To get a business credit card, you have to go through an application process that’s pretty similar to the one required of most consumer credit cards. You’ll have to supply some information about your business – its name and contact information, for example – but the gist is the same.
One of the more interesting similarities is that even though you may be applying on behalf of a business, you’ll generally still have to deal with a hard inquiry on your personal credit to get a business credit card.
What’s more, you’ll nearly always have to provide a personal guarantee that acknowledges your personal liability for your business credit card debts. This can be a problem if you’re intent on keeping personal and business finances separate.
This point brings up an important question: Is it possible to get a business credit card without a personal guarantee?
Technically, the answer is yes – you can get select business credit cards without a personal guarantee. But those opportunities are generally reserved for companies with big-league revenue and considerable cash reserves.
We’ll dig into the details, starting with the basics.
Can You Get a Business Credit Card Without a Personal Guarantee?
Let’s face reality.
Unless you’re representing a big corporation, you almost certainly won’t be able to get a business credit card without a personal guarantee.
Certain credit cards are available with no personal guarantee, but they nearly always have limitations. Options are usually restricted to corporate credit cards, and these cards are often only usable with certain merchants.
Designed for larger businesses, corporate cards often have stringent requirements that include annual revenue and/or cash reserve minimums in the millions of dollars. Others just require that borrowers use company assets for collateral – a system that’s a lot like the typical secured credit card. These rules are intended to reduce the risk a lender takes on when it extends credit. They want to avoid having a business that borrows money from them to default on that debt.
Even if you’re applying for a business credit card with the business EIN, you’ll likely still need to personally guarantee the card. When you use an EIN to apply, issuers will usually ask for your Social Security number later on.
Sometimes you may be able to boost your chances of being approved for a business card without a personal guarantee by maintaining a long and positive relationship with a financial institution. You could also simply focus on building a strong business credit history to prove that your and your business are good credit risks.
But even then, it seems unlikely that you’ll be able to get a regular business credit card without a personal guarantee. If you’re still operating in the small business world, it’s especially safe to assume that a personal guarantee is a given.
What Is a Personal Guarantee?
If you’re planning to apply for a business credit card in the near future, you might already understand the concept of a personal guarantee. But in case you don’t, here’s what a personal guarantee entails.
It’s pretty simple. A personal guarantee is a legally binding agreement that holds you, the business owner, responsible for paying off a business credit card account balance in full, even if that credit card is used explicitly for a business.
Personal guarantees exist because businesses are formed and dissolved on a daily basis. Imagine that a business goes under with no personal guarantee – the business is the only party responsible for its debts. The credit card issuer likely would lose all the money on that credit account.
Now imagine that scenario with thousands of businesses with credit card debts and no personal guarantee going under. The issuer would lose massive amounts of money left and right.
Thinking about how a personal guarantee protects lenders from having their money simply disappear gives perspective. It should be more clear why it’s harder to get a business credit card without that guarantee.
Cards You Can Get Without a Personal Guarantee
By now it should be clear that business cards available with no personal guarantee are few and far between. That said, they do exist, and you’ll find a few of your options below.
Brex Daily Card
The Brex Daily Card stands out from the crowd. It’s a flexible business card that’s not cobranded with a retailer — if you meet the requirements, you can use it anywhere Mastercard is accepted. Plus, you can choose from three excellent rewards programs, and access a wide variety of credits and discounts for a host of services your business might find useful.
The Brex Daily must be paired with a Brex Cash money management account. The card will be paid daily from the funds in the account.
Consider contacting Brex before you apply if you’re not sure you’ll qualify.
Stripe Corporate Card
The Stripe Corporate Card is a lot like the Brex card we just described. It’s a charge card that’s paid off monthly, that has a flexible rewards program and valuable benefits. It’s also available without a personal guarantee, and there’s no credit inquiry involved. But as is the case with the Brex card, this isn’t necessarily an easy card to get.
It’s available by invitation only, but you can request an invite. Not much of an obstacle. You don’t even have to use Stripe for payments to qualify.
The real challenge comes in meeting Stripe’s standards. Whether you’ll be approved for the card depends on several variables, including:
- Payment volume
- History with Stripe
- Bank account history
Considering how the card’s called a “corporate card,” it stands to reason that your business’ payment volume and bank account balances will have to be somewhat high to qualify.
Bremer Bank Visa Signature Business Company Card
The Bremer Bank Visa Signature Business Company Card is basically the only true business credit card that’s available with no personal guarantee and isn’t classified as a “corporate card.” It targets “medium to large businesses” and it has high income and revenue requirements. Cardholders enjoy access to a free rewards program when using the card.
ScaleFactor Visa Card
The ScaleFactor Visa Card was developed to help small business owners better monitor and control their business expense management processes. The credit accounting is fully integrated into ScaleFactor’s accounting software so business owners can better track how their employees use the cards. Users can easily issue cards to their employees in different forms: temporary, physical, or digital. They can establish spending limits and expiration dates, and can freeze or cancel any card at any time.
You can apply for this business charge card once you’ve connected your business bank accounts and accounting file to ScaleFactor. The application process has no impact on your personal credit and requires no personal guarantee.
Sam’s Club Business Mastercard
In terms of credit cards you can get without a personal guarantee, the Sam’s Club Business Mastercard is actually fairly flexible. You can use it wherever Mastercard is accepted (and that’s nearly everywhere credit cards are accepted), and you get strong rewards on gas, dining, and travel.
Divvy Business Card
The Divvy Business Card is tied to Divvy, an all-in-one financial management service designed for small to medium-sized businesses. You can issue as many employee cards as your company needs, with individual spending limits and controls for each card. The rewards program is based on how quickly you pay off your balance.
How Else Might a Business Credit Card Impact Your Personal Credit?
Personal guarantees aren’t the only connection between business and personal credit.
For one, even if your business has proven to be a dependable borrower through strong business credit, issuers will almost certainly conduct a personal credit check to determine whether you’re qualified to become a business cardholder. Amex and Capital One, for example, have confirmed that their business cards will always require personal guarantees and personal credit checks.
If you’re required to provide a personal guarantee to get the credit card, expect to submit to a personal credit inquiry, too. While the impact of a hard inquiry is temporary and typically quite small, it can affect your personal credit scores, and that’s something you may prefer to avoid.
It’s also vital to know that some credit card issuers will report business card activity not only to the business credit bureaus, but to the nation’s major consumer bureaus, too.
Specifically, both positive and negative activity on Capital One and Discover business credit cards will usually show up on your personal credit reports.
The remaining issuers, which include prominent names like American Express, Chase, Citi, Bank of America, and Wells Fargo, normally only report business credit card activity to personal bureaus if your debts are delinquent.
Both approaches have their benefits, so this is something you should consider before choosing a business credit card.
Preparing to Apply for Your First Business Credit Card
When it comes down to it, the average small business owner is going to have a pretty hard time finding a valuable business credit card that’s available without a personal guarantee.
In the meantime, if you’re simply looking for a way out of a personal guarantee and the accompanying inquiry because your credit scores need improvement, there’s an alternative that will take time, but might be well worth it:
Improve your personal credit scores by investing the time it takes to develop positive credit habits.