How to Build Business Credit With a Secured Card

If you are a small business owner, and you find yourself wondering how other business owners have successfully established credit for their businesses, but you have not been able to. This article will answer that question and fill in the blanks concerning several misunderstood aspects of business credit.

To put it up front, the answer is simple; secured business credit cards allow small businesses with no credit history to establish credit. For some reason there are several common misconceptions surrounding this type of card, but to get passed this and learn to grow your business by using them you will need to get passed them.

Here are the two most common misconceptions regarding secured business credit cards; aren't they a rip off? No, but I will address this. Aren't these just for people with damaged credit? No, and I will answer this.

First, let me address the question, are they a rip off: No, and here is why. Although secured credit cards do require you to put up collateral in case you default, this does not mean they are a rip off. It simply means that you have not earned enough trust from your lender to gain capital without giving them some type of assurance that they will be repaid. Look at this as a starting point, once you have borrowed and repaid numerous times your financial institution will be more inclined to extend you a traditional line of credit.

The second misconception is that secured lines of credit are for people with terrible credit histories only. This type of card can help someone with bad credit to reestablished credit, but that is not all it can do. If you business has no credit history you can use this type of card to start one.