How to Apply for a Business Credit Card – No Personal Guarantee Required

A business credit card can be a useful source of additional funding for common expenses. Perfect for paying bills, making small purchases and snagging limited-time deals, these cards also have the potential to improve your company’s credit score.

There’s just one problem: Most business credit cards require a personal guarantee. This can complicate the application process if you’d rather not put your assets at risk. Fortunately, there are options if you’re looking to qualify for business credit without signing a personal guarantee.

What is Business Credit, and How Does it Work?

A credit card is just one of several types of business credit available for your company. You can also apply for:

  • Charge cards, which are similar to credit cards but require full payment each month
  • Business lines of credit, a form of business loan providing a given amount from which you can draw as needed, although a fee may be charged for each draw

Each option has an application process with specific qualification requirements. In general, lenders and card issuers look at:

  • Time in business
  • Business entity type
  • Personal and business FICO scores
  • Average income and expenses
  • Business financial statements
  • Personal debt-to-income ratio

Knowing how your business stacks up to these requirements makes it easier to find cards you can qualify for and get an idea of available credit limits.

If you don’t yet qualify for these types of business credit, you may have the option of making purchases on credit from your vendors. You’ve probably done this in the past without realizing it. Any time you buy something and are issued an invoice with a pay period, such as 30 or 90 days, you’re buying on credit. Paying the full amount on time demonstrates reliability and can boost your company’s credit score, making banks and credit card issuers more willing to extend other forms of credit.

Why Do Most Credit Card Issuers Require a Personal Guarantee?

When you sign a personal guarantee, you promise to repay any debt incurred when using business credit. If your business lacks the funds to cover payments, the institution providing the credit can come after your personal assets to settle the debt.

This is a big risk to take, even for the sake of realizing your dreams as an entrepreneur. If cash flow unexpectedly slows after you make a large purchase, you could lose a lot more than your company. In this sense, signing a personal guarantee makes business credit cards just as risky as loans requiring collateral or agreements in which the lending institution puts a lien on your assets.

However, card issuers are businesses, too, and they’re just as wary of risk as you are. The risk for them may be even bigger with business credit cards than those granted to individuals because credit limits tend to be higher. Issuers want a statement showing each customer declares his or her responsibility for payments and grants them the right to collect in the event of negligence. Since about one-third of startups fail within two years, issuers requiring personal guarantees are simply protecting themselves from what would otherwise be inevitable losses.

How to Get a Business Credit Card Without a Personal Guarantee

Before signing any credit card agreement, look at the fine print. This is where issuers put personal guarantee information, usually in the form of a statement declaring you’re personally financially responsible for making all payments. Look for a sentence beginning with something like: “You understand that by responding to this offer you agree to be personally responsible…” Read the whole statement to find out how far this liability extends.

There are a few credit cards you can get without signing a guarantee, but they’re all very limited and can only be used at certain stores or to purchase specific products, such as gasoline. In most cases, though, there’s no way to get around putting your assets on the line.

If you don’t need a card right away, you have the option of waiting until your company is larger and more well-established. Some issuers will waive the guarantee for businesses meeting certain size or income requirements. You can also try improving your business credit through other means to increase your credit score and create a reliable, consistent payment history.

Another possibility is to strengthen your relationship with the institution through which you have your business bank account. Trustworthy customers might be able to apply for a business credit card with no personal guarantee or seek similar funding opportunities with less overall risk.

Explore Your Business Credit Options

If you’re looking for an alternative to a business credit card or can’t find the right card to meet your needs, you might benefit from a business line of credit. Much like a credit card, a line of credit offers “revolving” funding that’s always available. You only pay interest on the amount you draw, and you may qualify for a higher credit limit and lower rates than you’d get from a business credit card.

At National Business Capital & Services, there’s no minimum FICO requirement to qualify, and even startups may be eligible for funding. Discuss your financial situation with a team member at National to find out if a credit line is the right option or if another form of funding would better serve your business. To find out more, call (877) 482-3008 for a free consultation, or fill out a 1-minute application to get the funds you need in as little as 24 hours.

National Business Capital & Services is the #1 FinTech marketplace offering small business financing and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

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About the Author, Megan Capobianco
Megan Capobianco is the Marketing Manager at National Business Capital & Services. Megan is passionate about helping business owners along their journey - providing them with relevant content they can use in their day-to-day operations.