Decoding the Secret of Business Credit Cards, No Personal Guarantee Needed

It sounds like an ancient myth doesn’t it? The idea that you can get business credit cards, no personal guarantee necessary? The truth is, unlike the fountain of youth and the lost city of gold, these creatures do exist. They are rare however, and it takes a seasoned business explorer to land one. What does it take to capture the rare beasts that are business credit cards no personal guarantee? What kind of businesses are they meant for? How can you get one? We answer all of these questions and more.

Why Are Business Credit Cards No Personal Guarantee So Rare?

The reason why these cards are so rare is that a lack of personal guarantee is risky to the lender. Typically, a business needs to have $1 million to $4 million in revenue annually to qualify. In addition, there is a minimum annual charging requirement for most of these cards of $250,000 to $1 million. Many also require there to be at least 15 cardholders. If you are a new, smaller business such as one just starting to grow out of your home, you will not qualify.

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Even if you do meet these qualifications, there are not a ton of options for business credit cards no personal guarantee. One reason for this is that virtually all lenders consider the finances of the business and it’s owners to be tightly interwoven. They aren’t necessarily wrong either. According to the SBA:

• 8% of start-ups use personal credit cards for financing, versus just 2% using business credit cards.
• One-third of businesses fail within two years, and half don’t make it five years.
• Personal savings are the top source of start-up capital, used by nearly 6 in 10 companies.

The issue then becomes one of trust and stability, creditworthiness if you will, between the card issuer and the business. The credit card company just wants to get paid. If they can have a personal guarantee, they feel some level of security. How can a business accomplish the level of creditworthiness necessary to get business credit cards, no personal guarantee needed?

Develop a Relationship, or Use One You Already Have

If you are already with a bank that offers a credit card and you have handled your business with them well, you may be able to negotiate for business credit cards, no personal guarantee. This could be true even if you do not meet the standard qualifications typical for this type of card.

It’s not a given, but if your relationship is long and proves extreme creditworthiness with no overdrawn accounts or late payments, you have a chance. The bank just has to be able to see that they can trust you.

Wait Until You Meet the Revenue and Size Banks Want

Those businesses that meet the revenue and size requirements are not guaranteed to get business credit cards no personal guarantee, but they certainly have a better shot than those that do not. Another thing that can help is having several years in business. If you beat the odds and stay in business 5 years or more, your chances are even better.

The thing is, these cards are most often are from specific stores. You can usually use them only at those stores. That means that even if you are able to get business credit cards no personal guarantee, your spending options may be severely limited.

Regardless, these types of cards are few and far between. However, they do exist.

Here are a Few Business Credit Cards, No Personal Guarantee

We list a few of the ones that are out there, what they offer, and what they require for approval below.

Brex Corporate Card

This card is a stand out. It isn’t connected to a specific retailer so it is much more flexible than other business credit cards no personal guarantee. In addition, you can earn rewards! Specifically, you can earn one point per dollar on purchases. You can also get credits and discounts on certain services .

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One condition is that you have to pay the balance in full each month. It isn’t revolving credit in the traditional sense. You cannot carry a balance.

Even though they do not require a personal guarantee, Brex knows exactly what it is looking for in a cardholder. They want innovative businesses that use modern technology. In addition, they want to see a healthy business specific bank account. It is best if it maintains a balance of $100,000 or more.

The Brex Corporate Card has no annual fee. It also offers other reward levels based on the type of spending, in addition to the 1 point per dollar spent on regular purchases. These include:

• 7x points on taxis and ridesharing services
• 4x points on flights, AirBnbs, and hotels when you book with Brex
• 2x points on software purchases that are recurring

There is an introductory offer of 30,000 bonus points and card fees waived for life after approval. Other perks include credit for ZenDesk and Amazon Web Services. There are discounts on WeWork and Salesforce also.

In addition to a business bank account with $100,000 balance, they also want you to have an EIN.

Bremer Bank Visa Signature Business Company Card

The Bremer Bank Visa Signature Business Company Card is an actual business credit card, no personal guarantee necessary. It also has high income requirements and still prefers to work with medium to large businesses. If you are able to get one, you will enjoy no annual fee and a rewards program.

To qualify, you must have at least $1,000,000 in annual revenue and $350,000 in net annual income for the previous two years.

Shell Small Business Card

The Shell Small Business Cardis only good at Shell gas stations, and it offers no rewards. The best thing about it other than it being one of the few business credit cards, no personal guarantee required, is that it can be a nice tool for employees on the road a lot. It offers options such as purchase limits and specific station limitations. There is no annual fee, but cardholders have to be associated with a government entity, nonprofit, or earn at least $1 million annually for the past 3 years.

Sam’s Club Business Mastercard

Surprisingly, the Sam’s Club Business Mastercardis one of the more flexible options for business credit cards no personal guarantee. You are not limited to using it only at Sam’s Club. In fact, you can use it anywhere they accept Mastercard. It also offers great rewards on gas, dining, and travel.

There is no annual fee, but you do have to have a Sam’s Club membership. Currently you get a $20 statement credit if you spend $50 or more at Sam’s Club the same day you open the card. Rewards include 5% cash back on gas up to $6,000 in a year. After that, you get 1%. There is also a 3% cash back on dining and travel rewards, and 1% on all other purchases.

To get this card, the business must make $5 million or more per year. It also must be in business for at least 2 years and have more than 10 employees for there to be no personal guarantee requirement.

Office Depot OfficeMax Business Credit Account

Similar to the Shell card mentioned above, the Office Depot OfficeMax Business Credit Account is not known for its flexibility. It is only good at Office Depot stores, officedepot.com, and OfficeMax. They do not offer rewards, but there is an introductory bonus. If you spend at least $150 in the first 60 days after opening the account you get a $50 statement credit.

To qualify for this card, your business must be at least three years old with over $5 million in sales annually.

A Personal Guarantee Does Not Mean a Hit on Your Personal Credit

It is important to remember that just because a credit card requires a personal guarantee, it doesn’t necessarily affect your personal credit. While strong business credit may not get you out of a personal guarantee, it can help protect your personal credit report.

Many cards will only do a soft pull on your personal credit, and then they will report your payment activity to your business credit. For this to happen however, you have to have established business credit. That doesn’t happen automatically.

What if You Do not Qualify for Business Credit Cards with No Personal Guarantee?

The truth is, if you are a small business, it is very unlikely you are going to qualify for small business credit cards no personal guarantee. This means that you are going to have some personal liability for your business debt. There are ways to protect yourself however, both when it comes to liability for business debts and personal credit.

For example, if you formally incorporate as a corporation, S-corp, or LLC, you will significantly increase your liability protection. As luck would have it, this is also something that you need to do to begin to establish business credit separate from your personal credit.

Another thing you need to do to establish business credit is get and EIN and set up a dedicated business bank account. Since most business credit cards like to see these things anyway, it’s a good idea to go ahead and get the ball rolling.

Other Steps to Building Separate Business Credit

In addition to formally incorporating, getting and EIN, and having a separate business bank account, there are a few more things you need to do to separate your business from yourself and begin to build credit for your business separate from your personal credit.

For example, your business needs contact information that is separate from your own. That means a business phone number and business address that are listed in the business directories. You also need a dedicated business email address, and it needs to have the same URL as your website. It can’t be from a free service like Yahoo or Gmail.

Speaking of a website, you definitely need one. These days, if you do not have a website you basically do not exist. However, it can’t be just thrown together. You need to have it professionally designed. Also, pay for hosting. Free hosting services look unprofessional.

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Then, head over to the Dun & Bradstreet website and get yourself a D-U-N-S number. You have to have a D-U-N-S number to have a credit file with Dun & Bradstreet. Since they are the largest and most commonly used business credit reporting agency, you definitely need this number.

How Do You Get Accounts to Report to Your Business Credit?

Okay, so here is the secret that few know. It can seem virtually impossible to get credit accounts that will report to the business credit reporting agencies because, you have to have credit to get credit. However, if you set up your business correctly, like noted above, you can open tradelines with vendors in the vendor credit tier. These are starter vendors that will give you net terms on invoices without checking either credit report. Then, they will report your payments. If you apply with your business information, like your business phone number, address, and EIN instead of SSN, then they will be reporting to your business credit report.

When you get enough of these types of accounts reporting, you will be able to apply for cards in the retail credit tier. These are cards for stores Best Buy and Office Depot. Then, after enough of those are reporting, you will be able to apply for cards in the fleet credit tier. This includes cars like Fuelman and WEX. Finally, after you have enough accounts reporting positive payment history to your business credit report, you will have strong enough business credit to apply for card in the cash credit tier.

This are high limit, lower interest, awesome rewards cards that are not limited to specific retailers or types of expenses. While they may still require a personal guarantee, if you follow the steps outlined, they will not affect your personal credit.

Business Credit Cards, No Personal Guarantee: They Do Exist, but They are Few and Far Between

Business credit cards, no personal guarantee required, do exist. However, they are rare, and they are not easy to get. Realistically, it isn’t feasible for a small business to make finding these cards a goal. A more productive goal is to work to build strong business credit and to run your business on the merits of its own credit report.