Can You Get a Business Credit Card with Bad Credit?

Last Updated October 8, 2024

Your business credit score can have a huge impact on your ability to effectively manage your company. A high score makes it easier to secure credit cards, lines of credit, loans, and other funding to keep your business afloat.

But what if it’s your first time opening a business, and you have zero credit history? Or, what if you have bad business credit? Can you still obtain types of funding such as a credit card?

While securing funding with no credit or bad credit is undoubtedly more challenging, it is still possible—you just need to know your options and pick the best solution for your business.

Continue reading this guide to getting a business credit card with bad credit, complete with tips for obtaining a business credit card, what to look out for, funding alternatives, and even actionable tips to boost your business credit score.

Can You Get a Business Credit Card With Bad Credit?

Generally speaking, yes, you can get a business credit card with bad credit. However, lenders will evaluate you more closely since bad credit makes your business look risky. You’ll need to jump through more hoops to do it, but getting business credit cards for bad credit is possible.

In fact, this is a great next step to rebuilding your credit. Using and paying off your business credit card will provide a healthy credit history, which can boost your score over time. However, the downside is that you’ll likely have higher interest rates, a lower credit limit, and stricter terms.

Getting a business credit card with bad credit might require work, but it can be an essential way to fund your business. And while small business loans are possible with bad credit, credit cards allow you to pay for the small, daily expenses of running a business.

What Happens If You Have No Business Credit History?

As a new business, you’re starting with a clean slate. But lenders don’t like clean slates—it means they can’t monitor your company for signs of financial instability.

In this case, you can apply for a secured business credit card. This type of credit card is designed for people without a credit history. The terms might not be the best, but this is a helpful stepping stone to build your credit. If you use the card responsibly, you’ll build a stronger credit profile over time.

Can You Get a Credit Card With No Business Credit and Bad Personal Credit?

What if you’re starting a new business with zero credit, but your personal credit is bad? This is a big challenge for small businesses, but you can still overcome it with the right strategy.

The easiest option is to apply for a secured credit card. Like people without a business credit history, this option reduces your risk and makes you more attractive to credit card companies. You do have to front a cash deposit as collateral, which can be a challenge. However, responsible use over time will make it possible to apply for an unsecured credit card without a deposit in the future—hopefully with lower interest and higher credit limits.

How to Obtain a Business Credit Card With Bad Credit

Having bad credit shouldn’t get in the way of boosting cash flow. Follow these steps to get a business credit card with bad credit.

1. Know How to Access Your Credit Reports

Before applying for a credit card, access your personal and business credit scores. You can check your personal credit score for free through the official government site, AnnualCreditReport.com. This report will show your scores for the three major credit bureaus: Equifax, Experian, and TransUnion.

Check your business credit score through the paid Experian Business Credit search database (pricing starts at $39.99). You can also check with your bank to see if it offers free business credit score monitoring.

Not only do these credit reports help you understand what lenders see, but they also help you identify any inaccuracies. Credit report errors do happen and addressing them with the credit bureaus could improve your score.

2. Research Low-Credit Business Credit Card Lenders

Now that you know your credit score, look for lenders specializing in low-credit credit cards. Not all institutions offer these, so work only with lenders specifically offering business cards for bad credit.

Go with lenders that offer either secured business credit cards or business credit cards with no credit check. However, do your research to make sure it is a reputable company. Look for complaints on the Better Business Bureau and check reviews on sites like Yelp or Google.

If terms ever sound too good to be true, they probably are. Always read the loan terms to check for surprise fees or predatory lending practices, which will only hurt your financial standing.

3. Find a Business Credit Card You Qualify for and Compare Options

Once you find a few reputable lenders, check out their offerings. If you’re looking for a business credit card with bad credit, go for options like secured business credit cards, credit cards with no credit checks, or unsecured business credit cards for bad credit. Some cards list requirements for credit scores in their loan terms, so make sure you qualify for these cards before applying.

Most lenders offer various options, so weigh the pros and cons of each credit card. Look at rewards, interest rates, fees, payment due dates, and more to find the best option for your business.

Always identify at least three business credit card options. You might not receive approval for the first card you apply to, so it’s good to have backup options. However, avoid applying for multiple credit cards at once; this can create too many hard inquiries on your credit, which could hurt your score.

4. Make Your Decision and Apply

Pick your favorite credit card and go through the application process. Lenders might ask for more documentation if you have bad credit. Be prepared to provide your business information (like employer identification number and tax filing status), banking information, and proof of income.

Most lenders will tell you if you’re approved within a few hours, especially if you apply online. However, lenders specializing in bad credit can take longer to review applications, so give it at least a week before following up.

Considerations When Exploring Low-Credit Business Credit Cards

So much goes into finding the right business credit card for your company. Everything from interest rates to credit limits and fees can have a huge impact on cash flow. Low-credit business credit cards usually have higher fees and interest rates, so it’s crucial to balance affordability and features. Consider these factors to pick the best credit card for your company.

Know the Difference Between Secured vs. Unsecured Cards

Secured credit cards are easier to get but require an upfront deposit. In many cases, your deposit will also be your credit limit, so the more you deposit, the higher the limit will be. However, you’re limited by that deposit, so remember that your credit limit will be pretty low.

Unsecured credit cards don’t require a deposit, but lenders will give you a higher interest rate to compensate for your bad credit history. The credit limits will also be low.

Both secured and unsecured cards are helpful for building back up your credit, but if you’re having trouble getting a credit card right now, secured credit cards are the safer bet.

A Personal Guarantee May Be Required

A personal guarantee means that you, as the business owner, are personally responsible for the debt. That means that if your business goes bankrupt, you’re still on the hook for paying that debt. Lenders do this to reduce their risk and place more financial liability on you. It’s important to understand that personal guarantees have implications for your finances, so proceed with caution.

Business Credit Cards Can Affect Personal Credit Scores

Business credit cards are great because they separate business expenses from your personal expenses, but lenders still look at both scores to determine your financial stability. Keep in mind that paying your business credit card late could impact your personal credit score, so use these cards responsibly.

Explore Other SMB Financing Options for Those With Bad Credit

Credit cards are a popular way to get financing for your business, but they aren’t your only resource. You have options! Consider other small business funding options like:

• Invoice factoring: Invoice factoring allows you to get immediate cash for unpaid customer invoices. You don’t need a minimum credit score to qualify for invoice factoring, so it’s the perfect way to get funding, even if you have a bad credit history.
• Bank line of credit: A bank line of credit is a type of loan. But instead of getting a lump sum at once, you borrow and repay funds as needed. You only pay interest on the amount you withdraw, which is a great option if you aren’t sure how much money you’ll need.
• Merchant cash advance: With an MCA, you get an upfront lump sum in exchange for a percentage of your future sales. Most lenders will only offer this option if you have a strong sales history, though.
• No-doc business loans: These loans offer a type of alternative lending where you only need to provide minimal documentation. The no-doc business loan process is very fast and straightforward, although these loans usually have higher interest rates and less favorable terms.

Tips for Building Your Business Credit

Don’t let a bad credit score get in the way of your ambitions. Follow these tips to improve your business credit score:

• Check your credit regularly: Knowledge is power. Make a habit of regularly tracking your business credit score a few times a year and your personal score monthly. If you spot any errors or discrepancies, file a report with the credit bureaus to protect your score.
• Pay on time: Always pay credit cards on time, even if it means just making the minimum payment. Set reminders on your phone or enroll in autopay to keep up with your payments.
• Watch your expenses: Getting a business credit card with bad credit means you likely have high interest rates and low credit limits. Be responsible about your purchases. Carefully consider the pros and cons of every purchase to avoid going into unnecessary debt.

In-Summary: Can You Get a Business Credit Card With Bad Credit?

Specialized lenders offer credit cards designed for people with bad credit. Whether you go for a secured credit card, an unsecured credit card without a credit check, or another option, getting a credit card for your business is possible. However, you should expect longer wait times, stricter application rules, higher interest rates, and less favorable terms. There are some shady lenders in this space, so do your due diligence to find a reputable credit card company to get the support your business needs.

Have Low Credit and Exploring Financing Options? Consider Invoice Factoring

Cash flow is the lifeblood of every small business. Credit cards are helpful in a pinch, but strict terms, high interest rates, and predatory lending make them a less-than-ideal option for business owners with bad credit.

Fortunately, you don’t have to stick to just credit cards. Alternative financing solutions like invoice factoring are a smart, debt-free way to free up cash flow for your business. Simply choose which customer invoices you want to factor, and altLINE’s team will help you secure funding—sometimes on the same day. Get a free invoice factoring quote or talk to one of our representatives at (205) 607-0811 to convert your outstanding invoices into immediate working capital.