Many business to business transactions now take place using corporate or business credit cards. These cards fall into several categories. The most familiar is like a regular consumer credit card that is used to pay for anything as long as the credit limit is not exceeded, and the balance doesn’t have to be paid off each month as long as you continue making minimum payments. There are also procurement cards that are used for a particular product, such as gas cards to keep the company fleet gassed up and keep track of fuel expenses.

But just as there is a secured credit card for consumers to use, there is also a secured business credit card category. The secured business credit card requires the business to open a savings account and maintain a minimum savings balance to act as collateral for the debt on the credit card.

Once you have one, a secured business credit card is just as versatile as an unsecured card, but the process to obtain one is a little more involved. The credit card issuer will first require the applicant to make a deposit into a savings account that the issuer will have access to. The deposit can be anywhere from a few hundred to a few thousand dollars. Monthly payments for the card don’t come out of the savings account. It is just there in case the card holder falls behind on payments. The credit limit of the card account will be the same as the amount of money in the savings account. Other restrictions may be put on the account depending on the credit rating of the business.

Most times there is an application fee for the secured business credit card. The credit card issuer will make credit and reference checks as part of the application process. Along with that fee, there is usually an annual fee, and the interest rate will probably be higher than you could get with a traditional credit card. These higher expenses are there because the secured business card is an alternative for businesses that can’t obtain a traditional card due to low credit scores, or maybe they just don’t have a credit history yet. The card issuer is assuming more risk in these cases, so they require more money up front.

So you can see that a secured business card allows a business to have all the advantages of a traditional credit card when the business doesn’t qualify for an unsecured card. Even a company that has defaulted on cards in the past or is just emerging from bankruptcy can get a secured business credit card. Since access to credit is essential for any business, these cards can represent the difference between success and failure when a business is just starting out or emerging from a bankruptcy.

While the business is using its new credit card, it is building or rebuilding a credit history that will allow it to get credit on better terms in the future. In the meantime, it is business as usual for the secured business credit card user.

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