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7 Benefits Of Unsecured Business Credit Cards

Written by Marc Guberti

Marc Guberti is a Certified Personal Finance Counselor who has been a finance freelance writer
for five years. He has covered personal finance, investing, banking, credit cards, business
financing, and other topics.
Marc’s work has appeared in US News & World Report, USA Today, Investor Place, and other
publications. He graduated from Fordham University with a finance degree and resides in
Scarsdale, New York.
When he’s not writing, Marc enjoys spending time with the family and watching movies with
them (mostly from the 1930s and 40s). Marc is an avid runner who aims to run over 100
marathons in his lifetime.

Updated October 19, 2023​

4 min. read​

unsecured business credit cards

Businesses need capital to maintain operations and expand into new markets. Some companies have healthy profit margins and incoming proceeds to scale growth without borrowing money. However, many business owners tap into additional funding sources for their purchases, especially for expensive assets. Borrowing money even makes sense for business owners with strong balance sheets, depending on interest rates.

Business owners can explore various avenues of financing, and an unsecured business credit card is one of the best choices. We will discuss several benefits that come with owning an unsecured business credit card.

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Are Unsecured Business Credit Cards Better Than Secured Ones?

A secured credit card is essentially a credit card on training wheels. Business owners take out secured credit cards if they have bad credit and want to repair their scores. You have to make an initial deposit to fund your credit card, and that deposit represents your credit limit. Secured credit cards don’t have financing since you have to spend your own money to fund the credit card.

Business owners with poor credit can ditch the secured credit card for an unsecured one. You don’t have to deposit money into an unsecured credit card to borrow against it. Unsecured credit cards let you borrow more money and come with rewards. If you have bad credit, you’ll be stuck with a secured business credit card when you are starting out. However, unsecured credit cards offer more capabilities and perks for their cardholders. Unsecured credit cards are a long-term goal you can obtain right away if you have good credit.

Top Benefits of Unsecured Business Credit Cards

An unsecured business card provides numerous advantages over other financing methods, especially secured business credit cards. These advantages stand out.

1. No Security Deposit or Collateral

Unsecured business credit cards provide immediate funding without any strings attached. You don’t have to make a security deposit and put money into your business credit card before borrowing against it. Other financing methods, such as equipment loans, require collateral. Falling behind on payments for this loan can devastate a company. In addition, losing valuable equipment that acted as collateral for a loan can slow down a business and reduce operational capabilities. You won’t have to worry about these roadblocks if you use an unsecured business credit card.

2. Lower Interest Rates

Financial institutions only give unsecured business credit cards to business owners with good credit. While the barrier to getting an unsecured card is steeper for business owners with bad credit, you will get rewarded with more attractive interest rates. Lower interest rates make it easier to pay off debt and expand your company.

Most business credit card issuers will offer 0% APR for the first few months of using one of their cards. You can accumulate debt during this stage without worrying about interest payments until the welcome offer ends. This window gives business owners time to invest in their companies and repay the credit card debt before paying interest.

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3. Higher Spending Limits

Business credit cards have higher limits than personal cards, giving you more purchasing power. Business credit cards give you higher limits because credit card issuers will look at your personal income and business revenue. Credit card issuers only consider your personal income for a personal credit card which results in a lower ceiling.

4. Improves Business Cash Flow

Using a business credit card for short-term expenses gives you more flexibility to scale your company. You can use your credit card to finance purchases, so you have more money to put into your business. Business credit cards can also create more consistency for seasonal businesses. Some companies need additional funding during slow seasons, and a business credit card can keep your business in place while you wait for the busy season to return.

5. Low-Risk Capital

An unsecured business credit card has fewer risks than other financing options. You don’t have to worry about excessive interest rates or using collateral to obtain your capital. Unsecured business credit cards are a less risky avenue to getting the funds your company needs. While you should make more than the minimum payment to get out of debt sooner, credit card issuers won’t mark you for late payments if you make that minimum. Credit cardholders have more flexibility with how they approach their debt without the high risks of other financing options.

6. Potential for Business Growth

Businesses need money to grow. Making money proves your model is sustainable, and deploying that money puts you in front of more customers. Having more cash gives you more choices. An unsecured business credit card gives you additional funds and makes it easier to invest in your business. You can experiment with multiple marketing channels and expand your company sooner with your business credit line.

7. Builds Business Credit

Any credit card will build your credit if payments get reported to the major credit bureaus. An unsecured credit card gives you more flexibility than a secured credit card with higher limits and other advantages, but both strengthen your credit history. A higher credit score will help you qualify for better financing from business loans. Some lenders will only consider your loan application if you have a satisfactory credit score. A good credit score results in higher loan maximums and lowers interest rates. These advantages can help you reduce costs and get more capital. More lenders will happily work with you upon seeing a high credit score.

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Is an Unsecured Business Credit Card Right for Your Business?

Business owners have many paths to additional funds. Loans, crowdfunding, and other strategies can provide the capital you need. Unsecured business credit cards can provide a quick source of financing and make it easier to qualify for better loans in the future. You can tap into a higher credit limit since business cards account for your personal income and business revenue.

An unsecured business card will build your credit, and it can act as a reliable financing source. You don’t have to borrow against your business credit card, and you only pay interest on the remaining debt. Business owners can open a business credit card with no intent of using it right now, but it’s available when you need it.

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