A secured business credit card is backed by a deposit and acts like a normal business credit card. Business owners with poor credit or limited credit will find it easier to qualify for a secured credit card when compared to an ordinary business credit card. Secured business cards can help you establish business and personal credit.
If you have less than perfect credit or a thin credit history but are looking for an unsecured line of credit, consider Fundbox. They offer no credit check business loans and business lines of credit of up to $100K. Prequalify online in minutes.
Best Secured Business Credit Card: Wells Fargo Business Secured Card
The Wells Fargo Business Secured Credit Card helps business owners with credit scores below 640 build personal and business credit. The card offers a maximum credit line of $25k, up to 10 employee cards, and rewards. The Wells Fargo card has rates starting at 16.15% and is one of the only secured business credit cards available nationwide. If your credit score is above 640 (check here for free) you might qualify for an unsecured small business credit card. Read our article on the best small business credit cards to learn more.
If you are wanting a business credit card in order to help manage employee spending, a prepaid credit card like those offered by Bento for Business could also be a great alternative. Your credit isn’t checked and you don’t have to sign any personal guarantee. You just add funds to cards for each employee as needed and can manage where and how the money is spent. You can create reports for each card in seconds. Visit Bento to get your first 60 days free, 2 free cards, and your setup fees waived.
Wells Fargo Business Secured Card: Costs, Terms, & Qualifications
| Wells Fargo Business Secured Credit Card | |
|---|---|
| Credit Requirement | 550+ personal credit score |
| Maximum Credit Line | Up to $25,000 (credit line equal to amount deposited in collateral account) |
| APR | 16.15% current rate (prime rate + 11.90%) |
| Annual Fee | $25 per card |
| Number of Cards | Up to 10 employee cards ($25 per card annually) |
| Rewards Program | 1 point or 1% cash back per dollar spent with no limit |
| Foreign Transaction Fee | None |
| Balance Transfers | Not permitted |
| Learn More | Visit Wells Fargo |
Alternatives to Secured Business Credit Cards
Secured business credit cards are a great option for business owners looking to build or reestablish their credit. However, since they require a deposit at least as large as your credit line they’re not helpful if you don’t have a lot of cash on hand. Instead, check out a short-term business loan below.
Best Secured Business Credit Card Alternatives
| Minimum Credit Score | |||
| Minimum Time in Business | |||
| Maximum Loan Amount | |||
| Term | |||
| Expected APR | |||
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| Learn More |
Fundbox
OnDeck
KabbageBusiness secured cards and alternatives are most commonly used by business owners with poor or thin credit. However, recent changes to credit bureau reporting might have increased your personal credit score. Starting July 1, 2017, Experian, Equifax, and TransUnion will exclude records of civil judgments or tax liens that don’t have minimum identifying information. It’s important to check your credit score to see if yours has increased.
Check Your Credit Score for Free
Why We Recommend The Wells Fargo Business Secured Card
The terms for the Wells Fargo Business Secured Card are favorable for a secured card. Wells Fargo typically approves most business owners with a credit score above 550 and you can deposit between $500 – $25k into your collateral account. The APR on this card is currently 16.15% and is significantly lower than many of the other secured cards available.
You can even enroll in a rewards program with the Wells Fargo Business Secured Card. Once enrolled, you can choose to either earn 1 point or 1% cash back per dollar spent. If you choose the points you can redeem them for gift cards, travel, and more. However, this Wells Fargo Rewards program is optional and costs $50 per year, waived the first year.
Additionally, the Wells Fargo Business Secured Card has a $25 annual fee per card, up to 10 employee cards max. Although, if you spend enough on the card the rewards points/cash back can offset the fees, and once you build your credit you can apply for an unsecured small business credit card with better terms.
Wells Fargo reports payments on this card to both the consumer and business credit bureaus such as Dun & Bradstreet. This means that if you regularly make timely payments, you can boost both your personal and business credit score. For more information on the types of business credit scores, you can read our ultimate business credit score guide.
Wells Fargo Business Secured Card Costs, Rates, & Fees
The Wells Fargo Business Secured Card’s APR is typically pegged to the prime rate plus 11.90% and is currently around 16.15%. However, since the APR is pegged it can change based on market conditions. Further, the Wells Fargo card has a cash advance fee equal to the prime rate plus 20.74% for each advance.
Your APR or cash advance fee can change without your knowledge. Business cards are not covered the Credit Card Accountability Responsibility and Disclosure Act (or CARD Act), which regulates interest rates and other fees on consumer credit cards. It’s therefore important to pay off your card balance in full each month, especially if you’re trying to better your business credit score.
The Wells Fargo Business Secured Card charges a $25 annual fee per card. It also has a $50 annual card fee to enroll in its rewards program. However, if you charge at least $7.5k to your card you’ll offset the annual fees with cash back or reward equivalents. The card doesn’t allow balance transfers and there are no foreign transaction fees.
Wells Fargo Business Secured Card Credit Line & Collateral
Secured credit cards require an initial deposit that becomes the collateral for your credit line. The possible credit line on a Wells Fargo Business Secured Card can range from $500-$25k. The initial deposit into your account will be your credit line. For example, if you deposit $1k initially, your monthly credit limit will be $1k.
When you open a secured business credit card with Wells Fargo you make an initial deposit into a collateral account. If you want to add funds later it’s treated as a credit line increase request and requires a credit check. If you want to withdraw funds from the account it will be treated as a cash advance and subject to cash advance fees.
Wells Fargo Business Secured Card Rewards Program
The Wells Fargo Business Secured Card is one of the only business secured credit card we reviewed for this guide that offers a rewards program. For a $50 annual account fee (waived the first year), you can enroll in Wells Fargo’s Business Rewards Program. That fee covers the primary cardholder and all employee cards on the company account.
Once enrolled, you can choose to earn either rewards points or cash back. If you pick cash back you’ll earn 1% on all purchases as a statement credit to the account. If you pick points you’ll earn 1 point for every dollar spent on the card, redeemable for gift cards, hotels, and more. For information on the better option for you, read our article on points vs cash back.
Further, Wells Fargo offers bonus points or cash back for customers who regularly use the card. For every month that your total account finances at least $1k collectively, you can get 1k bonus points or a $10 statement credit. This can happen indefinitely and the threshold resets at the beginning of the new month.
Alternatively, if you’re looking for a small business credit card that offers you great rates and cash rewards, take a look at the Chase Ink Business Cash℠ Credit Card. New card holders are eligible for a $500 bonus and you can get employee cards at no add additional cost.
Wells Fargo Business Secured Employee Cards
Wells Fargo allows for up to 10 cards per Business Secured Card account. Your overall credit line will be allocated evenly across each of your cards. However, you can call Wells Fargo directly to set spending limits on each individual card. Each card costs $25 annually but the $50 annual fee for the rewards program covers all cards.
This means that it’s possible to offset your annual card fees with either cash back or rewards points. For example, if your employees together charge $1,000 to your account in one month, your business account gets $10 cash back or 1,000 points (worth $0.01 per point). The breakeven point is $7.5k for one card and even lower on a per-card basis the more cards you have.
How to Apply for a Wells Fargo Business Secured Card
You can apply for a Wells Fargo Business Secured Card online, over the phone, or in-person at a Wells Fargo branch. When you apply, you must provide both your SSN and your EIN if your business has one. Wells Fargo will typically pull your personal credit report and business credit report. However, there is no minimum credit score, making it a great credit card for startup businesses.
What is a Secured Credit Card?
A secured business credit card is a revolving line of credit designed for business owners with poor or limited credit. This means they typically can’t qualify for an unsecured business credit card and need a secured alternative. The credit limit on a secured business card is equal to the cash deposit held in a collateral account.
Many business owners who have been turned down for an unsecured business credit card can qualify for a secured credit card. This is because you have to put up a security deposit in a “collateral account” connected to the card. The lender therefore has a guaranty that they will be able to collect what is owed to them, meaning they can accept riskier borrowers with low credit.
Secured business credit cards are important for a couple of reasons. First, it can help establish or build both personal and business credit. Second, a secured business card helps separate your business and personal expenses along with a business checking account. This makes a secured business card a great option if you can’t qualify for a business credit card.
However, a viable alternative to secured business credit cards is to use a prepaid business card. However, prepaid cards cannot help you build credit, and you must use caution because some of them are riddled with fees. Let’s look at the differences between the two in greater detail.
Secured vs. Prepaid Business Credit Card
While a secured business credit card might seem similar to a prepaid credit card there are many differences. However, the number one difference between the two is that a secured business card acts like a line of credit while a prepaid business card acts like a debit card. This difference also changes the way deposits/collateral are treated.
For example, the initial deposit with a business secured card is used as collateral while the initial deposit with a prepaid business card is used to pay for the expenses. This means that with a secured credit card you pay your bill monthly just like any other business credit card. If you don’t pay the balance in full it’ll carry over with an APR charge.
A prepaid business card, on the other hand, when you make a purchase the expense is deducted from your deposit. For this reason, prepaid business credit cards don’t let you carry a balance and don’t help you build your credit. Still, they are a great option for managing employee expenses, among other things.
If you want to try out prepaid cards, give Bento for Business a try. You can manage where, when, and how much employees spend. Also, reporting on each employee card only takes seconds and can be integrated right into your accounting system, making paper employee spending reports a thing of the past. Try Bento free for 60 days and get your setup fees waived and 2 free cards.
Alternative Secured Business Credit Card Options
Wells Fargo is our recommended provider of secured business credit cards. Still, this doesn’t mean that they’re the only lender that offers business secured cards. Two other providers you might want to look at include both First National Bank and BBVA. Let’s take a look at each secured business credit card in a little more detail.
Secured Business Credit Card with Larger Limits: First National Bank
If you need a larger credit limit on your secured business credit card we recommend First National Bank. Their secured business credit card offers limits as high as $100,000. However, you’re required to put down a deposit equal to 110% of your credit line and the card comes with an annual fee of $39.00 and an APR that’s typically higher than Wells Fargo.
Secured Business Credit Card with a Free Rewards Program: BBVA
If you’re concerned with earning rewards you should consider BBVA. Once approved, they’ll enroll you into their rewards program for free and you can earn 1 Compass Rewards point for every $1 you spend. Like First National Bank, the BBVA card requires a 110% deposit and comes with an annual fee of $40, waived the first year.
Bottom Line
Overall, a secured business credit card is a good option if you’re a business owner with bad or thin credit. Business secured cards offer business owners a chance to build their business and personal credit scores. What’s more, you can even earn cash back or rewards points by using a secured business credit card.
If you’re looking for an unsecured business line of credit, consider Fundbox. They offer business loans with no credit check of up to $100K. Prequalify online in minutes.
Isaac S.
I was a WellsFargo Bank client from 2011 til 2017, I had Checking & Savings, Plus Secured credit card, Each end of month my account got low and I was a serious target of Overdrafts, Every month I was Overdrafted 1 to 3 times just for having a low bank account, When 1 over drafted othe charges fell right in line for them, I ask for solutions every 3 months, Was told its OK now but still loaded my accounts up with Cash each month NOT Realizing they were taking money out all time, So this went on for yrs, Finally I stopped using ALL my accounts, They closed my $2500. secured C.C. in good standings January 2017 in Feb & March they have reported late charges 3 times, My question is “How can I have late charges” when my account was closed in good standing? Anyway they are on their way to Court, Litigations are pending!!!!!!!!!!!
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Isaac,
Sounds like you had an awful experience. Thanks for sharing, and good luck.
Laura, Staff Writer
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Isaac
WellsFargo is being sued by 1,000s of People for Fraud, Constant Over Drafts & more, I personally have been over drafted from my past recent bank accounts every month from 2011 thru 2016 and now Im about to take them to Littigations for it, They also closed my credit card account in good standings and 2 to 4 months later added late fees on my credit profile which Im sueing also about it, But deal with WellsFargo OK best of Luck lol……
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Hi Isaac,
Thanks for your feedback! Wells Fargo is currently under more scrutiny than any other bank due to some of the events you’ve mentioned. Those are the best times to take advantage of the services large banks like Wells Fargo have to offer. In addition, this is an article about secured business cards. Borrowers using secured business credit cards typically have few options, and we’ve put together this article to represent the best secured cards that will help the most amount of business owners. Wells Fargo offers one of the best secured programs and reaches more people than pretty much any other bank. We will keep an eye on the events from March 2017 and see what happens with Wells Fargo. If we need to, we’ll adjust the article to reflect any changes. Thank you for your concern and honest input.
Best,
Jeff
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Michael Grant
Thanks! FitSmallBusiness.com is a Very Good resources for Small Businesses! You are very thorough and transparent! Great Job! Best Wishes!
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Emily
Hi, can anyone confirm if the Wells Fargo Secured Business Credit Card actually do report to both your personal and business credit report? I am trying to rebuild my credit and have applied for this card after reading this article 2 months ago, however, it does not look like it is reporting to my personal credit report?
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Hi Emily,
If you applied for this card using your personal credit score, it should be reported on your personal credit score. However, it may take some time to show up on your credit report. If it doesn’t start showing up on your credit report within a month or two, you can follow-up with Wells Fargo to see if there’s a problem.
Best,
Dock
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Ro Mundy
HI:
I am trying to find out if I can get a secured business credit card with out it being attached to my personal credit.
You are limited by utilization usage on a consumer credit card where as with a business credit card you are not.
My personal score is good I have had my LLC for around 8 years, but I have only had my business checking account for only 2 years.
This will be the first year I will actually be using my business checking account for business only.
I do not have bad personal credit but I do have low history business credit.
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Ryan J Wintrow
I just called in and they said this does not attach to my personal credit, only the business. They will check your personal credit when applying though.
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Hi Ro,
As with most small business borrowing, you typically need to personally guarantee secured small business credit cards and they will be tied to your personal credit.
However, this shouldn’t have any significant impact on your personal credit unless you default on the card or hold excessive balance on the account.
Thanks for joining the conversation.
Best,
Ian
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Thomas
Bad article, you have to be a wells fargo member for at least 6 months in good standing. I do not bank with them due to their credit checks which are mandatory (3 per year). And yes, they were hard checks and are still on my credit report from 4 years ago (stay for 6 years).
Do not be fooled, ask them if they check your credit just for a checking account.
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Hi Thomas,
Thanks for joining the conversation.
Sorry to hear you think this article was missing something. We will look into the what you described, the mandatory hard credit checks for banking with them and update the article accordingly. While this article is focused on secured business credit cards for those small business owners with thin or damaged credit looking to build their business credit scores, we certainly don’t want to leave out a detail like the one you mentioned above.
Best,
Ian
Best,
Ian
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