A secured business credit card is a popular tool used to establish and strengthen the credit history of a business.
In this article, we’re going to share everything you need to know about a secured business credit card, including an alternative option to access unsecured credit cards for your business.
This article is part of our free series on how to apply for credit cards in the US, including how to get a US credit card with an ITIN number, which you can access here.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Secured Business Credit Card
- What Are the Benefits of Secured Business Credit Cards?
- Features to Look For in a Secured Credit Card
- How to Apply for a Secured Credit Card for Your Business?
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
Secured Business Credit Card
A secured business credit card is one path to establishing a credit history and a credit score for a business. Approval requires the business to put up collateral in the form of a deposit requirement, which is then held by the financial institution issuing the card.
Unlike an unsecured credit card, a secured credit card application does not require the business to have a credit score. Instead, it is a form of business financing that is backed by a guarantee.
That said, secured credit cards typically have a low credit limit and do not have access to lucrative benefits like an attractive rewards program. For these reasons, they are often referred to as small business credit cards.
Of course, interest rates are still applied to any outstanding balance. So, business owners should responsibly use and repay the cards in line with the terms and conditions that they agree to.
Depending on your credit card goals, having multiple credit cards might be beneficial, which you can learn more about by accessing our free article linked here.
What Are the Benefits of Secured Business Credit Cards?
There are a number of benefits of secured business credit cards, especially for small businesses that are newly formed and have yet to establish credit. These benefits include an increased chance of being approved since they do not require a credit history, low (or no) fees, and the ability to establish and strengthen the business’ credit history.
Here is a closer look at the benefits of secured business credit cards.
Benefits of Secured Business Credit Cards
- Increased chance of approval
- Building credit for the business
- Low-cost path to establishing credit
- This leads to unsecured credit when used responsibly
- Ability to complete transactions online
Of course, not all secured business credit cards offer the same benefits. So, when deciding which credit cards to apply to for your business, you should make sure that the specific features that you want are being offered.
With this in mind, here is a look at some of the most important features that businesses can benefit from with a secured card.
Features to Look For in a Secured Credit Card
The following features are commonly referenced as being the most sought-after by business owners. If there are other features that you think we should add to the list, please let us know.
Low Credit Card Fees
One of the main features to look for in a secured business credit card is a combination of low fees. This includes the fees for using the card (especially when making international purchases) and the annual fees for obtaining and maintaining the card. Fortunately, there are several secured credit card options that exist that do not have any fees at all.
Credit Card Points
There are several secured credit cards that offer reward points. This includes points that the card issuers offer as a sign-up offer as well as points that are earned through spending. That said, the card points that a business can earn with a secured card are often not as attractive as those available with an unsecured card.
Business Travel Rewards
In addition to standard credit card points, certain credit cards also offer business travel rewards. Depending on the card, this can include benefits like extra points on travel-related purchases, insurance on certain travel purchases, and the ability to use points towards travel.
High Credit Limit
Most secured credit cards do not offer businesses a high credit limit. This is because secured credit cards have credit limits that are tied to the security deposit left with the financial institution. Not surprisingly, most businesses do not want to tie up their deposits with a financial institution for the long term. So, they typically opt to make smaller deposits.
Other Credit Card Perks
Of course, there are a number of other card perks that businesses can access with the right card as well. With this in mind, it’s important to compare all of the secured cards that your business can qualify for before deciding which card to apply for.
How to Apply for a Secured Card Card for Your Business?
As mentioned, the first step in applying for a secured credit card is deciding which credit card you want. This requires an assessment of both your business requirements, each credit card’s eligibility criteria, and the fees involved.
Of course, each card will differ in terms of eligibility. However, there are standard requirements that all secured credit cards do look for in an applicant. With this in mind, here are the common requirements that owners should expect when applying for a secured card for their business.
Requirements for Applying for a Business-Secured Credit Card
- Company name
- Proof of company address
- Annual revenue
- Employer identification number (EIN) of the company
- Social security number (SSN) of the applicant
- Security deposit (if applicable)
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Frequently Asked Questions
Below are five of the most common questions we receive from people looking into this topic. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
What Is a Secured Business Credit Card?
A secured business credit card is a card that requires a business to make a security deposit with a financial institution prior to approval. The credit limit of the card is then set to the amount of the security deposit, which acts as a guarantee of repayment. These cards help a business establish and strengthen its credit history.
Will a Secured Business Credit Card Help Build Business Credit?
Yes, a secured business credit card will help build business credit. In fact, building and strengthening credit history is one of the main reasons that owners get a secured credit card for their business. That said, the card must be used responsibly and the balance must be paid off on time.
Can I Get a Secured Credit Card for My Business?
Yes, you can get a secured credit card for your business as long as you are willing to make a secured deposit and leave that deposit with the bank for the duration of the card. If you are willing to do this, you will be able to get a secured card for your business with most major financial institutions in the United States.
Are Secured Business Credit Cards Worth It?
Secured business credit cards can be worth getting if you would like to establish credit history for your business separate from your own credit history. This can offer a number of benefits, including the ability to earn an increased number of credit card points, the ability to apply for and obtain more credit cards, and a way to transact for your business both online and in person.
What Banks Offer Secured Business Credit Cards?
Many of the major banks in the United States offer secured business cards, including Bank of America, Discover, Capital One, First National, and more. As always, in order to decide which card is best for your business, you should compare all of the requirements, fees, and features of each card.
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