As a business owner, having bad credit can be a major roadblock when it comes to securing financing. However, there are options available for those with bad credit, and one of the most popular is the business credit card. In this article, I’ll discuss the best business credit cards for bad credit, how to rebuild your credit with a business credit card, and how to use it to grow your business.
A business credit card is a credit card that is specifically designed for use by business owners. Similar to personal credit cards, credit cards allow you to make purchases and pay off the balance over time. However, they also offer additional benefits such as rewards programs, expense tracking, and higher credit limits.
For those with bad credit, getting approved for a business credit card can be a challenge. Bad credit can be caused by a variety of factors such as missed payments, high credit utilization, and bankruptcy. However, there are business credit cards available that are specifically designed for those with bad credit.
Understanding Credit Scores and How They Affect Your Chances of Getting a Business Credit Card
Before we dive into the best credit cards for bad credit, it’s important to understand how credit scores work and how they can affect your chances of getting approved for a business credit card.
Credit scores are a numerical representation of your creditworthiness. They are calculated based on factors such as payment history, credit utilization, length of credit history, and types of credit. The most commonly used credit score is the FICO score, which ranges from 300 to 850.
When it comes to getting approved for a business credit card, your credit score is one of the most important factors that lenders will consider. Generally, a credit score of 700 or higher is considered good, while a score below 600 is considered poor.
Benefits of Using Credit Cards for Bad Credit
Despite the challenges of getting approved for a business credit card with bad credit, there are still many benefits to using one. Here are some of the key benefits:
1. Improved Cash Flow Management
Using a business credit card can help you manage your cash flow more effectively. By using a credit card to make purchases, you can delay payment until the end of the billing cycle, giving you more time to collect payments from customers.
2. Rewards Programs
Many credit cards offer rewards programs that can help you earn cash back, points, or miles for every dollar you spend. These rewards can be used to offset the cost of business expenses or redeemed for travel or other perks.
3. Expense Tracking
Credit cards often come with tools and features that make it easy to track your expenses. This can help you stay organized and keep track of your spending, making it easier to create accurate financial statements.
4. Higher Credit Limits
Credit cards often offer higher credit limits than personal credit cards, which can be helpful for larger purchases or unexpected expenses.
Types of Business Credit Cards for Bad Credit – Secured and Unsecured
When it comes to credit cards for bad credit, there are two main types: secured and unsecured.
1. Secured Business Credit Cards
Secured cards require a security deposit in order to open the account. The deposit is typically equal to the credit limit of the card and serves as collateral for the lender. If you fail to make payments, the lender can use the deposit to cover the balance.
Secured cards are a good option for those with bad credit, as they are easier to get approved for and can help you rebuild your credit over time. However, they often come with higher fees and interest rates than unsecured cards.
2. Unsecured Business Credit Cards
Unsecured credit cards do not require a security deposit and are based solely on your creditworthiness. They often come with lower fees and interest rates than secured cards, but are more difficult to get approved for if you have bad credit.
Best Business Credit Cards
Now that you understand the different types of credit cards available, let’s take a look at some of the best options for those with bad credit:
1. Capital One Spark Classic for Business
The Capital One Spark Classic for Business is a great option for those with fair credit (580-669). The card offers 1% cash back on all purchases and has no annual fee. It also comes with a variety of business tools and features, such as online account management and customized spending controls.
2. Wells Fargo Business Secured Credit Card
The Wells Fargo Business Secured Credit Card is a good option for those with bad credit who are looking to rebuild their credit over time. The card requires a minimum deposit of $500 and offers a credit limit of up to $25,000. It also offers rewards such as cash back or points for every dollar you spend.
3. BBVA Compass Business Secured Visa Credit Card
The BBVA Compass Business Secured Visa Credit Card is another great option for those with bad credit. The card requires a minimum deposit of $500 and offers a credit limit of up to $25,000. It also comes with a variety of benefits such as travel accident insurance and extended warranty protection.
Business Credit Cards for Fair Credit
If you have fair credit (580-669), there are still many credit cards available to you. Here are some of the best options:
1. Capital One Spark Cash Select for Business
The Capital One Spark Cash Select for Business offers 1.5% cash back on all purchases and has no annual fee. It also comes with a variety of business tools and features, such as expense tracking and customized spending controls.
2. American Express Blue Business Cash Card
The American Express Blue Business Cash Card offers 2% cash back on all purchases up to $50,000 per year. It also comes with a variety of benefits such as travel accident insurance and extended warranty protection.
3. Chase Ink Business Cash Card
The Chase Ink Business Cash Card offers 5% cash back on office supply purchases and internet, cable, and phone services, as well as 2% cash back on gas and dining. It also comes with a variety of benefits such as purchase protection and extended warranty protection.
Factors to Consider When Choosing a Business Credit Card for Bad Credit
When choosing a business credit card for bad credit, there are several factors to consider:
1. Fees and Interest Rates
Be sure to compare the fees and interest rates of different cards to find the one that offers the best value. Look for cards with low annual fees and low interest rates.
2. Rewards Programs
Consider the rewards programs offered by different cards and choose one that offers rewards that will be most beneficial to your business.
3. Credit Limits
Choose a card with a credit limit that is sufficient for your business needs. Be sure to consider the deposit required for secured cards.
4. Business Tools and Features
Look for cards that offer business tools and features such as expense tracking and customized spending controls.
How to Rebuild Your Credit with a Business Credit Card
Using a business credit card responsibly can help you rebuild your credit over time. Here are some tips:
1. Pay Your Bills on Time
Make sure to make your payments on time every month. Late payments can have a negative impact on your credit score.
2. Keep Your Credit Utilization Low
Try to keep your credit utilization below 30% of your credit limit. This can help improve your credit score over time.
3. Monitor Your Credit Score
Keep an eye on your credit score and credit report to make sure there are no errors or inaccuracies.
4. Use Your Card Responsibly
Only use your card for business expenses and make sure to stay within your budget. Avoid using your card for personal expenses or unnecessary purchases.
Tips for Using Business Credit Cards to Grow Your Business
In addition to helping you manage your cash flow and rebuild your credit, business cards can also be a powerful tool for growing your business. Here are some tips:
1. Take Advantage of Rewards Programs
Make sure to take advantage of rewards programs to offset the cost of business expenses or redeem for travel or other perks.
2. Use Your Card for Large Purchases
Use your card to make large purchases such as equipment or inventory, and pay off the balance over time.
3. Track Your Expenses
Use the expense tracking tools offered by your card to stay organized and keep track of your spending. This can help you identify areas where you can cut costs and improve your bottom line.
4. Monitor Your Cash Flow
Keep an eye on your cash flow to make sure you have enough money to cover your expenses and invest in growth opportunities.
Credit cards for bad credit can be a useful tool for small business owners who are struggling to establish credit or have had past credit issues. Here are some frequently asked questions and answers:
A business credit card for bad credit is a credit card that is designed for small business owners who have poor credit or who are still building their credit history. These cards typically have higher interest rates and lower credit limits than cards designed for businesses with good credit.
A business credit card can help your business in a number of ways. It can help you build your business credit, which can make it easier to get financing in the future. It can also help you manage your cash flow by allowing you to make purchases and pay bills when you don’t have cash on hand.
The eligibility requirements vary depending on the issuer. Generally, you will need to provide information about your business, such as its legal name, address, and tax ID number. You may also need to provide information about your personal credit history.
When choosing a business credit card for bad credit, you should look for a card with a low annual fee and a reasonable interest rate. You should also look for a card that offers rewards or cash back, as this can help offset the cost of the annual fee.
Let’s say you are a small business owner who has had some past credit issues. You need a card to help you manage your cash flow, but you are having trouble getting approved for a traditional business credit card. You decide to apply for a business card for bad credit.
After doing some research, you find a card that has a $50 annual fee and a 20% interest rate. The card also offers 1% cash back on all purchases. You apply for the card and provide information about your business, including its revenue and expenses.
A few days later, you receive an approval for the card. You start using it to make purchases and pay bills, and you use the cash back rewards to offset the
Conclusion and Final Thoughts
In conclusion, business cards can be a valuable tool for those with bad credit. By choosing the right card, using it responsibly, and taking advantage of rewards programs and business tools, you can manage your cash flow, rebuild your credit, and grow your business. Be sure to compare different cards and consider factors such as fees, interest rates, credit limits, and rewards programs to find the one that best fits your needs.
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