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Credit Cards Without Personal Guarantees: The Basics

- Feb 12, 2021 Credit Card Info0 comments

If you’re an entrepreneur or small business owner, a business credit card that doesn’t require a personal guarantee may be one of the most convenient financial resources to obtain for your company. On top of the easy access to financing that these cards afford you, they also enable you to earn points and rewards with each purchase made, which creates more opportunities to save and build your credit standing along the way.

Typically, a lender or credit provider requires a borrower to present collateral in order to secure a credit line. In the event that the borrower is unable to do so, the lender would ask him or her to personally guarantee the credit card. Whether you’re a brand new business owner or a more seasoned entrepreneur, if you don’t have company assets to provide, you’re then stuck running the risk of putting your own personal assets in jeopardy. This is where a business credit card with no personal guarantee can be a real game changer.

We’ve written this article to serve as your guide to credit cards without personal guarantees. We’ve broken down what they are, how they work, and which ones we recommend. So let’s dive in.

What is a Personal Guarantee?

A personal guarantee is the borrower’s legal promise to pay for the outstanding debt balance on the credit issued to their business in the event that the business is unable to do so. In other words, if your business experiences financial trouble and becomes unable to make its monthly repayments, you the borrower, are personally liable for whatever is still owed.

The purpose of a personal guarantee is to mitigate the lender’s risk for issuing credit to your business. This is why applicants who have a low business credit score, haven’t been in business long enough to build up a substantial credit history, or who lack collateral, are the top candidates asked to provide one.  Even businesses with a significant credit background may still use personal guarantees to obtain a cheaper and more flexible business financing option.

How will you know if a business credit card that you’re applying for requires a personal guarantee? Make sure you thoroughly check the terms of the credit. Read the contract’s fine print and look out for clauses that spell out your personal liability for paying off the card’s outstanding balance if your business becomes unable to make repayments. A general rule of thumb, a credit application that requires you to provide your social security number (SSN) will typically involve a personal guarantee.

It’s worth noting that a personal guarantee is still applicable even if your company is a corporation or an LLC.

The Challenge of Securing a Business Credit Card Without a Personal Guarantee

While the majority of credit card companies require personal guarantees for business credit cards, there are a number of credit cards available that do not. The real challenge therein is finding a financing company that will offer one.

Lenders aren’t usually comfortable handing out business credit cards without some sort of guarantee in case of default. Lenders are particularly reluctant to offer unsecured business credit cards to new businesses, as they typically have a high failure rate. That is, unless your company is already generating significant revenue and profit to offset the lender’s risk.

How to Qualify for a Business Credit Card Without a Personal Guarantee

Businesses can increase their chances of qualifying for unsecured business credit cards in three ways:

  1. Consider your personal and business credit score. If your company has a flawless credit history, outstanding credit score, stable revenue, and low debt-to-credit ratio, then you’ll have a higher chance of being successful in asking the bank to waive the personal guarantee for your credit card. Ideally, your personal credit history should also show an excellent track record if you want to better your chances of approval even further.
  2. Leverage your relationship with the lender. You’ll also increase your chances for qualification if you’ve opened a credit line with the same lender before. If you’ve already worked with the financing company and had no issues regarding payments, it will help your case to have them waive the personal guarantee for the credit card. You’ve already earned their trust and proven your reliability.
  3. Meet the lender’s size and revenue requirements. You’re more likely to be eligible for an unsecured business credit card if your business demonstrates a stable and substantial revenue stream. In general, companies with an annual revenue of more than $1 million are what lenders would consider an ideal candidate.

5 Business Credit Cards that Don’t Require a Personal Guarantee

There is a catch when it comes to unsecured business credit cards. Most providers offering them aren’t banks or alternative lenders, but rather stores and large corporations. This does limit your spending capabilities, in some cases to specific products or merchants that your provider is partnered up with.

That said, if you are planning to apply for one, here are five of the best options to consider:

1.     Brex Corporate Card

The Brex Corporate Card is a credit card provided by the financial service and technology company, Brex Inc. Its primary purpose is to provide money management solutions and financial accounts to start-up businesses, specifically those in the tech and e-commerce industries.

This card is powered by Mastercard, which means that cardholders can use it anywhere in the world that accepts Mastercard payments. It has zero annual fees, zero foreign transaction fees, and doesn’t require borrowers to provide a personal guarantee. Users can earn points every time they make a purchase with their Brex Corporate Card, and points can be redeemed through cash back or converted into travel miles.

To ease the lives of cardholders’ during the COVID-19 pandemic, Brex Inc. now offers the following remote-work benefits through the use of this card:

  • Earn as much as seven points per dollar spent on any remote-work tool purchased on behalf of your company.
  • Earn three points per dollar spent on food deliveries.
  • Earn two points per dollar spent on software subscriptions.

Perfect for:

  • Companies that have at least $100,000 in your business account to qualify.
  • Businesses that can pay their entire balance due for that month (since Brex doesn’t allow borrowers to carry outstanding balances).
  • Start-up, tech, laboratory/sciences, and e-commerce businesses.
  • Businesses that need access to credit cards with a high credit limit.

2.     Stripe Corporate Card

Stripe is a technology company that started as a payment platform for eCommerce businesses. Thanks to its Stripe Corporate Visa Card, the company has since become one of the most invaluable financial resources for business owners.

With the Stripe Corporate Visa Card, businesses can earn a 2% cashback on purchases made in their top two spending categories per month, and 1% cashback on all other expenses incurred using the card. There are no fees associated with this card, and users can take advantage of free payment processing of up to $50,000 after exceeding the first $5,000 worth of spending.

Stripe automatically credits any unused rewards to your monthly credit card bill so none of the rewards you earn will go to waste.

Other benefits of the Stripe Corporate Visa Card include:

  • $150 credit for Google Ads.
  • Three free months of Shopify’s most basic subscription.
  • 40% off Hubspot subscription for the first year.
  • $5,000 Amazon Web Services credit.
  • 25% off the first 12-months of a Slack subscription.

The Stripe Corporate Visa Card is accessible by invitation only. Business owners simply need to visit Stripe’s website and request an invitation. Applications do not require businesses to submit any paperwork as Stripe bases its approval decision primarily on the business’ payment volume.

Perfect for:

  • Companies with a high payment volume.
  • Businesses with an extended history of using Stripe. (The longer and more established your payment history on the platform is, the higher your credit limit will be.)
  • Business owners who’d like to avoid the tenuous process of collecting and submitting extensive paperwork.

3.     Sam’s Club Business Credit Card

Sam’s Club is a membership-only retail company. This means you have to sign up for membership in order to quality for its Sam’s Club Business Credit Card, which offers users access to a wide variety of benefits and rewards.

The Sam’s Club Business Credit Card has zero annual fees, but users will be required to pay the annual fee for your Sam’s Club membership. This can cost anywhere from $45 to $100, depending on your chosen level of membership. Members can add one authorized user to receive a second card without any charges.

The Sam’s Club Business Credit Card offers a variety of cashback rewards, including:

  • 5% cashback on the first $6,000 spent on fuel purchases at Sam’s Club and Walmart fueling stations in the United States and Puerto Rico. Purchases made beyond the $6,000 mark will earn 1% cash back for the duration of the membership period.
  • 3% cash back on dining and travel expenses (i.e., plane tickets and hotels).
  • 1% cash back on all other purchases made through Sam’s Club Business Credit Card.

Sam’s Card is powered by Mastercard, so cardholders can use it anywhere in the world that accepts Mastercard payments.

This is one of the more difficult cards to qualify for on this list. The application does require businesses to have been in operation for at least two years, have an annual revenue of at least $5 million, staff a minimum of ten employees and be a limited liability company (LLC) or corporation.

Perfect for:

  • Business owners who are already Sam’s Club members.
  • Corporations or LLCs that generates a high annual revenue.

4.     Bremer Bank Visa Signature Business Company Card

Bremer Bank – headquartered in St. Paul, Minnesota –  offers five different business credit cards for business owners to choose from. Of these five, the Bremer Bank Visa Signature Business Company Card is the only one that does not require a personal guarantee.

This card is designed to meet the needs of medium to large enterprises. It comes with a generous credit line, and features a zero fraud liability. This protects you from having to pay for any fraudulent purchases made on your card should it be lost or stolen.

The card comes with zero APR fees, but does charge a 3% foreign transaction fee for every international purchase made, as well as a $39 late payment fee should you miss a payment deadline.

To qualify for a Bremer Bank’s Visa Signature Business Company Card, your business must have an annual revenue of at least $1,000,000. The bank may also require businesses to have a yearly income of $350,000 in the past two years. Since you’re applying for this card from a bank, the lenders may ask you to submit the usual paperwork and documentation for loans. This includes credit card reports, financial statements, balance sheets, etc.

Perfect for:

  • Medium to large businesses with high annual revenue.
  • Businesses with a credit score of 780 or higher.

5.     Shell Fleet Plus Card

The Shell Fleet Plus Card is a corporate credit card offered by Royal Dutch Shell, widely known for its Shell gas stations worldwide. This card is exclusive to purchases made at Shell gas stations and convenience stores, and cannot be used for any expenses outside these locations. That is why this card is most suitable for businesses that run and manage a fleet of vehicles, like trucking companies, moving companies or car service businesses.

Benefits that come with the Shell Fleet Plus Card include:

  • A 6-cent rebate for every gallon of petrol purchased. Companies can efficiently track their petrol purchases while saving on their expenses at the same time.
  • A 15% discount on any participating Jiffy Lube branches in the country, for when your vehicles require repairs or maintenance.

The Shell Fleet Plus Card doesn’t come with an annual fee or require a personal guarantee. That said, the higher your company’s business credit score, the higher your chances will be for approval. Upon approval, cardholders can obtain additional cards for their staff without having to pay any added fees.

Perfect for:

  • Businesses in the transportation, freight, or shipping and logistics industries that frequently need petrol top-ups for their vehicles or trucks.
  • Companies associated with a government entity, nonprofit organizations, or companies bringing in at least $1 million in revenue each year.

Final Thoughts

Businesses need some sort of financial resource as a way to ensure the financial stability of their organizations. Sometimes, this could come in the form of a credit card. However, applying for one without a personal guarantee can be challenging, considering how stringent some of the requirements are.

Nevertheless, qualifying for a business credit card without a personal guarantee is one way of securing stable funding for your company without putting your personal assets on the line. However, you have to be prepared to pay a higher interest rate because you’re applying for unsecured credit.

If you’re interested in applying for an unsecured business credit card, we believe this article is a good place to start. As always, it’s important that you do thorough research to determine which card options best meets the needs of your business.

Frequently asked questions
Are there any business credit cards that do not require me to be a personal guarantor?
Amex, Chase and many more banks, offer corporate cards with no personal guarantor, however your business usually needs 1-5m in annual sales in order to qualify
Is there any business card that I can get with no personal guarantee?
There are a few products out there but they will require a long and established business. And in most cases, high revenue and cash flow

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Sam Sam has nearly a decade's worth of experience educating his many readers on everything credit. Sam spends his days checking out credit cards for a full report, from the minute benefit details to the shebang of welcome bonuses. Plus studying the ins and outs of building proper credit. It’s his favorite pastime and he loves sharing it with others.

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