Have you considered applying for business credit cards to finance your small business? Many cards in the market require good credit history but if you have bad credit or poor credit rating, then a secured card for business is your next option. In this article, let’s discuss the basic facts you need to know about this type of card.
What is a Secured Business Credit Card?
Similar to a personal secured credit, a secured card for small business requires the submission of cash deposit which will be used as guarantee for debts that will be incurred using the card. Hence, if the owner of the account defaults payment, the issuer of the business credit card can use the amount deposited as payment for debts. Because of the cash security deposit, approval is not based on the applicant’s credit history but on the cardholder’s ability to make a deposit.
Some secured card issuers offer a credit limit that is equal to the amount of the security deposit. For example, if you have deposited an amount of $500, then your credit line will be equal to $500 as well. Some issuers may double the amount of security deposit as credit line. Before applying for a secured business card, you will need to prepare your security cash deposit.
Use a Secured Business Credit Card to Rebuild Credit
It is a wonderful tool to rebuild bad credit. As you use your card to cover for your business expenses and submit your payments on time, you can regain good credit rating once again.
Find a card issuer that offers credit reporting. Take note that not all issuers offer this very important provision. In order to rebuild credit history, your payments need to be regularly reported to the major credit trackers like Dun & Bradstreet and Experian (for business).
How can a secured business credit card help you rebuild business credit? To avoid incurring bad credit, it’s important vclub to use your account very carefully. Do not charge purchases to your business card if you are not sure whether you can pay it back on time. Remember that if you fail to submit your payment on your due date, you will be charged with a penalty fee. If you choose to carry over your balance for the next month, you will be charged with interest rate.
It is also important to keep track of your business spending by checking your account regularly. Many small business credit cards allow online account access which makes way for convenient monitoring. Anytime you want to check your card account, you can simply get online and log in to your account. There’s no need to leave your work desk or visit the bank to do so.