Secured business credit cards without personal guarantee are much less difficult to obtain. You provide the collateral which is typically 100 to 110 percent of the credit limit. This means that a business owner is not required to sign a personal guarantee for a prepaid credit card. While prepaid credit cards don't help you build business credit the way unsecured and secured business credit cards do, they do mitigate a business owner's risk.
Because of unsecured credit card loans, the bank wants an additional line of defense if your business can not pay its debts. As a result, almost every bank asks for personal guarantees on business credit cards. Therefore, it is difficult to obtain business credit cards without any personal security guarantees.
If your business can benefit from an unsecured ongoing access to cash just like an unsecured line of business credit than a merchant card may be just what you’ve been hoping for.
Establishing corporate credit without a personal guarantee is doable. However, for most new businesses it can take up to a year. In general:
1.Organize your Corporation or LCC with your State
2.Get an EIN from the IRS
3.Separate mailing address (UPS Store)
4.Get three business lines of credit (Dell, Staples, etc).
5.Wait and then apply for a small business credit card.
Some people decide to use personal guarantees when getting started. Just think with your head and be responsible.
I am generally very leery of those selling services to establish corporate credit overnight.
It’s great that you are starting a business.
Can You Get a Business Credit Card With No Personal Guarantee?
Getting credit for your business without personal guarantees isn't something you can accomplish overnight, but it is important, and it's possible. ... Save some of the proceeds from the unsecured business loan for your company. Since credit card loans are unsecured, banks want an extra line of defense in case your business can't pay its debts. ... As such, it's hard to come by a business credit card with no personal guarantee requirement.
3 steps to getting business credit cards without personal guarantee
Finding a lender willing to extend no personal guarantee to you is difficult, but not impossible. Together, partners must pay all company debt. If your partner’s assets only cover 30% of the liability, you pay the other 70%. This is true even if you own only half the company. Getting a business credit card with no ties to your personal assets takes a lot of time and planning.
These three steps can help your business get approved with no personal guarantee:
1. Separate yourself from your business - Create your business as an entity separate from you. Separate your funds, debt, and official name. And to do this you must merge or become LLC. If you are the sole owner or partner, the bank sees your business credit card as a personal loan. In this case, your personal assets can be used to repay business debt.
2. Build your credit score - There are several types of credits that you can use to assign a strong credit score. If you are careful about spending and being diligent with payments, you can set yourself up for no personal guarantee credit card.
3. Prove you can pay back debts - To get a business credit card without personal guarantee, you will need to show creditors a history of your business successfully paying debts. You must also prove you are an established business that makes steady profits.
To find out the full report on your credit history, you should get reports from some business credit bureaus. The report reflects your ability to pay monthly bills, vendors, and banks.
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