How to Get a Secured Business Credit Card

Secured business credit cards can help businesses establish fundability, get listed with various business credit bureaus, and establish excellent credit scores to qualify for higher credit lines in the future. This guide will detail what a secured business card is, reasons you want one, and how to get one so you can build your business credit faster.

Starting a new business? Visit Divvy to apply for their business credit card and build your business credit quickly.

What Is a Secured Business Credit Card?

A secured business credit card is a credit card where you pay a deposit for a line of business credit. The deposit is usually equal or approximately close to the credit limit extended by the business credit card issuer, the bank.

Here are some more things to know about secured business credit cards:

  • Secured business credit cards otherwise work exactly the same as a traditional business credit card. You use the card to spend money on purchases for your business and pay the card off each billing cycle, usually every twenty-five days.
  • You can choose to pay the balance in full or make a partial payment so long as it is above that minimum payment requirement. If you opt not to pay in full, interest will be applied to your card account, which you’ll be responsible for paying.
  • Like other business credit cards, these secured business credit cards come with interest rates and fees attached. It is wise to know and understand what these fees are before applying for a card.
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Recommended: You’ll need a business before you can start establishing business credit. Learn how to start a business.

Why Should You Get a Secured Business Credit Card?

There are several reasons you should get a secured business credit card. Like with your personal credit report, business credit lines are also reported to various business credit reporting agencies. These agencies rate your creditworthiness in the form of business credit scores. You want to make sure your business credit score is excellent, and one way to achieve this is to have multiple tradelines reported on your business credit reports.

Most new businesses do not qualify for a business credit card when applying with an Employer Identification Number (EIN). The best alternative is to get a secured business credit card.

Here are some reasons you should have a secured business credit card:

  • Earn rewards and other incentives (cash back rewards, airline miles, insurance coverage, etc.).
  • Prove you can manage a secured business credit card, and the issuing bank may extend to you a traditional business credit card in the future.
  • Keep your personal credit separate from your business credit. This helps you maintain the corporate veil, so your personal assets are protected.
  • It helps you show a consistent repayment history. Future creditors are more likely to extend credit to businesses with a history of paying their bills on time, and even better early.
  • Easier to qualify for than traditional credit cards. You can qualify for a secured business credit card even if your personal credit score is below 580.
  • Build and repair your credit by making timely payments and managing your credit well.
  • Putting down collateral is the only difference between a regular business credit card and a secured business credit card. They work the same way.
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Important: Don’t spend more than 30% of your credit line during any given billing cycle. Spending more than 30% may adversely affect your business credit scores.

How to Get a Secured Business Credit Card

Want to know how to get a secured business credit card? It’s pretty much the same process as applying for any other business credit card. The only difference is you’ll need to put down collateral in the form of a deposit.

Here are some steps to help you get a secured business credit card:

  1. Research different secured business credit card offers. We recommend searching online for the card that offers the best rates, the least amount of fees, and the most benefits.
  2. Select a secured business credit card that fits your business needs.
  3. Apply for the card. Usually, this means hitting an “Apply Now” button that will take you to the application page.
  4. Fill out the secured business credit card application. Make sure you fill out the application carefully and completely. Take your time.
  5. Wait for a decision. Sometimes you’ll get an instant response letting you know you’ve been approved; sometimes, it may take some days to receive a notice in the mail. It depends on the credit card issuer, the bank.
  6. Send in your deposit. The bank may require you to send in the money before they issue you the card. Some banks want you to send the deposit after you receive your card.
  7. Start using your card once your card has been activated. The bank will activate it after receiving your deposit. Most banks will provide you with instructions once they issue your card for how to activate the card to make it ready for use. This usually involves calling a toll free number or visiting a website.
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Recommended: Visit Divvy to apply for their business credit card, earn points, and build your business credit quickly.

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Frequently Asked Questions About Secured Business Credit Cards

  • Does a secured business credit card report to the credit bureaus? Yes. Secured business credit cards do report to credit bureaus. It is best to inquire as to which ones they report to before applying for a card.
  • How much of a deposit do I need for a secured business credit card? Deposits vary; however, the minimum secured business credit card deposit is usually $500. We recommend inquiring if you can pay a larger deposit for a higher line of credit. This way, you have more to spend, keeping in mind that it is best to only charge up to 30% of your credit card balance. If your secured business credit card has only a $500 credit limit, you’ll only be able to spend $150 before you reach 30%. If you spend more than 30%, it can negatively impact your business credit score, making it harder for you to get higher credit lines later for your business.
  • How does the deposit for a secured business credit card relate to the credit line? In most cases, the issuing bank for a secured business credit card will match the credit line to the deposit. So if you deposit $500, your credit limit will be $500. It is best to inquire directly with the secured business credit card issuing bank before applying to clarify this point.
  • Is it possible to see a complete fee schedule for secured business credit cards? Yes. Before you apply for the secured business credit card, you can learn about all the fees and terms associated with the credit card. You can request information by phone or view it online in most cases. We recommend you review the fees before applying.
  • When will I get a bill, how long before I have to pay it, and how long before my secured business credit card starts accruing interest? Most billing statements are sent out a few weeks after you get your secured business credit card. Under the CARD Act, you must be given a minimum of 21 days before your bill has to be paid. Most secured business credit card banks will give you a grace period before interest begins accruing on purchases. The grace period is typically the time before your bill comes due. Stay away from cards that begin charging interest on purchases at the immediate time of purchase.
  • Will I get my deposit back if I cancel my secured business credit card, and what’s the process for getting it back? After a year of making your payments on time and establishing good credit, your account will probably qualify for being an unsecured business credit card. You’ll want to inquire about this before applying for the card, and while you’re on the phone, ask how you get your deposit back.
  • What’s the best secured business credit card? The answer to this is subjective. It will depend on your specific business needs. That being said, the best cards are those with fewer fees, higher allowed credit lines, and the best rewards and incentives (e.g., cash back, airline miles, points, travel insurance, concierge service, etc.).
  • What’s the fastest way to build business credit with a secured business credit card? The fastest way to build your business credit using a secured business credit card is to pay your bill early every statement cycle, pay off the balance in full, and use around 20% of your available secured business credit card credit limit. Making payments on time (preferably early) will quickly establish your business credit, giving you access to higher lines of credit and better credit terms.
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Recommended: Learn more about the best small business credit cards.

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