business credit cards without personal guarantee

Compare Business Credit Cards without Personal Guarantee

Business owners apply for credit cards under their companies only to get rejected. These business credit cards without personal guarantee are also very hard to find. The problem is their company does not have any established credit yet. Creditors and the credit bureaus can only way creditworthiness based on the actual business owners credit profile.

This creates a major dilemma. As a new business owner, the only way to get credit card financing is by adhering to a personal guarantee. Essentially, you must co-sign for the business and accept all liability that comes with defaulting on your payments. If your business goes belly up – prepare to cover the credit card debt or else it will destroy your personal credit.

Note: Are you a sole proprietor or part of a partnership? If so, you must incorporate your business first. Your company must stand as an individual to be considered a borrower. Otherwise, you must provide personal guarantee to get a business credit card.

Warning: Personal Guarantees are Dangerous

What happens when you are late on a payment? Well, supposing you have excellent credit, your FICO score will drop by as much as 100 points or more. This damage can take two to three years to fully repair. The difference is tens of thousands of dollars in interest if you go and obtain a mortgage in the next year. You do not want this negative impact to happen, but there is no guarantee that you will avoid late payments. The more your business starts to scale – the easier one hiccup could leave you with debt you cannot afford.

Furthermore, when other negative thing is happening when you hold a business credit card in your personal name. Your utilization ratio becomes much worse. The credit bureaus calculate your FICO score with this in mind. Your utilization rate actually makes up 30% of your score calculation. The hard part is that you will almost always be tapping your business’s credit card limit. As do most business owners, you will likely float costs on a month-to-month basis and use the card as a better means of accounting.

Long story short, a business credit card will hold back your personal credit in the near-term and it could potentially destroy it in the long term as well.

How to Avoid Personal Guarantees

It is clearly important to stick with business credit cards without personal guarantee requirements. Two options exist to make this happen. First, you find a credit card issuer that naturally does not check your personal credit to qualify you for their card. Second, you turn to a prepaid business credit card instead.

These two avenues are very different. Prepaid cards are an option when your business does not have established credit. You can use these cards to run the checks and balances and make sure that employees always have funds on hand. You can even control how employees are using these funds, such as by allocating a certain amount of capital for specific employees – and limiting the types of stores where their card will work.

Prepaid business credit cards are definitely helpful. The problem is that they do not do anything to help grow your business is credit worthiness. Opting to business credit cards without personal guarantee does the opposite. You can build up a healthy payment history with one of the business credit bureaus if you have a legitimate card without the personal guarantee.

Over time, your business will gain access to greater amounts of funding at more reasonable interest rates. This gives you more ways to scale and grow your business, which makes it the clear best choice. As such, you should consider secured and unsecured business credit cards over prepaid cards.

Regardless, if you do consider prepaid business cards – check out the section below.

Best Prepaid Business Credit Cards without Personal Guarantee

Prepaid business credit cards are an easy out for anyone looking to avoid the personal guarantee requirement. This option won’t help build business credit, and it’s not an unsecured financing method either. Still, when you need to control employee spending and transaction via credit cards, it’s a viable solution.

Bento for Business

Bento for Business offers Team, Pro and Enterprise packages. Team is $29 a month and allows for up to 10 cards / cardholders. Pro is $69 a month and allows for up to 20 cards / cardholders. Enterprise is $149 a month and allows for more than 20 cards / cardholders. You can also get the Starter plan with one or two cards to test things out.

PEX

PEX offers simple $7.50 per card pricing and their monthly fees are cleared when you transact at least $50,000 a month. Their fees are straight up – you won’t pay for loading funds, doing ACH transfers to your PEX card or replacing any of your cards. They offer a 60-day free trial so you can feel out their product before sticking with them.

Business Credit Cards without Personal Guarantee List (2017)

Now, let’s take a look at some business credit cards without personal guarantee. This list will give you insight on what your options are right now. Keep in mind that avoiding the personal guarantee is difficult. You will only be able to if your business has many years of history and an established DUNS credit file.

Focus on building your business’s creditworthiness, even if it means taking on a personal guarantee at first. These limited options will likely not accommodate all you need in a credit card – unless your company transacts a high amount of revenue each year.

With that said, below are some business credit options that can work without a personal guarantor. Make sure you inquire before applying – some will still do a personal credit check, or only attribute the no-guarantee option to select applicants.

Visa Signature Business Company Card from Cadence Bank

Medium and large-sized businesses can obtain the Visa Signature Business Company Card from Cadence Bank. This card does not require a personal guarantee and you can opt-in to their business rewards program. Some other perks include advanced reporting and specialty cardholder benefits. You will also have a dedicated account manager.

You must contact Cadence Bank to get more info on the card and how to apply. Also, they have another card (Visa CommUNITY Card) which is for municipalities and non-profit organizations. This card is an option if your business is a non-profit and looking to avoid the personal guarantee requirement.

Sam’s Club Mastercard

Sam’s Club Mastercard provides businesses with a credit card without a personal guarantee. The big catch? Your company must be turning over at least $5 million in annual revenue. This business credit card can be used for purchases anywhere and the rewards program offers as much as 5% back.

Visa Signature Business Company Card from Bremer

Bremer Visa Signature Business Company Card is another guarantee-free business credit card. However, your company must make $1 to $10 million in revenue each year to qualify. This card is straightforward, able to be used anywhere and also includes a rewards program. Like Cadence Bank, Bremer also provides a CommUNITY card for municipalities and non-profits.

SuperAmerica Fleet Card

SuperAmerica Fleet Card is a corporate gas card without a personal guarantee. The problem here is that you can only use the card to purchase gas at their stations. In reality, this card helps establish business credit but doesn’t provide financing for anything more than gas.

Shell Small Business Card

Shell Small Business Card is a corporate gas card without a personal guarantee. The biggest requirement to meet – a minimum of $1 million in annual revenue. Your business must also be at least three years old. This is another fuel card which can only be used at accepted gas stations, so it’s mainly a credit builder.

secured business credit cards

Alternative 1: Start with Corporate Store Credit Accounts

You can begin building business credit through store credit accounts. For instance, with a Staples Commercial Account your company’s creditworthiness can grow. This charge account is available without any personal guarantee required. Set up an account there and at some other office supply shops, and similar stores. You will quickly get the four tradelines necessary to obtain a PAYDEX score which will make it easier to get business credit cards without personal guarantee.

Besides Staples, some other stores known to offer no PG credit include:

  • Best Buy
  • Conoco
  • Fry’s Electronics
  • Grainger
  • JC Penney’s
  • Lowe’s
  • Macy’s
  • Nordstrom
  • Office Depot
  • Office Max
  • Orchard Supply
  • Sears
  • Target
  • Texaco
  • Union 76

Alternative 2: Request a Personal Guarantee Removal

You might not want to limit yourself to the short selection of cards that are available with no guarantee. One other work around to consider is the idea of obtaining a card with a guarantee and requesting it to be removed later. You cosign for your business by including the guarantee, which gives your company the chance to establish credit history. You can then contact the credit card company and request that the guarantee is removed from the account. If you build your business’s credit up enough, there’s a good chance they will do this for you.

Getting the guarantee removed requires proving that your business is financially responsible enough to cover the credit card debt. Make sure to always have the utilization rate at 30% or less in the months leading up to this request. You will likely want to wait at least 6 to 12 months after first obtaining the card to try to get the personal guarantee removed.

Another way to prove your businesses creditworthiness is by supplying a list of high-value items that were purchased, along with proof the loans were paid back. You should also be supplying cash flow statements to prove that your company has funds on hand each month to make a credit card payment.

Unfortunately, not every bank will oblige and remove your credit cards personal guarantee. For some banks it is just policy to not allow this to happen. You should inquire with your institution to see if there is a possibility that they will remove it in the future. If not, maybe another bank will.

Alternative 3: Build Credit with Secured Business Cards

Business credit cards without personal guarantee are always in short supply. The number of credit card issuers that offer these cards are very limited. However, some do exist and you can find what you need here. The bigger issue comes in determining whether you can get a secured or unsecured business credit card without personal guarantee.

Secured business credit cards without personal guarantee are much less difficult to obtain. You provide the collateral which is typically 100 to 110 percent of the credit limit. The creditor has little risk because you are securing the card, so they find it much easier to approve your business when you apply for a secured card.

Unsecured business credit cards without personal guarantee require previous business credit history. The only potential workaround is if your business is profitable, handles large amounts of money and holds are real worth of assets. So for a startup just looking to grow, an unsecured card will not happen until they establish their credit status first. Secured business credit cards without personal guarantee can make that happen much faster.

Conclusion

These no personal guarantee business credit cards are only available to eligible businesses. Since your personal credit report is not touched – your entity must be one that a creditor can report against to the business credit bureaus. Use BizCreditBuilder to learn how your business can go through all the steps to be ready to take on and build credit.

From there, try to apply for business credit cards without personal guarantee. The chance of approval is slim as a new borrower. You have a better chance after you have some payment history and four open accounts – the minimum allowed for Dun & Bradstreet to calculate a PAYDEX score. As long as your credit cards include business reporting your company will eventually gain access to guarantee-free credit opportunities.