Business credit cards without a personal guarantee

Ensure your personal assets remain secure while still getting your business the credit it needs.

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Finding business credit cards with no personal guarantee can be very difficult in Canada. While there is typically a legal separation between personal and business expenses for a large corporation, this is usually not the case for a small business or sole proprietorship. This means that if your small business fails to pay back what it owes, you’ll be personally on the hook to cover the unpaid amounts. Not only can you lose personal assets and damage your finances, you can also seriously damage your personal credit score.

This is why some small business owners search for business credit cards with no personal guarantee – but options are very limited.

What is a personal guarantee?

A personal guarantee, also referred to as personal liability, is a legal promise made by a business owner or an organization to personally accept the responsibility to repay the credit issued to their business in case it fails to pay its debt. This clause is usually stated in your credit card’s Product Disclosure Statement (PDS) as “Joint and Several Liability”.

Credit card providers are taking a risk when they let you borrow money. They need to know that when the time comes, you’ll repay your debt – and a personal guarantee limits that risk.

For a small corporation that doesn’t have a credit history, the manager or stockholders typically personally guarantee that they will pay the debt in case the company goes bankrupt. Larger businesses, banks and providers usually require multiple guarantors to reduce the risk that a single person could fail to repay the debt. For a sole proprietorship, the sole business owner is usually solely responsible.

  • So, why would you want a card that doesn’t require a personal guarantee?

If you’ve just started your business and you’re not entirely sure about its financial future, your personal assets and financial future could be at risk. That’s where a card without a personal guarantee comes in — to ensure that if your business fails, your personal finances and your credit report, are secure.

Options for small business cards without personal guarantee

Your choices are slim when it comes to finding business credit cards with no personal guarantee. Your options may be limited to:

  • Prepaid business cards

While not many providers offer them, you can get a prepaid business card. Although this type of card won’t help you build credit and you’ll need to provide the money upfront to load onto the card for use, these cards are easy to obtain and can help you build a relationship with a provider. Prepaid business cards aren’t typically listed online, so you’ll need to reach out to a provider directly. BMO currently offer a prepaid business card.

  • A credit card that doesn’t report to the personal credit bureaus

Some business credit card providers only report to the businesses bureaus and won’t report to the personal credit bureaus – even if your business fails financially. While you’re still liable for your business finances, this is the most convenient way to get a decent credit card for your business and avoid the negative effects on your personal credit report.

  • Developing a relationship with your provider

If you’ve been a long-time customer with your bank or credit card provider, you may be able to negotiate a small business card without a personal guarantee – however many banks may be unwilling to do this. Your chances could be improved if you have an excellent payment history, great business financials and low debt. Some banks may waive the personal guarantee after you’ve had the card for a few years or if you’ve built up your business credit.

  • Applying for a corporate card

You’ll need to meet the bank’s size and revenue requirements to get a corporate card. However, once you have one, you’ll no longer be personally responsible for your business’ finances.

Compare business credit cards

Name Product Purchase Interest Rate Cash Advance Rate Annual Fee Minimum Income Welcome Offer
American Express Business Edge Card
19.99%
21.99%
$99
N/A
Earn up to 42,000 Membership Rewards points in your first year. Earn a Welcome Bonus of 30,000 Membership Rewards points when you spend at least $5,000 on eligible purchases within the first three months, and earn 1,000 Membership Rewards points each month (a total of 12,000 annually) when you spend a minimum of $3,000 on eligible purchases
BMO Rewards Business Mastercard
14.99%
22.99%
$0 annual fee for the first year ($120 thereafter)
N/A
Get up to $470 in value in your first year. Get 50,000 BMO Rewards points when you spend $5,000 in the first three months. Plus, the primary cardholder will get the first year $120 annual fee waived.
BMO Air Miles Business Mastercard
19.99%
22.99%
$120
N/A
Get up to 3,000 AIR MILES Bonus Miles ($310 towards your purchases with AIR MILES Cash).
BMO Cashback Business Mastercard
19.99%
22.99%
$0
N/A
Get 10% cash back on gas, office supplies, cell phone bills and internet bills for 3 months.
BMO Air Miles No-Fee Business Mastercard
19.99%
22.99%
$0
N/A
Get 1,150 AIR MILES Bonus Miles ($120 towards your purchases with AIR MILES Cash).
American Express AIR MILES for Business Card
N/A
N/A
$180
N/A
Earn a Welcome Bonus of 2,000 AIR MILES when you spend at least $5,000 on eligible purchases within the first three months
Business Platinum Card from American Express
N/A
N/A
$499
N/A
Earn a Welcome Bonus of 35,000 Membership Rewards points when you charge $7,000 in purchases to your card in your first three months of Cardmembership.
Marriott Bonvoy Business American Express Card
19.99%
21.99%
$150
N/A
Receive 50,000 Marriott Bonvoy™ points when you charge $1,500 in the first 3 months of card membership. Terms apply
American Express Business Gold Rewards Card
N/A
N/A
$250
N/A
Earn a Welcome Bonus of 30,000 Membership Rewards points when you spend at least $5,000 on eligible purchases within the first three months
American Express AIR MILES Gold Business Card
19.99%
21.99%
$0
N/A
Earn a Welcome Bonus of 150 AIR MILES when you spend at least $1,000 in eligible purchases within the first three months
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Compare up to 4 providers

How to choose the right small business card for your needs

To choose the best small business credit card, ask yourself:

  • Would you rather earn cash back, points or miles? Compare the value of cash back, points and miles to determine which will give you the best value. Also, consider what you will use more of. If you’re not a big traveller, avoid earning miles and instead consider cash back.
  • Do you want to earn accelerated rewards? Accelerated rewards usually come with more expensive credit cards and may limit you to specific spend categories. If you spend a lot on travel, gas or office supplies, try to find a card that offers accelerated rewards in the categories you spend most in. If you spend evenly across all categories, a flat-rate rewards card might be better.
  • Do you want to pay an annual fee? If your business has an inconsistent income, you may be more comfortable having a no annual fee card. That said, business cards with an annual fee tend to have stronger rewards and features.
  • Do you want a charge card or a regular credit card? A charge card must be paid off in full each billing cycle, while you can carry a balance from month to month with a credit card – but you’ll rack up interest charges.

3 tips for using your small business credit card

Looking to limit the impact your business credit card has on your personal credit score? Follow these tips:

  • Always pay in full. Try not to carry your balance from month to month. That way, you’ll have less pressure and you won’t be held liable for unpaid balances. Plus, you’ll minimize interest charges.
  • Limit authorized users. Since you’re liable for your business account, make sure to set up spending limits for your employees and authorized users so you don’t get stuck with a higher balance than you can pay. Some providers offer reduced liability for the card owner when they add employees on as authorized users, which can be a helpful feature when employees are using the card account too.
  • Look for a business card with a low APR. If you think you’ll carry a balance from month to month, try to get a card with a low purchase APR.

Bottom line

It’s difficult to find the perfect business credit card with no personal guarantee. In many cases, you’ll end up with a prepaid or a corporate card.

Instead of focusing on finding a card that doesn’t require a personal guarantee, look for a card that is going to reward you for your spending. You can then put your efforts into keeping your business finances on track so that you won’t negatively affect your personal assets or your credit score.

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