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The Official Way to Get Business Credit Cards for New Business

Published By Janet Gershen-Siegel at December 6th, 2018

The Secrets to Get Business Credit Cards for New Business

Business credit cards for new business can be yours. But first, let’s delve into business credit lines.

Credit Lines

A credit line, or line of credit (LOC), is an arrangement between a financial institution or a private investor and a debtor which sets a maximum loan balance which a borrower can access.

A borrower can gain access to funds from their line of credit anytime, as long as they don’t exceed the maximum set in the agreement, and so long as they meet all other requirements of the bank or investor including making on time payments.

Benefits

Credit lines provide many unique benefits to borrowers including versatility. Borrowers can utilize their line of credit and merely pay interest on what they use, compared to loans where they pay interest on the full amount borrowed. Credit lines can be re-used, so as you acquire a balance and pay that balance off, you can use that available credit again, and again.

Credit lines are revolving accounts similar to credit cards, and compare to other types of funding such as installment loans. Frequently, lines of credit are not secured, much the same as credit cards are. There are some credit lines which are secured, and because of this easier to qualify for

Popularity

Credit lines are the most commonly sought after loan type in the business world even though they are popular, real credit lines are few and far between and tough to find. Many are also very difficult to qualify for requiring good credit, good time in business, and good financials. But there are other credit cards and lines that few people know about that are attainable for startup companies, bad credit, or even if you have no financials.

The SBA

Many credit line varieties which most entrepreneurs think of come from standard banks and conventional banks use SBA loans as their prime loan product for small business owners. This is due to the fact that SBA assures as much as 90% of the loan in the event of a default. These credit lines are the toughest to get approval for because you must qualify with SBA and the bank.

SBA CAPLines

There are two principal varieties of SBA loans you can typically procure. One type is called CAPLines. There are actually five kinds of CAPLines that can work for your company.

You can also get a lesser loan amount more rapidly using the SBA Express program. Many of these programs offer BOTH loans and revolving lines of credit.

From the SBA: “CAPLines is the umbrella program under which SBA helps business owners meet short-term and cyclical working capital needs”. Loan amounts are on offer up to and including $5 million. Loan qualification criteria are the same as with other SBA programs.

Seasonal Line

This one advances against expected inventory and accounts receivables. It was created to help seasonal businesses. Loan or revolving types are on offer.

Contract Line

This one finances the direct labor and material cost associated with executing assignable contracts. Loan or revolving types are on offer.

Builders Line

This one is made for general contractors or builders constructing or renovating commercial or residential buildings. It is used to finance direct labor-and material costs, where the building project functions as the collateral. Loan or revolving types are on offer.

Standard Asset-Based Line

For companies not able to meet credit standards connected with long-term credit. Financing for cyclical growth, repeating and/or short-term needs. Repayment results from converting short-term assets into funds.

Businesses constantly draw from the LOC, based on existing assets, and repay as their cash cycle prescribes. This line usually is utilized by businesses that provide credit to other businesses.

Small Asset-Based Line

This is an asset-based revolving line of credit of up to and including $200,000. This line works like a standard asset-based line save that a number of the more stringent servicing requirements are foregone, so long as the business can consistently show repayment ability from capital for the full amount.

SBA Express

You can get approval for as much as $350,000. Interest rates can be different, with SBA allowing banks to charge as much as 6.5% over their base rate. Loans over $25,000 will call for collateral.

Details

To get approval you’ll need great personal and business credit. Plus the SBA specifies you must not have any blemishes on your report. You will need good bank credit; an acceptable bank score demands you have at least $10,000 in your account over the most recent 90 days.

You’ll also need a resume showing you have market experience and a well put together business plan. You will need three years of company and personal tax returns, and your business returns should show a profit.

And, you’ll need a recent balance sheet and income statement, thereby showing you have the funds to pay back the loan.

Collateral

To get approval you’ll need account receivables, but just if you have them. When it comes to the collateral to balance out the risk, normally all business assets will be accepted as collateral, and some personal assets which include your residence.

It’s not uncommon to need collateral equivalent to 50% or more of the loan amount. You also need articles of incorporation, business licenses, and contracts with all third parties, and your lease.

Private Investors and Alternative Lenders

Private investors and alternative lenders also offer credit lines. These are less complicated to get approval for than conventional SBA loans. They also need much less documentation for approval. These alternative SBA credit lines commonly demand good personal credit for approval.

Unlike with SBA, many of them don’t require good bank or business credit approval. Most of these sorts of programs call for two years’ of tax returns. Tax returns must demonstrate a profit. Rates can vary from 7% or greater and loan amounts extend from $25,000 into the millions.

Loan amounts are typically based upon the revenues and/or profits shown on the tax returns. At times lenders may ask for other financials such as a profit and loss statement, balance sheets, and income statements.

Merchant Cash Advances

Merchant cash advances have rapidly become the most popular way to get financing, in large part because of the easy qualification process. Businesses with $10,000 in profits can get approval, with the business owner having scores as low as 500.

Some sources have now even begun to offer credit lines that go with their loans.

You will need to have at least $10,000 in revenue for approval. You should be in business for a minimum of one year, although three years is preferred. Lenders regularly want to see a credit score of 650 or higher for approval.

Details

Loan amounts are generally about $20,000. Lenders often do pull your business credit, so you should have some credit already established and at times lenders will want to see tax returns. Rates differ based on risk for this program, and there typically aren’t a lot of funding sources who offer it.

Securities-Based Financing

You can get financing despite personal credit if you have some kind of stocks or bonds. You can also get approval if you have somebody intending to use their stocks or bonds as collateral for financing.

Personal credit quality doesn’t matter as there are no consumer credit criteria for approval. You can get approval for as much as 90% of the value of your stocks or bonds. Rates are usually below 2%, making this one of the lowest rate credit lines you’ll ever see. You can still earn interest as you normally do on your stocks and bonds.

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Credit Cards and Lines are Very Similar

Credit cards often offer 0% intro rates for up to two years. So this is extremely useful for startups in particular. Credit lines allow you to take out more cash at a much cheaper rate than do cards. These are the main two differences that will affect you between credit cards and credit line.

Investopedia even says that, “lines of credit are potentially useful hybrids of credit cards.”

Both cards and lines are revolving credit. Credit lines are more difficult to get approval for as card approvals are normally very fast, many times automated, while line require an in-depth underwriting review. Lines usually offer lower rates, per Bankrate card rates average 13% while lines average 4%.

Get Business Credit Cards for New Business: Unsecured Business Credit Cards

You can get unsecured business credit cards for new business. Most of them do report to the consumer credit reporting agencies. They all call for a personal guarantee from you. You can get approval in general for one card max as they stop approving you when you have two or more inquiries on your report.

Most credit card companies furnish business credit cards including Capital One, Chase, and American Express. These have rates much like consumer rates and limits are also similar. Some report to the consumer reporting agencies, some report to the business bureaus. Approval requirements are similar to consumer credit card accounts.

Consumer Report Inquiries

Normally, when you apply for a credit card you put an inquiry on your consumer report. When other lenders see these, they will not approve you for more credit because they do not know how much other new credit you have lately obtain. So they’ll only approve you if you have less than two inquiries on your report within the last six months. Any more will get you refused.

Details

With unsecured business financing, you deal with a lender who specializes in securing business credit cards. This is a very rare, only a few know of program which few lending sources offer. They can normally get you three to five times the approvals that you can get on your own.

This is due to the fact that they are familiar with the sources to apply for, the order to apply, and can time their applications so the card issuers won’t decline you for the other card inquiries. Individual approvals ordinarily range from $2,000 – 50,000.

Approvals

The result of their services is that you generally get up to five cards that simulate the credit limits of your maximum limit accounts now. Multiple cards generate competition, and this means you can get your limits raised ordinarily within 6 months or less of your initial approval. Approvals can go up to $150,000 per entity such as a corporation.

With UBF they actually get you three to five business credit cards that report solely to the business credit reporting agencies. This is huge, something the majority of lenders don’t offer or publicize. Not only will you get money, but you build your business credit as well so in three to four months, you can then use your recently established business credit to get even more money.

Rates

The lender can also get you very low introductory rates, frequently 0% for 6-18 months. You’ll then pay normal rates after that, typically 5-21% APR with 20-25% APR for cash advances. And they’ll also get you the best cards for points. So this means you get the very best rewards.

Like with just about anything, there are significant benefits in working with a source which focuses on this area; the results will be better than if you try to go at it alone.

Qualifications

You have to have excellent personal credit right now, ideally 685 or higher scores, the same as with all business credit cards. You shouldn’t have any derogatory credit reported to get approval, you must also have open revolving credit on your consumer reports now. And you’ll need to have five inquiries or less in the last six months on report.

Fees

All lenders within this space charge a 9-15% success based fee and you only pay the fee off of what you secure. Bear in mind, you get a lot of added rewards and about three to five times more money in this program than you would get on your own. So this is why there’s a fee, the same as all other lending programs.

Guarantors Welcome

You can get approval making use of a guarantor and you can even use numerous guarantors to get even more money. There are additionally other cards you can get making use of this same program but these cards only report to the consumer reporting agencies, not the business reporting agencies. They are consumer credit cards versus business credit cards.

Benefits

They supply similar benefits including 0% intro APRs and five times the amount of approval of a single card but they’re a lot easier to qualify for. You can get approval with a 650 score and seven inquiries (or fewer) in the most recent six months and you can have a bankruptcy on your credit and other derogatory items. These are a lot easier to get approval for than UBF company credit cards.

With all earlier cards, you need to have good consumer credit in order to get approval but what if your personal credit is not good, and you don’t have a guarantor? This is when building company credit makes a ton of sense even if you have good personal credit, setting up your corporate credit helps you get even more money, and without having a personal guarantee.

Get Business Credit Cards for New Business Even When You Think It’s Impossible

Company credit is credit in a business name, that’s linked to the company’s EIN number, and not the owner’s Social Security Number. When accomplished correctly, business credit may be obtained with no personal credit check and without a personal guarantee. And this is a thing all other cards above can’t provide.

You can get three types of business credit cards. Vendor credit offers net 20 terms used to start a business credit profile. With retail credit, get credit cards with high limits at most retail stores.

And with cash and fleet credit, get Visa, MasterCard, and American Express cards you can use anywhere. You can get these without any credit check or guarantee. Limits are typically $5,000 – $10,000 to start, and can exceed $50,000.

Your business can get credit cards and financing, if you know where to look. Check out how this will help your company get business credit cards for new business.

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