The Best Business Credit Cards for Those with Bad Credit

For entrepreneurs, maintaining a clear distinction between personal and business finances can be challenging. The success of your business often intertwines with your personal financial standing, and vice versa, especially if personal investments are required. If your personal credit is less than stellar, it can adversely affect your business’s access to credit. Similarly, your business itself may have encountered credit challenges. Let’s face it—credit setbacks occur, whether due to unforeseen business expenses or missed payments.

Nevertheless, obtaining a new business credit card is still feasible, even with imperfect credit. Similar to personal credit cards for individuals with poor credit, these business cards typically offer modest credit limits, average interest rates, and minimal rewards. Some may even require a security deposit to open—an option known as secured credit cards. Despite their standard features, utilizing one of these cards can aid your business in rebuilding its credit profile. This step may pave the way for long-term viability and success.

Many individuals believe that credit falls into two categories: bad or good. However, the credit spectrum is much broader. While various financial institutions employ their own scoring systems, the general framework remains consistent. Scores below 500 are typically classified as bad credit, while scores ranging from 500 to 600 are considered poor. Fair credit falls between 600 and approximately 680. Beyond this range, credit ratings progress into the categories of good, very good, and excellent.

It’s crucial to recognize that your credit may not be as unfavorable as presumed, especially when considering obtaining a business credit card. Different banks and credit bureaus utilize slightly varied methodologies to assess creditworthiness. Additionally, a single financial misstep from years ago might not have had as detrimental an impact on your score as anticipated. Thus, exploring the available business credit card options is advisable to find one that aligns with your requirements.

The Capital One Spark Classic is a favorable starting point, boasting no annual fee. However, it does carry a relatively high variable interest rate of 26.99%. To avoid accruing substantial extra charges, it’s essential to clear the entire balance monthly. On the bright side, the card offers 1% cashback on all purchases, without minimums or expiration dates. Additionally, complimentary employee cards with individual spending limits are available if required.

Utilize the Spark Classic to rebuild your credit and subsequently explore upgrading to other Spark products offering improved interest rates and more enticing rewards programs.

Now, let’s explore secured cards, an ideal choice for individuals with bad or poor credit. With secured cards, you’re required to provide an upfront cash deposit to obtain the card. This Wells Fargo offering provides a credit limit ranging from $500 to $25,000, contingent upon the deposit amount. Additionally, cardholders benefit from a 1.5% cashback on all expenditures, with bonus points awarded for monthly spending exceeding $1,000.

Notably, this card carries no annual fee and features a Prime + 11.9% interest rate. While these are advantageous features, it’s important to remember that you’re still supplying the funds to secure the credit limit. Thus, such perks are expected. The silver lining is that secured credit cards aren’t intended for perpetual use. By responsibly utilizing this card, reclaiming your security deposit, and enhancing your business’s credit score, you can eventually transition to a superior card.

Here’s another secured card, quite similar to the previous one. It does come with a $40 annual fee, although it’s waived for the initial year. The minimum security deposit and corresponding credit limit is $500, but you have the flexibility to increase it incrementally by $100 as needed. The interest rate stands at either 17.49% or Prime + 12.99%, positioning it with a better rate than some cards but not as competitive as others.

Regarding rewards, you’ll earn one point for every dollar spent. Additionally, you have the option to designate your own bonus point categories, such as gas or groceries. However, one potential drawback is that only 90% of your deposit is accessible for your credit limit. Thus, if you start with a $1,000 deposit, your credit limit will effectively be $900. While it offers a layer of protection, it can be somewhat inconvenient.

The Blue Business Plus Amex card offers a particularly appealing perk: a 12-month introductory 0% interest rate. This feature makes it ideal for balance transfers, debt consolidation, or for any small business seeking to manage expenses wisely as they expand. Following the first year, the interest rate becomes variable based on your creditworthiness.

In addition to its attractive introductory offer, this card boasts no annual fee, which is another advantageous feature. Furthermore, it provides basic rewards: you earn 2X points for the first $50,000 spent annually, and 1X on every dollar thereafter. If you’re concerned about carrying credit card balances while launching your business, this 0% intro card could be your top choice. Conversely, if your business involves significant travel, there might be other cards with travel rewards that align better with your needs.

The Chase Ink Preferred is a noteworthy choice for your business, albeit it may require a slightly better credit score compared to other options on our list. Nevertheless, if you qualify, there are considerable perks available. For instance, you can earn 100,000 bonus points by spending $15,000 within the first three months. These points could equate to as much as $1,250, depending on your redemption method. Additionally, you can acquire additional employee cards at no extra cost.

While the Chase Ink Preferred card does entail a $95 annual fee, its interest rate typically ranges between 15.99% and 20.99% — a decent but not particularly exceptional rate. Nonetheless, the robust rewards program should more than offset the annual fee, provided you use your card responsibly and avoid accumulating substantial monthly interest charges.

There are alternatives to traditional credit cards, with lines of credit being a popular choice for businesses. While these lines of credit are often reserved for companies with strong credit histories, there are options available for those with lower credit scores as well. One such option is Kabbage.

Kabbage offers lines of credit of up to $250,000, with a quick and convenient online application process. However, there are certain requirements to qualify. For instance, your business must have been operating for at least 12 months. Additionally, your interest rate will depend on factors such as your credit score and the Prime rate. On the positive side, the Kabbage Card provides direct access to the funds, functioning similarly to a debit card. It’s worth noting, though, that since Kabbage is not a credit card per se, it doesn’t offer any rewards programs.

It’s crucial to recognize that these credit cards aren’t meant to be permanent fixtures in your financial toolkit. Many of them are tailored to assist you in building or enhancing your credit profile. After a few years of utilizing one of these credit cards designed for individuals with poor credit, you may be able to transition to a more favorable option. Seek out cards offering lower interest rates, enhanced benefits, or more valuable rewards as you progress in your credit journey.