Best Business Credit Cards for Bad Credit

Written by: Zach Johnson

Starting a company can be a risky business.  Especially when it comes to finances.  Few owners start out with a big pile of cash or major venture capital funding.  Most will face a broad range of challenges that can tank their credit score and put a severe pinch on a company’s ability to grow -- or even survive.

Issues that can crater your company’s credit

  • Limited or Inconsistent Cash Flow

    You’re making sales, but not enough to cover all your expenses or you’re crushing it in Q4 but the rest of the year, sales are flat.  In the meantime the bills keep coming in.

  • Not Using a Budget

    It’s easy to get in financial trouble fast if you don’t know what you’re expenses are.  Figuring out upfront what you expect to have to spend to keep the lights on every month is essential.

  • No Preparation for Unforeseen Expenses

    Everything is going along fine and then your laptop dies. The furnace in your workshop blows up. Or the cost of energy drinks to stock your cool company kitchen suddenly skyrockets. If you don’t have at least a small cash cushion set aside, you could be in instant trouble if something happens.

  • Not Raising Enough Capital

    While it’s tempting just to dive in on a venture without raising much money, it isn’t wise.  If you have cash upfront to pay for things like office equipment, furniture, and initial inventory, you won’t have to take the risk of financing the cost.

  • Too Much Debt

    See “not raising enough capital” above.  Taking out loans to start your business immediately puts you in the hole. Carrying a lot of debt once you’re established eats into your profits and can prevent you from scaling.

  • Neglecting Necessary Reporting

    Like not having a budget, to begin with, not tracking sales, cost of goods, and expenses can lead you into a blind alley of financial woes.

  • Poor Tax Compliance

    Neglecting to charge sales tax, miscalculating quarterly estimated taxes, or failing to file on time can financially catch up to you in very damaging ways.  And while you can sometimes put off creditors, you can’t put off the government.

  • Not Paying Bills on Time

    Whether you’re delaying because you’re waiting for an invoice to be paid to have the cash to pay on time, or you’re just not on top of your accounts payable schedule, late or missed payments can trigger extra charges and damage your credit score.

So you’ve gotten yourself in a financial jam and your credit score is in the toilet -- below 640. If you’re not planning to close up shop and quit, you’re going to need some kind of financial instrument to help you get back on track.

Business credit cards for bad credit are credit cards designed for small business owners who personally have bad credit.  Unfortunately, right now, there are very few business cards available to new applicants.

The good news is that there are personal credit cards for business owners with bad credit that WalletHub has selected from among  1,500+ business and consumer credit card offers because of their reasonable approval requirements and solid terms.

Secured?  Or Unsecured?

When it comes to credit cards, there are two main types: secured and unsecured. Secured credit cards can be great for business owners with bad personal credit as they give you control over your limit while also being low-cost when compared to most other options out there.

In addition, unlike an unsecured card where the bank takes on all responsibility in case of a purchase not made from money that belongs to you or someone else who is responsible for repaying debts incurred by those purchases, even if this happens with cash advances using a secured card – which typically means borrowing against your own equity -you will still have some protection because these loans come at high-interest rates.

Secured credit cards also report information to the major credit bureaus like Experian, Equifax, and TransUnion each month. So on-time payments will help you build the kind of credit needed to qualify for a really good business credit card down the road

Here are WalletHub’s top picks.

Business Rewards Visa -- Secured

The Business Rewards Visa requires a minimum opening deposit of $500. Your available credit will be 90% of your savings account balance.  You can add funds to your account to increase your credit limit.

Min Deposit of $500

One-Time Fees:  None

Regular APR:  16.24% (V)

Annual Fee:  $0 1st yr, $40 after

Monthly Fee:  None

Rewards Rate

1.5 points / $1

Unsecured offer for Business

The Credit One Bank® Visa® Credit Card gives users a $300 initial spending limit, with no security deposit needed, in return for up to $99 in annual fees. It also offers cashback rewards and monthly credit-bureau reporting.

One-Time Fees:  None

Regular APR:  17.99% - 23.99% (V)

Annual Fee:  $0 - $99

Monthly Fee:  None

Rewards Rate:  0 - 1% Cash Back

The Discover it® Secured Credit Card has a $0 annual fee and offers good rewards on purchases (1% to 2% cashback) and doubles the rewards cardholders earn the first year.  The minimum deposit of $200 is on the low end for a secured credit card.

Min Deposit of $200

One-Time Fees:  None

Regular APR:  22.99% (V)

Annual Fee:  $0

Monthly Fee:  None

High Approval Odds for Business Owners --  Secured Credit Card

The OpenSky Credit Card is a good choice for business owners who have a low credit score who want high approval odds more than they want rewards. There is no credit check for new applicants. The OpenSky Card’s main benefit is the chance to build credit at a reasonable cost of the card’s $35 annual fee.

Min Deposit of $200

One-Time Fees:  None

Regular APR:  17.39% (V)

Annual Fee:  $35

Monthly Fee:  None

Bottom Line?

According to WalletHub, the best business credit card for bad credit is the BBVA Compass Secured Visa® Business Credit Card because it has a $0 annual fee the first year ($40 after that) and rewards cardholders with 1.5 points / $1 in purchases. The BBVA Compass Business Secured Card’s APR - 16.24% (V) - also is below-average for a secured credit card.

But business owners should always consider both business and personal credit cards for company spending. Doing so increases your chances of finding the best possible deal without adding to your personal liability. So, two of the rest of the best credit cards for business owners with bad credit are Discover it® Secured Credit Card (best bad-credit rewards) and the OpenSky® Secured Visa® Credit Card (no credit check when you apply).

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