Can A Startup Business Get Credit Cards with No Credit?

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

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Startup businesses need as much funding as they can get. However, some startups are pre-revenue or unprofitable and need capital to maintain the underlying company. Credit cards can help these startups raise funds and improve their credit score. A higher credit score will help business owners get higher loan amounts and lower interest rates. 

Most credit card issuers conduct a hard inquiry during the application process. This credit check gives creditors a better understanding of your credit history and debt management skills. Unfortunately, some small business owners do not have credit. Is it still possible for these startup founders to get business credit cards? We will discuss some factors to consider and how startup founders can obtain financing. 

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What is Considered a Startup Business for Lenders?

Startups have various definitions, depending on who you ask. Some people will mention pre-revenue companies, while others will say startups are unicorn companies that need cash. Startups are relatively new businesses seeking to validate their business models. Some are profitable, while others require startup funding to stay alive.  

Startups are riskier for lenders since approximately 80% of them fail. Most small business lenders and financial institutions have stricter guidelines for startups to mitigate risk. Having a good credit score will increase your odds of qualifying for a loan, and a business credit card can help with that objective.  

Is It Possible for Startup Businesses to Get Credit Cards with No Credit?

While some business owners may view opening a business credit card as an uphill battle, credit card issuers make accommodations for startup founders. You can qualify for a business credit card if you have a solid personal credit history. Good personal credit demonstrates your ability to effectively manage debt, something every creditor wants to see in an applicant. Using your personal credit card effectively can help you secure a business card and build your business credit score.

Even if you have poor personal credit, you can still get a business credit card. A secured business credit card is more accessible and gives you the opportunity to repair your credit score. However, these secure business credit cards require a security deposit that acts as your credit limit. You have to fund a secured business credit card with your own money before you can borrow against it. Startup owners with bad credit can use this credit card to improve their credit history and then apply for an unsecured business credit card in the future.

How to Choose a Business Credit Card for Startups

Startup founders can select from various business credit cards, but some are better than others. These criteria will help you determine which card is optimal for your startup.

Determine Minimum Requirements

Credit cards use minimum requirements to minimize risk and increase earnings. While most credit cards have minimum monthly payments, you also have to consider the minimum security deposit for secured business credit cards. A high minimum security deposit and low credit limit can make a credit card less enticing. 

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Compare Interest Rates

Interest rates play a critical role in how much your debt accumulates if it remains unpaid. Higher interest rates will make it more difficult to climb out of the hole. Some credit card issuers offer introductory periods with 0% APR, making it easier to repay current debts. Some credit card companies are more generous with their introductory periods, while others don’t offer them to their cardholders. Business owners should also look beyond the introductory APR to see what they will have to pay in the years ahead.

Tailor Your Card to Your Business Spending

Business credit cards can help you invest in your business, but some cards give you more flexibility. You should assess credit limits to see if your credit card provider is giving you enough startup funds. A credit limit under $2,000 is not sufficient for some startup founders. You should look for a small business credit card with a good credit line.

Some startup owners have high expenses at the moment. These founders may have expanded their staff recently or purchased a commercial property. Getting your business credit card when your costs have increased in the short term can help you fully capitalize on introductory APR offers.

Consider Fees and Other Costs

Business cards can have various costs. You should review how much you will get charged for making late payments, exceeding your credit limit, and other expenses. A business credit card’s costs can quickly add up if you are not careful. Assessing multiple cards will help you understand fair costs and help you distinguish greedy credit card offers. Some credit card companies may charge annual fees, but most of the best business credit cards do not have those expenses.

Take Advantage of Benefits, Bonuses, and Rewards

Business credit cards let you tap into additional funds and build your credit with on-time payments. In addition, credit card companies utilize multiple perks to encourage business owners to work with them instead of getting business credit cards from competitors. For example, credit cards may have cash-back on qualifying purchases, travel rewards, and other benefits.

Review the benefits of every credit card and consider which ones apply to your company. Most people would love cash-back and bonus points on every purchase, but if you often travel to meet new prospects and long-term clients, a business credit card with travel rewards may be the better choice for you.

Take Into Account the Lender’s Reputation

Business credit and loans can give your company the necessary capital to fund new ambitions, but scammers aren’t below-deceiving needy startup founders. Business owners should look at a lender’s reviews and conduct due diligence before working with them. Due diligence can help you identify fraudulent imposters. Most lenders will have a phone number and other ways to contact them. Reaching out to lenders will put you in contact with their support team. You will have to contact these people in the future if you work with the lender and have any questions.

This process will also help you narrow your list of legitimate lenders that could become long-term partners. Some lenders don’t do anything shady, but they have horrendous customer support and make business owners feel as if they are alone. When you work with a lender, you don’t only receive capital. You also receive additional resources and access to their support team. You may feel great about the capital you receive, but you should also feel confident in your lender to help you in case an issue comes up.

Consider Alternative Funding for Your Startup Business

Startup founders have many resources to obtain additional funds. Knowing your choices can help you get capital with the best terms and expand your business. Fund&Grow can help you explore more of your financing options and pair you with safe and easy-to-use funding.

Fund&Grow is a small business lending solution provider that enables business owners to borrow between $50,000 and $250,000 through low-interest business credit. Fund&Grow has a team of consultants who guide business owners to getting the funds they need. The company has helped secure over $1.4 billion for thousands of business owners. Some of their clients received over $100,000 within a few weeks. You can schedule a free call with Fund&Grow to discuss your options with one of their consultants. Their team can make the path to additional business credit much easier.

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