What is a Secured Business Credit Card?
Are you a business owner searching for an accessible business credit card that meets your business needs and your budget? A secured business credit card can help improve your credit, give you rewards and help you stay on budget.
These types of cards are a great option if you run a business and have a credit score that doesn’t qualify you for a regular business credit card. That’s why secured business credit cards are an excellent option for business owners trying to rebuild or improve their credit while growing their businesses. Here’s how a secured business card works.
How does a secured business credit card work?
A secured business credit card works the same way as a regular business credit card. However, the difference is that the cardholder provides a security deposit to the financial institution issuing the business credit card as security.
Cardholders cannot access the security deposit while the business credit card is still open. A secured credit card is similar to a prepaid business credit card in that the spending limit is typically the amount of the ‘prepaid’ security deposit. This helps to keep a business owner on budget as they can’t spend more than their security deposit.?
By paying your monthly credit card bill on time, you can slowly start to rebuild your credit score. The credit card issuing company will report to the credit bureau each month if the business owner’s secured credit card remains in good standing.
This is a key difference between a prepaid credit card and a secured credit card. Financial institutions that issue prepaid credit cards will not report to the credit bureau and they do not help repair credit scores.?
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Do all banks offer secured business credit cards?
No, not all banks offer secured business credit cards. However, there are at least two financial institutions in Canada that do offer secured business credit cards:
Typically, a business owner would first apply for a regular business credit card. If they aren’t approved due to poor credit, the bank would offer them a secured business credit card.?
If you have a poor credit score and are applying for a business credit card, ask the bank you’re applying to if a secured business credit card is an option if your application is denied. While your bank may not offer secured business credit cards, they will provide you with other options to consider.
This article is the shortened version of an article originally published on Hardbacon.ca by Arthur Dubois under the title "What is a Secured Business Credit Card?".