If you’re looking to apply for credit for your business, you’ve probably come across secured business credit cards… nd bypassed them completely. Many people think that secured credit cards are only for people or businesses that have bad credit, or have declared bankruptcy. The truth is, secured business credit cards are good for any business who needs to establish credit from scratch and build a good credit score.
Many small business owners and entrepreneurs use their personal credit for business expenses. They do this because it just seems easier to whip out a card they already have and that they know the limit on rather than starting off all over again with new cards. While this method works, it really isn’t an ideal situation.
If you are intending to grow your business, your credit score will determine to at least some extent how quickly and how much money you can borrow to help grow your business. Another reason not to just use your own cards is that you want to keep your personal finances separate form your business finances as much as possible. Keeping personal and company money separate will make your book keeper or accountants job much easier.
Getting a secured credit card for your business simply means you are in the beginning stages of establishing good credit. Generally, lenders require that you use the secured card from 12-18 months before they will qualify you for an unsecured card…in which time you’ve created a strong financial foundation for your growing business, and will be in a better position to qualify for higher limits and business loans.
Many business owners are embarrassed by the idea of using a secured card. Thing is, secured cards look exactly the same as regular cards, and there is no indication that your card is of the secured type when you make a purchase. Many lenders don’t even report a card as being secured to the credit bureaus.
Secured business credit cards are not a sign of financial misconduct or failure… they are a tool you can, and should, use to build an enviable credit score for your business.
