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How to choose the right secured business credit card

By providing a deposit, a secured business card can help you build your credit and grow your company.

Growing your business can be difficult if you don’t have access to consistent funding for everyday expenses. When your credit score is less than great, getting a business credit card can seem impossible. That’s where secured credit cards come in.

A secured business credit card works just like any other credit card — but to get the card, you must put down a security deposit. The amount you deposit usually determines your monthly credit limit – so if you provide $5,000, you could have a monthly credit limit of the same amount.

Most banks and credit card providers don’t offer secured business cards, so it may be difficult to find more than one or two on the market at one time. You will typically need to contact a bank to ask if they offer a secured business card – most providers don’t list them online.

While we don’t have any secured credit card offers at the moment here’s a range of non-secured business credit cards.

Compare business credit cards available in Canada

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 57,000 Membership Rewards points in your first year. Earn 45,000 Welcome Bonus points when you charge $5,000 in purchases to your Card in your 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.
American Express Aeroplan Business Reserve Card
16.99%
21.99%
$599
N/A
Earn up to 90,000 Aeroplan points and a bonus Buddy Pass. Plus, apply for an American Express Aeroplan Business Reserve Card by October 1, 2021 and spend at least $10,000 in qualifying net purchases by November 30, 2021 and you’ll earn, step up, or jump start your Aeroplan Elite Status.
BMO Rewards Business Mastercard
14.99%
22.99%
$0 annual fee for the first year ($120 thereafter)
N/A
Get 50,000 points and the $120 annual fee waived in the first year.
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 1,000 AIR MILES Bonus Miles (over $100 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 75,000 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
Earn a Welcome Bonus of up to 105,000 Marriott Bonvoy points. Plus, get 5X the points on eligible gas, dining & travel for the first 6 months. Apply by September 20, 2021.
American Express Business Gold Rewards Card
N/A
N/A
$250
N/A
Earn a Welcome Bonus of 50,000 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

What is a secured business credit card?

A secured business credit card is geared towards business owners who can’t get an unsecured card because they have fair, poor or no credit. To get a secured card, you’ll need to provide a deposit which serves as collateral. The deposit amount that you provide typically becomes the monthly credit limit of your card.

After making on-time payments for a year or so, your provide may increase your credit limit. Eventually, your provider might transition you from a secured to an unsecured credit card. This will depend on your payment history, credit score and your ability to responsibly borrow money.

Where can I find a secured business credit card?

There are not many secured business credit cards on the market. As mentioned above, you will likely need to contact a bank and ask if they offer a secured card – you can’t usually see the details or apply for them online. You’ll need to visit a branch in-person or call to find out more about these types of cards.

How is a secured credit card different from an unsecured credit card?

With a secured credit card, you’ll need to provide an upfront deposit to serve as collateral. This deposit isn’t required with an unsecured card. Although you can’t use the deposit after you open the card account, you’ll typically get the deposit back once you pay off your balance in full and close the account.

A secured credit card is a great option for a new business owner who can’t qualify for a traditional credit card. It can give you time to build your credit score while you’ll still have access to credit to grow your business.

Why does a secured business credit card require a deposit?

Secured cards are most commonly used by individuals who don’t have the necessary credit score to get an unsecured credit card. Because these consumers are seen as more likely to default on their debt, issuing banks and credit card providers use the deposit as protection against missed payments. So if you don’t pay off your balance, the provider can recoup their loss by seizing your deposit.

Why does your business need a credit card?

Using a business credit card has many benefits including:

  • It makes it easier to separate your personal and business expenses.
  • It can make accounting and expense tracking simpler and cleaner.
  • Depending on your credit limit, you could make larger purchases upfront to get your business running.
  • You can use your credit as a revolving operating loan during business launch or tight financial times.

How to choose a secured business credit card

There aren’t many options for secured business credit cards on the market. Not all banks offer them – instead they may offer a prepaid business card or an unsecured business card. To narrow down the best business card for your needs, consider the following factors:

  • Annual fee. Most secured credit cards charge an annual or monthly fee.
  • Rewards. Secured cards typically don’t offer the same kind of rewards as unsecured business credit cards. However, earning rewards is a secondary benefit, as your main goal will probably be to build your business credit.
  • Minimum security deposit. Most secured credit cards require a minimum security deposit of $500.
  • Maximum security deposit. You may want a very high credit limit — in that case, look for a card with a high maximum security deposit, such as $10,000.
  • Cost of employee cards. Some providers charge for additional employee cards. If you need extra cards, contact the provider before applying and ask how much they charge per supplementary card.

Compare business cards for no credit

What fees does a secured business card have?

  • Security deposit. Consider what you want your credit limit to be and make sure you have that amount available in cash before applying for the card.
  • Annual fee. Most secured cards charge either an annual fee or a monthly fee.
  • Per-card annual fees. You could pay an annual fee for each additional card that you hand out to employees.
  • Late payment, overlimit and returned payment fees. Any of these fees could trigger a penalty interest rate or fee, so check your card’s rate table.
  • Foreign transaction fees. You’ll typically be charged 2.5% for using the card overseas or shopping on foreign websites.

Pros and cons of secured business credit cards

Pros

  • Multiple users. Supplementary employee cards allow you to add several authorized users to the card account.
  • Helps you build credit. Choose a secured business card provider that reports your payment activity to business credit bureaus like Dun & Bradstreet, Equifax and TransUnion.

Cons

  • Slim pickings. It’s hard to find secured business credit cards.
  • No rewards. Most secured credit cards don’t offer rewards.
  • Security deposit to access credit. You’ll need to provide a deposit before you can receive and use the card.
  • Per-card annual fees. Having supplementary cards may mean you’ll pay more in annual or monthly fees.

How to apply for a secured business credit card

To apply for a secured credit card for your business, do the following:

  1. Find a provider who offers a secured business card. Check with your current bank. If they don’t offer a secured business card, shop around and consider another provider that does.
  2. Apply for the card in-person. You will most likely need to fill out a personal guarantee for the card, even though it’s a business card. This makes you personally responsible for the card’s balance. Have your Social Insurance Number ready, along with your company’s business number.
  3. Bring financial documents. These might include revenue figures and your banking information.
  4. Provide your deposit. Once you’ve been approved for the card, you’ll need to provide the lender with your deposit.

What’s next?

After you get your secured business card, focus on making your monthly payments on-time and in full to prove to the credit card bureaus that you’re a reliable customer. As you continue to use your card, your provider might periodically review your account to see if you’re eligible for an upgrade to an unsecured business credit card. You can also call the provider and request a credit account review.

Once your credit score has improved, you can look forward to choosing from a variety of different unsecured business cards, where you’ll be able to earn rewards such as cash back, miles or points.

How to build business credit

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