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How do I get a Guaranteed Business Credit Card?

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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 17 September 2016
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Obtaining a guaranteed business credit card may be the first step toward building credit for many beginning businesses. There are several ways in which the term guaranteed might be understood, however. It can mean that someone or some entity has stepped in to guarantee the amount of money borrowed on the card, or it might mean the card is prepaid, and subject to the limits of the prepaid account. Alternately, some people mean that the card itself is guaranteed to be approved.

Often, the guaranteed business credit card is one where the business and the owner of the business are liable for repayment. In other words, the owner of the business when applying for a card uses his/her personal credit information to guarantee repayment. Should the business become insolvent, responsibility for repaying the card bill shifts entirely to the business owner, and the money borrowed is viewed as personal debt. This is a challenge for many business owners because one of the reasons people create a separate legal entity called a business is so that they won't be liable for certain debts if the business goes under.

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Giving this type of guarantee is often not very helpful to the business either, and eventually a company needs to get its own credit that doesn’t require an owner guarantee. On the other hand, it’s not challenging to obtain a guaranteed business credit card of this kind. A business owner will merely add information about his social security number and income on the application, and this will be checked with the business tax ID number. Providing owner credit score is good, such cards are usually approved.

Another type of guaranteed business credit card is the prepaid card. This will allow people to put money on the card so that they can use it like a credit card for various business transactions. Alternately, some businesses have a secured card. Money to the limit of the card is placed in an account and is not touched by the business, and the company can borrow up to their limit, making regular payments, but guaranteeing that should anything happen to the business, that secured and banked amount can be used to pay off debt. There are many companies that offer both these types of cards, and both are easy to search for on the Internet.

There are finally types of cards that are guaranteed approval cards. These too can be found on the Internet, and they may seem attractive to a business with little or poor credit history. It’s important people read the fine print on these cards and note that the amount of credit they may get is usually up to a given amount. Due to the fact that creditors may be taking higher risks by guaranteeing issuance of a card, businesses can expect these cards to come with higher interest rates and fees. It may be better to start with some other form of the guaranteed business credit card instead, since fees might be lower.

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