choice for the best overall business credit card.
2. The Business Advantage Cash Rewards Mastercard Credit Card
If you are looking for a card that offers favorable cashback terms and helps you quickly earn rewards, consider the Business Advantage Cash Rewards Mastercard. Bank of America will give you a $300 statement credit if you make $3,000 in purchases over the first 90 days.
This card is optimal for launching a business with significant startup costs. You can also earn 1–3% cash back on most purchases, including travel, online shopping, gas, and dining. The best part is you can choose which category earns the 3% cash back, so the reward is optimized for the purchases you make most frequently.
3. Bank of America Platinum Plus Mastercard Business Card
The Bank of America Platinum Plus Mastercard makes our list because it has no annual fees and there is a 0% APR for the first 7 billing cycles. Once the promotional period ends, you can expect to pay an APR of 11.74–22.74%. Because this card is associated with Bank of America, you can also enjoy the $300 statement credit if you make $3,000 in purchases over the first 90 days mentioned above. This card has the biggest signup bonus available without annual fees.
4. Amazon Business Prime American Express Card
The Amazon Business Prime American Express Card was one of Lendio’s top picks for low-interest business credit cards. There is no 0% APR introductory period, but you will only have to pay 15.74–23.74% depending on your credit score.
Also, there is no annual fee for this card if you are a member of Amazon Business Prime, which costs $179, but Amazon will send you a $125 Amazon gift card upon approval to offset the costs. You can also opt for a 90-day interest-free repayment term for Amazon purchases, which includes Whole Foods.
5. Chase Ink Business Preferred Card
While the Chase Ink Business Preferred Card has a $95 annual fee, it also boasts a few unique benefits that may make you consider this option. Chase formed a partnership with Facebook to offer 3x the points on Facebook and Instagram advertising, which are popular platforms for growing businesses.
If you operate a business that needs promotion—specifically on social media—this could be the best card for you. Additionally, business owners get an 80,000-point signing bonus if you spend $5,000 in the first 3 months. You can also request employee cards at no cost as you grow your team.
If you feel overwhelmed by your credit card options or want a second opinion on which ones are right for you, we can help. Check out Lendio’s page on business credit cards, which should provide you with the information you need. You can also read specific reviews about cards on our blog, where you can find objective, well-researched content on the current options on the market. We are here to help you make the best choices for your needs.