Using Secured Credit Cards for Start Up Business Financing

Small business owners seeking start up business financing can benefit by using secured credit cards. Secured credit cards are basically regular credit cards that are secured by a savings account opened with the bank offering the credit. This account always has a minimum deposit, rarely lower than a few hundred dollars and as high as a few thousand dollars. This deposit is based on the amount of credit you will be extended, and it can be anywhere from 50 to 100 percent of the minimum deposit in the account. The money in this savings account is not used for your purchases, and other than being secured by the money placed there, the credit card works just like any other credit card.

Secured credit cards are an excellent way to build business credit if you do not qualify for or are otherwise unable to obtain unsecured business credit for your business. Building a strong business credit rating will help a small business when seeking start up or business debt financing. For example, a business with a poor credit rating will be more likely to be able to obtain a secured credit card than an unsecured one. As long as you pay your bills on time, secured credit cards can help you rebuild your business credit.

There are some risks involved with secured credit cards that you should be aware of when seeking them, however. There are some companies, individuals and other organizations that advertise secured credit cards, but are, in actuality, trying to scam people. According to the FTC, such scam advertisements generally have a few notable features, such as a 900-number or giving the impression that you can get the card just by calling. Be wary of any advertisements with 900-numbers and offers of easy credit. For more information about using secured credit cards to help with start up business financing and business debt financing, please contact us.