Secured Business CC

Personal Finance
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Secured Business CC

Nick J.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes

So I've got a question that may have already been answered. I quickly skimmed through the category and didn't see what I was looking for.

I want to create/open a secured business credit card for my business, specifically the new entity I'm creating in Missouri. Put 5k on it and use it for expenses. I called the local bank I plan on using there in Joplin and ask them if they offer secured business cards and they said no, it must unsecured.

Does anyone know of a secured CC company like a CaptialOne or something similar that you can create a secured business card or am I way off base here?

My main reasoning is to use the card for small home repair items and rental car, little stuff. I know I could apply for a home depot card and all that but instead of immediately tying everything to my personal name I'd like to start building business credit at the same time.

Does that make sense? any thoughts or specific help would be great

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Josh Green
Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
16y

Nick,

many banks don't offer a secured business CC. My bank is in the process of starting a new product, but we shall see when it is launched.

IN THE MEANTIME, i would suggest getting a secured loan for the business.

you will put the 5k into a cd and they will lend it back to you. you will typically have quaterly payments on this and your money is still earning interest in the cd.

check to see if your bank offers that. many (most) do.

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  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    16y

    Nick,

    many banks don't offer a secured business CC. My bank is in the process of starting a new product, but we shall see when it is launched.

    IN THE MEANTIME, i would suggest getting a secured loan for the business.

    you will put the 5k into a cd and they will lend it back to you. you will typically have quaterly payments on this and your money is still earning interest in the cd.

    check to see if your bank offers that. many (most) do.

    2Reply
  • Nick J.
    OP
    Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
    16y

    Thanks Josh, I seem to remember that my bank does do that, I'll ask this new bank if they do that.

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  • Craig Grella
    Commercial Real Estate Broker · Nashville, TN · Member since 2008 · 151 posts · 46 votes
    16y

    Josh has a great post. Many business owners and rehabbers struggle with credit options, not realizing that almost all banks, especially local community banks offer small personal and business loans backed by deposits.

    Since it's a small amount you may go through that money quickly and need another small loan once it's been paid off. In that way you may incur fees for opening and closing several loans. You may want to look into getting a small business line of credit with that money in deposit as the security for the line. Even if its just a $5,000 line you will only pay fees once to open it, then you can charge it up and down as you please.

    Good luck.

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  • Nick J.
    OP
    Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
    16y

    I can see what you mean by going through it quickly if I'm paying it quarterly. What you're talking about is 'revolving credit' right? that works too.

    I'm just concerned with creating and building business credit with a new entity, I don't plan on blowing the money but rather spending and paying it off systematically to help build it.

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  • Craig Grella
    Commercial Real Estate Broker · Nashville, TN · Member since 2008 · 151 posts · 46 votes
    16y

    Most small lines will be tied to your personal credit as well as business. It's not until you step into higher amounts and do more business that most banks will offer unsecured lines tied only to business activity.

    With that said, a line will report just like a loan, as a tradeline on your credit. To really build business credit, you'll want to setup accounts at D&B and other business reporting sites.

    As long as you run your business activity through a legal business entity other than your SS# (sole proprietorship) you should have no problem showing profitibility and therefore no problem increasing your lines of credit tied to the business.

    The unsecured nature is a different beast though. Many banks now are going back to the tried and true underwriting methods which include getting security for their lines and loans. The best way to get an unsecured line or loan for your business is to have revenue that supports that line and assures the bank you'll pay as promised. That takes time and business activity.

    Until then, a better use of your time is getting whatever credit you can, personal or otherwise, using it wisely and building your business.

    -Good luck.

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  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    16y

    lots of good stuff craig!

    i would also add that right now, banks and other lenders are increcibly picky about WHO they lend to. not only on personal credit scores, but the type of business.

    for instance, even if you had ABSOLUTE PERFECT credit i could not give you a line of credit if you are in the investment property field.

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