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Business Credit Cards for Bad Credit: A Good Idea?

I recently changed my web design business from a sole proprietorship to an LLC. In the process of changing things over, I began pondering the best way to establish credit for the business and keep my finances separated.

Given my history with spending and credit card debt, as well as my crappy credit score, I really didn’t know if a business credit card was the right choice for me. Would I go crazy and spend hundreds of dollars on office supplies? What if my business failed and I ended up with more debt to pay off? Could I even get a business credit card with bad credit?

After a lot of internal debate, I decided to apply for a card and, if approved, just use it for all my normal business expenses. Nothing crazy; just the stuff I buy anyway. So I called Capital One to see what kind of options they had for small businesses – I have a personal credit card and a car loan with them, so I figured they might offer something that would work with my credit situation.

The rep I spoke with told me about the Spark Classic business credit card, which sounded perfect for my needs. The interest rate is high, but that’s a plus for me – it discourages me from carrying a balance. It also doesn’t require perfect credit, so the rep felt like my odds of being approved were good. The only disadvantage is that I had to personally guarantee the card, meaning I am responsible for the debt – if the business fails or goes bankrupt, I still have to pay off any balance I owe. So even though the card says Nuts and Bolts Media on it, the payments are reported on my personal credit report. (In my case that’s not a bad thing since I need all the positive reports I can get!)

Using a Business Credit Card Responsibly

Obviously I have to make sure that I only use the new business credit card for legitimate business expenses. Sure, I could go buy whatever I wanted, but I’d have to answer to my accountant at tax time! So far I’ve had no trouble controlling myself.

All my monthly business expenses (web hosting, theme and font purchases, etc.) are made using the business card. Every week, I make a payment from the new business checking account (for the record, I went with PNC because they just added remote check deposit for business), then transfer money from Paypal to replenish the bank balance. It’s a little complicated but it works well for me and keeps me from losing track of what I’m spending.

I did use the card to order some t-shirts with my logo, but not until I had money set aside to pay for them. I’m treating this credit card like a time-delayed debit card; I may have available credit (I actually got a MUCH higher credit line than on any of my personal cards) but that doesn’t mean I can use it. The income from my business still has to pay my personal bills as well as any bills the business incurs, so it’s not free money.

Also, even though I don’t plan to carry a balance on the card, having available credit means I don’t have to miss out on opportunities while I scramble to transfer money out of Paypal or make a bank deposit. If I find a product or service that can improve my business and help me in the long run, I can purchase it immediately and deal with the details later. That makes a big difference in the way I do things.

For example, awhile back I needed to purchase some graphics for one of my clients. I had just drained my Paypal balance to transfer money to my bank, and the money was in that weird limbo state where I didn’t have access to it yet. My options were (1) purchase the graphics from my personal bank account, messing up my accounting or (2) ask the client to front the money instead of invoicing it at the end of the project. NOT good options! With a business credit card, I never have to deal with those situations again.

Should You Get a Business Credit Card?

If you’re confident in your ability to use credit wisely, a business credit card can be a great way to keep your business and personal finances separated. You have a record of everything you buy for your business, plus you’re covered in the event that your information (or your card!) is stolen. I like knowing that my business bank account info is safe since I’m not using my debit card very often.

For the first time, I understand why people say they have peace of mind when it comes to using credit cards. I’ve been pretty set against them ever since I paid off my last one in 2011, but as I learn to use them the right way, I’m starting to see credit cards as a valuable tool to help my small business grow.

What do you think? Are business credit cards a good idea for people with bad credit? Any cards you’ve used that have been a great help to you and/or your business? At what point is someone reformed enough to use business credit responsibly?

About Andrea Whitmer

Andrea is a freelance web developer and mom trying to maintain a sense of humor in an otherwise chaotic world. She blogs in hopes of helping others avoid the same mistakes she made in the past. Join in the discussion here on So Over This, or connect on Twitter, Pinterest, Instagram, or Google Plus. You can also subscribe to new posts via RSS so you never miss out!


  1. As long as you are reformed and can handle it I think business credit cards are great for small business. I believe you almost always have to personally guarantee them though!

  2. It's good to keep you personal and business expenses separate. Some of our vendors won't invoice and you have to have a credit card. I'm not sure how you can run a business without one unless you mix everything up and have to sort it out at tax time.

    • That's what I had been doing – just going through my Paypal transactions monthly and separating everything. Total pain in the ass! This is much easier.

  3. Veronica Hill says:

    I'm curious why you changed to an LLC? Do you anticipate getting sued in the web design biz?

    • I wrote a post awhile back about my reasons for changing – link is in the first sentence of this post.

      • Doh, I read that post! I must have forgotten. Sorry. So the online process didn't have any choice for DBA either? I wanted to check myself but it requires registration. I guess overall it's not a big deal to do either or, unlike the nuisance of doing it here in California.

  4. In my personal experience, any business should not be a sole proprietor status. It's just too much personal risk to put your personal credit and finances on the line, should your business fail. I made that mistake and if I ever have a business again, it will be an LLC. Smart move, Andrea, in covering your personal assets.

    Regarding the business credit card – I'd have to say however you are handling credit right now, personally, is probably how you will handle your business credit card. My husband got several business credit cards when he was in business and handled them the same way he handled his personal credit – charged to the max, without a plan for repaying. Just a recipe for failure. I think they are a great tool in helping your business function and grow, but as with any debt, something that will have to be taken seriously and not let get out of control.

    • Excellent point! I agree – if I had gotten a business credit card when I was in debt up to my eyeballs, I would have managed the business card the same way as my personal ones. Only because I've gotten my finances under control would I call it a good idea.

  5. I think that these are a great idea and I know that many people with past debt difficulties worry about having a business credit card. I think the the difference is that with a business credit card you have ultimate accountability to your accountant, whereas in the past with a personal credit card there probably isn't any ultimate accountability. I would worry, i think that you'll manage it well and I think they can be very good.

  6. I have been contemplating getting a business credit card for the very reasons you state, mainly that it will be easier to separate everything out. However, I don't really want another credit card at this point because we are about 2 years out from buying a house, and I don't want too much open credit. What to do?

  7. I think you will do well with this, especially because you're focused on not f'ing it up! As your business grows, you'll be glad you have a credit card as your short-term float, and as long as you settle everything each month, you will avoid interest and fees. After a year or so, I would open a better business credit card to take advantage of points and a better interest rate–you won't use it, but you're entitled to it once you've shown your creditworthiness with the other card!

  8. Credit cards will be fantastic for you, for cash flow management. Like you mentioned, life is easier when you have to put up dollars for your clients but can't charge them until the job is complete. Best of luck managing them effectively, but I think you're a pretty motivated gal who'll do just fine 🙂

  9. I've thinking about LLC at some point also. There is always to avoid credit cards if you desire. Is it possible to get a retainer before you begin work or start stashing up an expense account that you replenish for any upfront costs. Just throwing out some options you've probably already thought up.

  10. bluecollarworkman says:

    I know someone who used their company credit card for little prsonal things. And then those personal things got bigger. And more expensive. And then she got fired. From her 6 figure salaried high-up corporate job, she got fired basiclaly for stealing corporate money for her own personal junk. After over a year of loooking for a new job, she finally got one, at a much lower salary, and she's told her new boss she'd prefer not to have a company credit card. She didn't tell her boss that it's becuase she knows she'd just be irresponsible again!

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