Almost all business credit cards require a personal guarantees. But there are business credit cards with no personal guarantees that reduce a business owner’s personal liability. These cards are typically issued to businesses with $1mm – $4mm+ in annual revenue and 1 – 2+ years cash reserve.
For businesses that don’t meet these high thresholds, the Chase Ink Business Cash card our preferred small business credit card. Companies can earn between 1% – 5% cashback on all purchases with a 0% introductory APR for the first 12 months.
Business Credit Cards Without a Personal Guarantee: Costs, Terms & Qualifications
Let’s take a look at the details of each type of business credit card with no personal guarantee below:
1. Corporate Credit Card With No Personal Guarantee
Corporate credit cards are general purpose credit cards used to pay for working capital expenditures. These cards are usually issued to companies with $4 million or more in revenue and 15+ normal credit card users. Liability can be either fully on the business or held jointly between the business and each individual cardholder.
If a corporate credit card has “company-only” liability then the risk is fully placed on the business itself. If a corporate credit card account has “card-specific” liability then the business and the individual cardholders are held jointly liable for their specific card transactions. Regardless, no personal guarantee is required on behalf of the business owner.
The average APR on a corporate credit card is currently around 15% and the average cost per card is typically between $25 – $100 annually. Businesses who use this card typically have 15+ cardholders, at least $4 million in annual revenue, and an existing corporate credit card policy agreement. The most common use of a corporate credit card account is to finance overhead.
In addition to the reduction in business owner liability, corporate credit cards also offer the following benefits:
- Hotel and resort complimentary benefits
- Access to airport lounges
- Premium member at a co-branded hotel, if any
- Additional airline perks such as free wifi
While corporate credit cards offer a range of benefits, they typically don’t offer cash back or rewards points like other small business credit cards. If you want a card that offers rewards, check out the small business credit cards with a personal guarantee in the section below.
How to Get a Corporate Credit Card With No Personal Guarantee
Corporate credit cards are usually offered by all the major business credit card issuers. However, almost all card issuers require at least $4 – $25+ million in annual revenue and between 10 – 15+ cardholders in order to qualify.
If you meet these requirements, you can apply online for a corporate credit card account with a card issuer like American Express. They have 4 different corporate credit card options available for a range of intended uses. For example, there’s a card for businesses that travel, host a lot of meetings, or make general purchases.
Since the requirements for approval are high, card issuers like American Express require you to call or chat live with a team member. On the call, they’ll go over the required business documents needed for approval as well as answer any questions you might have.
2. Corporate Gas Card With No Personal Guarantee
Corporate gas cards come in the form of either fuel cards or fleet cards, some of which don’t require a personal guarantee. Fuel cards are typically for businesses with 1 – 2 vehicles while a fleet card is used by businesses with 2+ vehicles. Companies that qualify for a gas card without a personal guarantee typically have $1 million or more in annual revenue.
Like corporate credit cards, a gas business credit card with no personal guarantee can either have company-only liability or card-specific liability. This means that corporate gas cards with no personal guarantee either place liability fully on the business for all transactions or jointly between the business and individual cardholder, respectively.
It should be noted that it’s not uncommon to find gas cards that require a personal guarantee. In these cases, liability is held jointly between the business owner and the business. Employees would therefore not be held responsible for transactions on their cards.
Corporate gas cards without a personal guarantee typically have an APR around 23% and cost between $0.00 – $25 per card, per month. Unlike corporate credit cards, corporate gas cards typically can only make gas and gas-related purchases, and discounts are earned on monthly gallons pumped. A corporate gas card is best for companies with 2+ regularly-used vehicles.
How to Get a Corporate Gas Card With No Personal Guarantee
Corporate gas cards are typically co-branded with a card issuer and a fuel company. For example, Shell has a co-branded small business gas card with Visa. In fact, Shell is currently Fit Small Business’s best small business fuel card and is one of the few corporate gas cards that don’t require a personal guarantee.
Instead, it’s possible to get the Shell Small Business Gas Card with company-only liability. To do so, your business will have to have at least $1 million in revenue and at least 3 years of business operations. If you don’t, you can still qualify, but you’ll have to sign a personal guarantee.
The Shell Small Business Gas Card has no monthly cost and offers a $0.03 discount per gallon. The card can be used at over 14,000 participating gas stations. See if your business qualifies today.
3. Prepaid Business Credit Card With No Personal Guarantee
While prepaid credit cards aren’t anything new, recent changes to the credit market have brought forth new, online prepaid credit card issuers. These prepaid business credit cards are backed by cash and therefore there is no liability. 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. This is because each card issued to an employee is backed by a specific denomination of cash. There are no overdrafts or fees, meaning that there’s no chance to be charged interest on payments above the line of credit backed by cash.
Each individual card issued to an employee can have unique spending controls and a different line of credit. Cards are managed online and accounts can be re-upped with money in real time.
This means that prepaid credit cards are best for business owners who want to limit their exposure to employee charges or who can’t get approved for a card with a personal guarantee due to bad personal credit. Further, these prepaid credit cards can help business owners better manage employee expense tracking and reimbursement.
How to Get a Prepaid Business Credit Card With No Personal Guarantee
There are many online card issuers who now offer prepaid credit cards without a personal guarantee. These companies are usually independent companies that work with traditional card issuers such as Visa, American Express, or Mastercard. To get a prepaid credit card without a personal guarantee, you’ll have to enroll in one of the online programs.
For example, Dash is an online company that works with Mastercard to offer liability-free prepaid credit cards. There is no limit to the number of cards you can issue to your employees and expenses can be tracked in real time. Further, funds can be added to individual cards online.
Business Credit Card Personal Guarantee
A business credit card personal guarantee legally binds a business owner to be personally liable for any business credit card debts. When applying for a business credit card, owners sign a personal guarantee that holds them personally responsible for all card charges. This is beneficial to business credit card issuers who want to mitigate their risk.
This doesn’t mean that a personal guarantee is bad. Instead, a personal guarantee is simply an extra layer of protection for creditors. It’s pretty common for small business credit cards to require a personal guarantee, even if the business has its own credit report and history. This is mainly due to the fact that the financial health of a small business is often tied to the health of the owner.
You should therefore expect to sign a personal guarantee when opening a small business credit card. This typically occurs when a business credit card application requires the business owner’s social security number. The card issuer will use the owner’s personal credit history to help determine creditworthiness and to hold the owner jointly liable for all debts.
In addition to the personal guarantee of the business owner, some small business credit cards will hold the employee or cardholder liable, too. Some credit cards that don’t require a personal guarantee on behalf of the owner might still hold employees jointly liable with the business for their specific credit card transactions. We discuss liability further in the sections below.
Drawbacks of a Personal Guarantee
A personal guarantee holds the business owner (guarantor) jointly liable for all business credit card transactions. While this protects card issuers, it increases the risk of the business owner. For example, a personal guarantee authorizes a business card issuer to pull an owner’s personal credit as well as make them responsible for all business debts.
Small Business Credit Cards With a Personal Guarantee
Like we said before, a personal guarantee isn’t necessarily bad, and there are a bunch of good business credit cards that also require a guarantee from the business owner. These cards are still a great way to separate business and personal expenses, establish business credit, track business charges, and earn rewards.
On average, you should expect to sign a personal guarantee when you open a small business credit card account. This helps limit a card issuer’s risk and makes it more likely that you’ll qualify when compared to using only company business credit. The 3 types of small business credit cards with a personal guarantee that you should consider include:
1. Small Business Credit Card
A small business credit card is the most common type of business card with a personal guarantee. Small business credit cards are available from all the major card issuers and liability is typically held jointly between the business owner and the business. This means that a personal guarantee is required for approval.
Small business credit cards are a great option for businesses who don’t qualify for a corporate credit card. These cards are generally used to pay for working capital expenditures and can be issued to multiple employees. There is typically no employee liability for cardholders since the business owner is ultimately responsible.
Small business credit cards typically have a rewards program. Some cards, like Chase Ink Business Cash, offer between 1% – 5% back on all purchases. Higher cash back is associated with spending categories such as office and travel purchases.
Other cards offer rewards points for purchases made. For example, the Capital One Spark Miles card offers 2x airline miles for each dollar spent. The American Express Business Platinum card offers 5x points for each dollar spent on airline expenses, along with other travel-related point bonuses.
For more information on the small business credit cards with a personal guarantee, check out our guide on the best small business credit cards. If you’d like to view the cash back options offered by Chase, check out Chase Ink Business Cash, our top-rated small business credit card.
2. Small Business Secured Credit Card
A secured credit card is a credit card backed by cash. The revolving line of credit on a secured credit card can be greater than the value of the cash. This is because the cash is treated as a deposit and credit card borrowers are expected to make monthly payments on the card. Any existing balances roll over into the next month and interest is charged on the amount.
Even though a small business secured card is backed by cash, a business owner will typically have to sign a personal guarantee. This is because the deposit is usually less than the revolving line of credit and card issuers hold the business and owner jointly liable.
A secured credit card is designed for business owners with little or no credit. Secured credit cards can be used to both build personal credit as well as business credit. For an annual fee equal to ~$50 per card, rewards points or cash back can be earned on purchases.
The Wells Fargo Business Secured Credit Card is rated as the top secured card by Fit Small business. The card offers credit lines up to $25k and up to 10 employee cards. No credit required.
3. Small Business Charge Card
A small business charge card is like a credit card except that its balance is paid off in full at the end of every month. This is different in that there are no rollovers and no APR charged on outstanding balances. Instead, business owners are required to sign a personal guarantee to settle their company debts at the close of each billing cycle.
This means that a charge card doesn’t have a revolving line of credit. Instead, late fees and restrictions are assessed on any late payments. If too many late payments are made, the charge card account will adjust to become a normal credit card account. The size of the line of credit is dependent on a borrower’s ability to repay.
Charge cards are most commonly used by business owner with little to no credit who want to build their personal and/or business credit. American Express is one of the few major card issuers that still offers a charge card. Most charge cards are being replaced by more flexible small business credit cards.
Bottom Line: Business Credit Card With No Personal Guarantee
Overall, a small business credit card without a personal guarantee limits a business owner’s liability and helps them qualify for a card if they have poor credit. However, other than corporate credit cards, prepaid cards, and some fleet cards, all small business credit cards require a personal guarantee.
The Chase Ink Business Cash card is rated as the top small business card with a personal guarantee by Fit Small Business. Businesses can earn between 1% – 5% cashback on all purchases as well as a $300 introductory bonus.