As a small business owner, having a bad credit score is not an ideal situation. It can limit your financing options and make it difficult to access the necessary funds to run your business smoothly. However, despite having a low credit score, you still need to manage your finances and potentially grow your business. This is where the best credit cards for small businesses with bad credit come into play. In this comprehensive guide, we will introduce you to the top credit cards designed for small business owners struggling with their credit scores and explain how you can benefit from using these financial tools.
Why Should You Consider a Business Credit Card?
- Separation of personal and business expenses: Using a business credit card helps you keep your personal and business transactions separate, thereby simplifying the process of managing your finances and preparing for taxes.
- Building your business credit: A business credit card can help you improve your business's credit score over time by making regular, timely payments.
- Access to additional capital: A credit card can provide quick access to working capital for your business, allowing you to cover unforeseen expenses or take advantage of business opportunities.
- Valuable rewards and perks: Many business credit cards offer rewards programs and benefits that can help offset your business expenses and enhance your operations.
Factors to Consider When Choosing a Credit Card for Your Small Business with Bad Credit
- Annual Percentage Rate (APR): APR is the interest rate charged on your outstanding balances. Look for a card with a low APR to minimize your costs.
- Annual fee: Ensure the benefits of the card outweigh any annual fee charged.
- Additional fees: Be aware of the various fees associated with different credit cards, such as late payment or balance transfer fees. Choose a card with reasonable fees that suit your business's needs.
- Rewards and benefits: Choose a card that provides useful rewards and benefits for your business spending habits.
- Accessibility: Look for a credit card issuer that specializes in extending credit to small businesses with bad credit.
Best Credit Cards for Small Businesses with Bad Credit
1. Capital One Spark Classic for Business
The Capital One Spark Classic for Business is an excellent option for small businesses with fair or average credit. The card offers a 1% cash-back reward on all purchases, has no annual fee, and can help improve your business credit score when used responsibly.
2. Wells Fargo Business Secured Credit Card
The Wells Fargo Business Secured Credit Card is specifically designed for small business owners with bad credit or limited credit history. This card requires a security deposit and offers a low APR. As your credit score improves, you may be eligible to upgrade to an unsecured Wells Fargo business credit card.
3. BBVA Compass Business Secured Visa Credit Card
The BBVA Compass Business Secured Visa Credit Card is another great option for small businesses with bad credit. This secured credit card requires a security deposit and offers a competitive rewards program with 1 point per $1 spent on qualifying purchases. There is no annual fee for the first year, and a low yearly fee after that.
Best Credit Cards For Small Business With Bad Credit Example:
Imagine you run a small graphic design company, and your current credit score is less than stellar. You decide to apply for the Capital One Spark Classic for Business credit card to help manage your finances and improve your credit score. You regularly make purchases for office supplies and software subscriptions with the card, earning a 1% cash-back reward on every dollar spent.
By paying off your outstanding balance in full every month, not only do you avoid paying high-interest rates, but you also demonstrate responsible credit usage. Over time, your business credit score begins to improve, and your company gains access to better financing options to help fuel future growth.
Navigating the world of business credit cards with a bad credit score can be challenging, but it is not impossible. By choosing the right credit card tailored to your specific needs and using it responsibly, you can work towards rebuilding your business credit and eventually gain access to more attractive financing opportunities. Feel free to explore other Flik Eco guides for more insights on personal finance and business growth strategies and, if you found this article helpful, don't forget to share it with fellow small business owners!
