How to Get a Secured Business Credit Card

By Valencia Higuera

Overview

Are you looking to start a business? Do you want your business to have its own identity? If so, consider a secured business credit card. With a business credit card, you'll have to pay a deposit for the credit card. But once you've established business credit, you'll qualify for a higher spending limit in the future and future business loans. Running a business is expensive, and some companies experience cash flow problems. You can use a secured business credit card to acquire essential business supplies or marketing materials. What's more, a secured business credit card builds your business's credit rating.

How to Get a Secured Business Credit Card

Step 1

Open a bank account in the name of your business. Before applying for a secured business credit card, visit your local bank or credit union and inquire about a business account. If you want to give your business its own identity, you'll need to establish a bank account that's separate from your personal account. Most banks require a minimum deposit of $50 on business accounts.
Step 2

Improve your personal credit score. If your business doesn't have a credit history, some secured credit card companies base approval on your personal credit history. Secured credit cards require a deposit, and most people qualify for this type of credit. However, having a high personal score can influence the interest rate you receive on the card. Check your personal credit report beforehand, and consider ways to improve your score by eliminating debts and making timely payments.

Step 3

Have a deposit on hand. Secured business credit cards differ from unsecured credit cards. With an unsecured credit card, applicants don't have to pay an deposit or set-up fee. On the other hand, applicants who apply for a secured business credit card are required to pay a deposit, which secures their spending limit. For example, if you want a $1,000 credit limit on the secured business credit card, you'll have to pay a $1,000 deposit. Make timely payments for one year, and then ask the credit card company to review your account. They may grant you an unsecured business account and increase your spending limit.
Step 4

Request a tax identification number (EIN). If you're running a home based business and it's a sole proprietorship, you don't need a tax identification number from the IRS, and you can apply for a secured business credit card using your Social Security number. If you incorporate or form a LLC, you'll need to get a business or tax ID number and include this number on your credit application.
Step 5

Complete your application. Research different secured business credit cards before submitting an application. Compare fees, rates and terms. Once you find the right card for your business, thoroughly complete the credit card application and include a check for your deposit and other related fees such as processing and set-up.

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