Published By Janet Gershen-Siegel at September 1, 2018
Written by Janet Gershen-Siegel
You can get business credit cards without personal guarantee.
Acquiring credit is not easy.
You know what I’m talking about. You looked around the major banks, and then the medium-sized banks and the small ones. And you tried the banks where you do business and the others suggested by your friends or business associates.
But after your long quest, you were unable to obtain any sort of a business credit card without having a personal guarantee.
There are more than 500 distinct business credit cards on the market but no more than fifty of them grant credit to businesses in the absence of a personal guarantee. Complicating matters, these cards are not publicized or granted to all interested consumers.
You can relate to the financial institutions’ point of view. They don’t like risk so they attempt to curtail it by securing a business credit card. They do so by requesting you, the small business owner, to guarantee payments from your private cash, in case of business default.
If worst comes to worst, and as a guarantor or co-signer you are not able to pay the debt, then your private assets will be executed. As in, your bank accounts, your vehicle, your home, your investments, and anything else you may have used to guarantee that card.
But your viewpoint, obviously, is that you need this card to run your small business better.
The very first thing you can do, and it’s easier said than done, is to have patience, and grow creditworthiness for your company in the same way that you have grown your personal credit history.
For most small businesses, this means settling your financial obligations punctually, plus keeping in business awhile, to develop a record of creditworthiness.
In order to get rid of the sticking point of a personal guarantee, you must show the bank that your business is in good shape, that it can generate steady profits, it has a healthy cash flow, and your business has an untarnished payment history.
If all these can be shown, it will be a lot less complicated to find a small business credit card without a personal guarantee.
Here are steps you can take:
Set apart yourself from your small business. This means you can really help your cause by incorporating or becoming a limited liability company (LLC). This is a separate entity from the owner( s) and it means you must register for a distinct identification number with Internal Revenue Service. If your small business is already an LLC you can bypass this step altogether.
Get several small business credit cards with personal guarantees. The ones with high spending limits will be better for they are the only ones reported to the business credit agencies.
See to it when you get these products, they have the personal guarantee removal feature baked right in. Keep your credit utilization at one third of your credit limit or less. Pay timely each time.
Be sure to make use of these business credit cards to make your small business’s significant orders. These purchases, blended with a low revolving debt and of course timely payment will prove to the financial institution that your small business can handle its financial resources properly.
It will also persuasively show that the profit your company yields suffices to cover financial obligations and more.
Make certain that your individual credit history stays perfect. After a while (six months to one year), you can file a personal guarantee removal request for these preexisting business credit cards.
The bank will perform an account review, but they may also consider your individual credit report. If the bank accepts your request then you have achieved your end goal. If the bank refuses, don’t throw in the towel; just go to the next step.
You can elect to make an application for third-party guaranteed lending. For instance, this may be an SBA loan, for funding. Paying back such a loan will help you build your business credit score. You can also apply for a business credit card from a particular store.
These store credit cards in most cases do not call for a personal guarantee.
Opt for a store where your company makes purchases often and obviously do not forget about those on time payments! These store credit cards, in addition to an SBA loan will improve your PAYDEX score provided by Dun and Bradstreet.
If you are unfamiliar with the term, the short version is that PAYDEX is for companies what FICO is for individuals. Store credit cards will supply you from the beginning an extra reward; they will diminish your private liability for your small business debt.
Ask the financial institution again to get rid of the personal guarantee clause or apply for new small business credit cards without any personal guarantee, after you have developed an 80 PAYDEX score under these conditions.
Your chance to get such credit cards will increase significantly.
You can instead apply directly for those very few small business credit cards with no personal guarantees. For example you can go with Sam’s Club ® Business MasterCard ® or the Bremer Bank Visa ® Signature Business Company Card.
Each particular card of this sort asks you, the small business owner, to comply with a set of conditions which differ from one product to another. For a Sam’s Club ® Business MasterCard ® you need your business to generate over $5 million in annual sales.
The Bremer Bank Visa ® Signature Business Company Card is for small businesses with annual profits of $1 million – $10 million. Note: other company credit cards with no personal guarantee attached demand an open Dun & Bradstreet file and other stipulations to be met.
Make sure to consult the credit card provider and go through all of the aspects of the promotion meticulously.
And here are some business cards we particularly like.
For a 0% APR time period, we like the Ink Business Cash ℠ Credit Card. Also, you pay no yearly cost. It’s got an interest-free period. It has versatile cash-back rewards. There are spending limits for employees. However, you will have to have a credit score of 690 or higher.
For Fair Credit, we like the Capital One Spark Classic for Business. It has no annual fee. There are cash-back rewards. However, you will need a credit score of 690 or better.
BEAR IN MIND: the ongoing APR is 23.99% variable APR.
For Travel Points, we like the Gold Delta SkyMiles Business Credit Card from American Express. Get 30,000 bonus miles after you make $1,000 in purchases on your new card within your first three months. Terms and limitations apply.
Also earn a $50 statement credit after you make a Delta purchase with your card in your first three months. Earn two miles per dollar spent on purchases made straight with Delta. Earn one mile per qualifying dollar spent on purchases.
For Low APR/Balance Transfers Business Credit Cards, we like the U.S. Bank Business Edge Platinum. So you begin with twelve months of 0% APR financing on new purchases and balance transfers. There is a 3% balance transfer cost.
Afterwards, the purchase APR is a variable 10.49% – 18.49%, which is dependent on creditworthiness. There is no annual fee. This card is only offered to people with great or excellent credit. However, there is no rewards program for purchases.
Check out the Wells Fargo Business Secured Credit Card. It allows cardholders to get a credit limit of $500 – $25,000. The amount offered equals the amount of cash you supply to secure the line.
Your purchase APR rate can be as low as a variable 13.15%. The yearly fee is $25. The more cards you have, the higher your annual fee will be.
This card lets business owners with poor personal credit to obtain a card to make purchases and develop business credit.
However, the card will just report to the personal credit bureaus if you default or are behind on payments.
Look at the SimplyCash Plus Business Credit Card from American Express. So you can earn as much as $400 cash back. Earn a $200 statement credit after spending $5,000. Also, get 5% cash back at US office supply stores and on wireless phone services purchased from US service providers. However, this applies to the initial $50,000 of yearly spending.
You also get 3% cash back on spending category of your choice. So this is from eight distinct categories. They include air travel, gas, advertising and computer purchases. However, it applies to the first $50,000 of annual spending.
Plus you get 1% cash back on all other purchases.
Consider the Business Gold Rewards Card from American Express OPEN. So you can earn 50,000 Membership Rewards points after $5,000 in purchases on the card during first three months. Also, you get three points on your choice of five categories. In addition, get two times the points on the other categories. Also, get one point per dollar on all other purchases. It has a $0 annual fee for the first year. However, then afterwards your annual fee climbs to $175.
With patience and eventually, you can get a small business credit card from a financial institution with no personal guarantee. All you need is what the financial institutions ask: a strong small business bringing in stable earnings, with a strong cash flow. Check out how this will help your company get business cards without personal guarantee.