Starting or growing a business means making smart financial decisions, including protecting your personal assets while building your company’s financial foundation. Whether you’re trying to build business credit or just track expenses, understanding your options can help you avoid risk and maximize benefits.
At Remitly, we understand how important it is to separate business and personal finances, especially as your company grows. That’s why we created this guide to help you explore business cards without personal guarantees, understand qualification requirements, and find the right credit card for your business.
Business cards and personal guarantees
Choosing the right card for you starts with understanding what business credit cards are, why personal guarantees are so common, and how they can impact your finances.
What are business credit cards?
Business credit cards are designed to be used by a company rather than an individual. Businesses of all sizes can qualify for them.
Having a business credit card brings many benefits for your company finances. Apart from increasing your financial flexibility, it helps you build a credit profile, separate business and personal expenses, and improve future borrowing terms.
Business credit accounts typically come with special perks like free employee cards, accounting software integration, and software and service discounts. However, they lack the strong consumer protections of individual credit cards. That’s because protection laws like the Truth in Lending Act and the CARD Act only apply to consumer credit.
What is a personal guarantee?
A personal guarantee is a clause in a credit card agreement that defines your personal responsibility for the account. Once you sign the contract, the credit issuer can hold you personally responsible for paying any balance with your own assets, including things like your car or home. This typically happens if your company becomes insolvent and can’t repay any outstanding debts with its assets.
Depending on the particular agreements in your contract, you could face unlimited liability, or your liability could be limited to a previously agreed-upon amount. Any late payments you are personally responsible for can even affect your personal credit score. Companies can even take legal action against you to ensure repayment, but this usually only happens in extreme circumstances with very high amounts of debt or payments more than six months late.
Many business credit cards have a personal guarantee clause because if a company defaults, a card issuer has no collateral to claim if an account goes unpaid. Because business credit cards often have high credit limits, personal guarantees lower the credit card company’s risk involved in issuing these cards.
If you get a credit card with a personal guarantee, make sure you use it carefully. Only charge items to it if you know you can make the payments, and try to keep your balance below the credit limit.
Why separate personal liability from business expenses?
One of the biggest reasons why people seek out credit cards with no personal guarantee (also called a no-PG credit card) is because they fully separate your personal and business expenses. This separation offers a host of benefits.
Legal benefits:
- minimize personal liability
- clearly establish a distinction between your business and personal assets, which is particularly important for LLCs
- protect personal assets like your home, savings, and investments
Financial benefits:
- clear view of your business’s financial performance
- track your business’s cash flow
- build business credit without affecting your personal credit score
- be more financially transparent
- build trust with investors, partners, and clients
Tax benefits:
- streamlined tax reporting
- more accurate tax deductions
- easier recordkeeping
Benefits and drawbacks of no personal guarantee business credit cards
While avoiding personal liability is appealing, make sure you weigh all the pros and cons of a credit card with no personal guarantee. Because no-PG cards are riskier for providers to issue, they can have less favorable terms.
Advantages for business owners and entrepreneurs
- Gain substantial rewards without risking your personal credit.
- Keep personal and business finances completely separate.
- Your company can build credit independently.
- Responsible use can lead to better terms.
- Having a dedicated card simplifies accounting processes.
Potential downsides to consider
- They may have greater limitations on credit and spending power.
- They can have less favorable terms, including higher interest rates and fewer rewards and cashback options.
- Many have stricter qualification criteria.
- They may not contribute to building your personal credit history.
- Many require you to pay your balance in full each month.
How to qualify for a business credit card with no personal guarantee
Due to the higher risk involved, most providers have much stricter eligibility criteria for no-PG cards than for those issued with a personal guarantee.
Eligibility criteria for business owners
While specific criteria depend on the card, your business is more likely to qualify for a no-PG card if it meets some of the following conditions:
- large corporation
- high revenue and/or proven profitability
- strong cash flow
- large bank balance
- strong credit history
- publicly traded company
- well-established franchise or business with multiple locations
- professional service firm, like a law firm or medical practice
- tech startup or high-growth company
Additionally, most no-PG credit cards require a business to be at least two years old, with several million dollars in annual sales or revenue. However, some entry-level cards may have lower revenue and operational history requirements.
Key factors that influence approval
Typically, some of the most important factors that influence your approval for these kinds of cards are:
- Financial stability: Lenders will assess your revenue history, profitability, and cash flow to determine if you can responsibly manage credit without a personal guarantee.
- Strong credit profile: A business credit score of 650 or higher and a consistent payment history with vendors or creditors can improve your standing.
- Established business operations: You’ll usually need to be in operation for at least six months to a year, but the longer you’re in business, the better you’ll appear to issuers.
You also need to make sure your documentation is current and in order. This can include:
- Financial statements like balance sheets, income statements, and cash flow reports
- Bank statements from the last three to six months
- Business registration documents like trade licenses or incorporation papers
- Tax filings and previous tax returns
All of these documents give your application an additional layer of financial credibility.
While no specific factor will guarantee your approval, making sure your business is prepared and fits these criteria can increase your likelihood of being issued these cards.
Steps to improve business creditworthiness
If you don’t think your business qualifies for a business credit card with no personal guarantee, don’t worry. While you may not be able to get one now, there are steps you can take to improve your business credit and qualify for these cards in the future:
- Set up your business as an LLC or corporation.
- Get an Employer Identification Number (EIN) and register your company in your state, county, and city.
- Open a business bank account.
- Get a business credit card with a personal guarantee and use it to build credit history by making purchases and paying them back on time.
- Make sure you’re working with vendors who report their activity to business credit bureaus.
- Claim your DUNS (Data Universal Numbering System) number from Dun & Bradstreet, one of the major business credit bureaus.
- Actively monitor your business credit score and be aware of anything that may be negatively affecting it.
- Add your business to online business directories.
- Apply for and set up a small business line of credit.
- Maintain a good personal credit score, as loan eligibility for new businesses may be based on it.
Best business credit cards without personal guarantee
If you feel confident in choosing a no-PG credit card and want to explore your options, here are some top-rated no-PG business cards, along with key benefits and features.
Brex Business Card
Features: This is a charge card that you must pay either daily or monthly. Monthly pay requires $1 million in a business account, or professional investors and $50,000 in a business account.
Benefits:
- Accepted worldwide as part of the Mastercard network
- Integration with accounting, ERP, and HR software
- Brex Rewards points on every dollar spent in a variety of categories: 7x on rideshare, 4x on Brex Travel, 3x on restaurants, 2x on software subscriptions, 1x on everything else
- 10,000 points if you spend $3,000 in the first three months
- Deals and discounts at vendors including Amazon Web Services, Apple, and QuickBooks
Credit limits: N/A
Annual fees: $0
Ramp Business Credit Card
Features: This charge card automatically deducts the amount owed from your bank account on the same day each month. You must link it to a business bank account that meets the minimum balance requirement. Your business should also mostly operate in the US.
Benefits:
- 1.5% cash back rewards
- No annual or foreign transaction fees
- Unlimited employee cards
- Spending controls
- Forecasting tools
- Automatic receipt matching
- Integration with the Ramp platform
Credit limits depend on business finances, but usually up to $100,000.
Annual fees: $0
BILL Divvy Corporate Card
Features: This is a charge card that must be paid monthly or weekly. The minimum required business account balance may be lower than that of similar cards like Ramp. International companies can apply if one owner with at least a 25% share is a US citizen. Unlike many cards on the market, it has a 2.99% late fee and 0.2-0.9% foreign transaction fees.
Benefits:
- Easier for smaller businesses to obtain
- Unlimited employee cards
- Point-based reward system, up to 7x on restaurants and 5x on hotels
- Discounts and offers on corporate software
- Spend and expense management tools
Credit limits typically start at $1,000.
Annual fees: $0
Capital One Spark Cash Plus
Features: This credit card has a high purchase rate (29.74% APR), but is useful for small businesses that want to build credit. It’s targeted towards people with fair credit scores.
Benefits:
- No foreign transaction fees
- 1% cash back on all purchases with no minimums
- Easier to qualify for with average credit than other cards
- Unlimited 5% cash back on hotels and rental cars booked through Capital One Travel
Credit limits are typically between $300 and $6,000.
Annual fees: $0
Rho Corporate Card
Features: This corporate card will ask for 12 months of financial statements to determine your credit limit. You don’t have to bank with Rho to use it.
Benefits:
- No minimum annual revenue requirement
- No firm bank balance requirement
- Up to 1.25% cash back
- Unlimited virtual cards
- Spend and expense management tools
Credit limits depend on your company’s financial statements.
Annual fees: $0
The application process, step-by-step
Once you’ve found the right card, it’s time to prepare your application. Here’s what you’ll need to know and gather before applying.
Application process and required documentation
- Decide whether a no-PG card is right for you. Is your business likely to qualify? Do you need this type of card right now?
- Look over your card options and determine which card is right for you and your business. This can depend on eligibility criteria, spending limits, rewards, and more.
- Carefully review the card requirements to ensure your business lines up with what the issuer wants. Get personal credit reports, too, since many issuers will use your personal credit score to gauge your creditworthiness if you have little to no business credit history.
- Almost all no-PG card applications are online, so go to the issuer’s website and fill out and submit the application.
The exact documents you’ll need depend on the credit card company, but can include:
- Your EIN
- Personal details and documentation for all owners of the business
- Business license
- Business bank account statements
- Tax returns
- A business credit report
- Business plan or projections
Why you need an EIN
An EIN is a unique tax identification number assigned by the IRS, used to identify businesses for tax purposes. Not only does it help you build credit, it’s a requirement for most card issuers.
Your EIN is important because it separates your personal and business finances. Your company finances will be tied to your EIN, not your social security number (SSN). Credit card issuers use this number as your “ID” when you’re applying for a no-PG credit card so that your personal finances are completely protected.
Choosing a business credit card without a personal guarantee sounds appealing and can offer greater financial protection, but it’s not the right fit for every business. Make sure you thoroughly evaluate your company’s finances, goals, and eligibility before applying to make the best decision for your future.
FAQs
Can I get a business credit card with just an EIN?
Yes, you can. However, since EIN-only business cards are usually corporate cards with no personal guarantee, most of these cards have strict eligibility requirements. This can range from being in business for at least two years to earning more than $2 million in annual revenue.
Does an Amazon Business Card require a personal guarantee?
Both the Amazon Business Card and the Amazon Prime Business Card require a personal guarantee. Amazon also reports both positive and negative credit activity to the personal credit bureaus, meaning that problems like late payments will affect your individual credit score.
How do I get a business credit card with bad personal credit?
You can still get a business credit card, but you will certainly have fewer options than if you had good credit. Some business cards, like the Capital One Spark Classic for Business, are specifically geared toward people with fair credit. Others, like the Ramp Card, don’t perform a personal credit check at all.
What is the easiest business credit card to get?
Typically, the easiest business credit cards to get are secured cards and cards designed for people with fair credit. Secured cards, like the Bank of America Business Advantage Unlimited Cash Rewards Secured Credit Card, require a deposit that acts as collateral instead of a personal guarantee. Fair credit cards, like the previously mentioned Capital One card and the Brex Card, are available to people with fair credit (typically defined as having a credit score between 630 and 689).