Brex is a charge card that requires no personal guarantee or a personal credit check for approval. There is no APR and you could even earn rewards along the way. Here’s everything you need to know about the Brex Corporate Card for Startups.
How do you get a business credit card when your business is so new, it has no revenue?
Until recently, the answer has mostly been – you can’t. You’d have to charge expenses to your personal credit card and figure out the accounting on the back end. But now, a startup card is looking to make things easier for startup businesses.
The Brex Corporate Card for Startups is a charge card designed with entrepreneurs in mind. There are three versions of this card – one for startups, one for e-commerce and one for life science businesses (see table below for more details).
For now, we’re focusing on the startup card, the most well-known and established of Brex’s offerings.
See related: Best startup business credit cards
Guide to Brex: The card for startups
Benefits of Brex
One way Brex differs from other similar cards is that it requires no personal guarantee or personal credit check for approval. A line of credit can be approved in a matter of minutes – credit is extended based on the business’s bank balance.
“The Brex approach has been to rebuild the tech stack that underpins the entire experience you are used to,” says Marco Mahrus, vice president of payments for the San Francisco-based company.
On the surface, the card doesn’t look significantly different from other cards. It operates on the Mastercard network, it offers rewards and because it is a charge card (not a credit card), its balance must be paid back in full at the end of each month.
See related: The difference between charge cards and credit cards
But behind the scenes, “we manage everything,” says Mahrus. “We have our own underwriting credit policy. We create our own statements, we process transactions directly and run our own risk management platform.”
Because of that, companies can apply online and, within a few minutes, not only get approved, but are issued a virtual card that can be used immediately.
Applicants connect their bank accounts to the company’s software, allowing Brex to see their cash flow and grant them lines of credit that Mahrus says are 10 to 20 times larger than they would get from a traditional card.
“So, you’ve got both very high lines of credit as well as instant provisioning,” he said.Other benefits include:
- No annual fees or foreign transaction fees.
- Five employees cards included. $5 per month for each additional employee card, a virtual version of which can be instantly issued.
- You can upload your receipts to the Brex app (or text or email them in), and the company will automatically match them up with your statement.
- Brex reports on-time payments to credit agencies to help your company build credit.
To be eligible for the startup card, a business must be registered in the U.S. as a corporation or other form of non-individual liability company. It also must have at least $100,000 in its corporate account to qualify for the card.
Brex determines a customer’s credit limit based on the cash the company has raised or equity in the company, as well as the business’s spending patterns.
See related: Startup vs. small business
Brex rewards and perks
As long as Brex is your company’s only corporate card, you’re eligible for a host of rewards benefits. The standard rewards include:
- 7 points per dollar on ride-shares
- 4 points per dollar on travel
- 3 points per dollar on restaurants
- 2 points per dollar on software subscriptions
- 1 point per dollar on other purchases
However, given the changes wrought by the coronavirus pandemic, customers can instead opt for a remote rewards package which includes:
- 7 points per dollar on collaboration tools
- 3 points per dollar on food delivery
- 2 points per dollar on software subscriptions
- 1 point per dollar on other purchases
The rewards automatically revert back to their standard rates September 30, 2020.
The card also offers partner rewards, which are worth more than $50,000 in total. These include a $5,000 credit over two years in Amazon Web Services, a 20% discount on an annual Zoom subscription and up to $150 in Google Ads credits.
Pros and cons of Brex
The partner rewards have been the most attractive part of the card for Jake Tamarkin, the founder of Everyday Life, an online life insurance service.
“What we found really helpful were the perks they offered in partnership with other companies,” he said. “The $5,000 in credit from AWS is meaningful to us. That was a really big deal.”
Another of the card’s supposed selling points – its integration with banks and accounting software – has been a disappointment for Tamarkin.
His business banks with Azlo, an online bank for entrepreneurs, and uses Wave Accounting, an invoicing and accounting software. Neither are integrated with Brex.
“The implications are kind of a hassle for me,” he said. “It means that every month, I have to email them my bank statement and if I don’t, they shut off my credit limit.”
He had one scare in February, when he woke up on a Sunday morning to a text from Brex that he had only $95 in credit left on his account because he’d forgotten to send the email. This sent him into a panic because he’d put a number of revolving charges on the card and was afraid one of them would get refused.
Tamarkin says he wished he’d had a little more notice and not just a text message first thing on a Sunday. “Lesson learned,” he said. “But they could have handled that better.”
Because his accounting software doesn’t connect to Brex, Tamarkin also has to manually enter every charge if he wants to categorize his expenses. “As we grow, that is absolutely not going to work,” he said.
According to Mahrus, as a growing business itself, Brex continues to add more software and financial institutions to its roster. “We’ll add on more as we go,” says Mahrus.
However, the benefits offered by Brex proved a boon for Udit Gupta, a Mountain View, California, entrepreneur who successfully applied for the card in January.
As an Indian citizen, he didn’t have a Social Security number, which is a standard requirement for most American credit cards. And his startup, Ostrym, had money in the bank, but no revenue stream.
“It took us 20 minutes to sign up on the website and, immediately, they issued us a virtual card,” he said. “We could use it for Uber, or any of the other tools we use to run the business.”
If they didn’t have access to a card like Brex, Gupta said he and his business partner, who is also an Indian citizen, would have had to charge everything to their personal credit cards, then pay themselves back from their business account.
How Brex stacks up to the competition
Brex has competition, including cards from Stripe and Silicon Valley Bank. There’s also a new card from American Express, but it’s by invitation only. However, when Gupta and Tamarkin went looking for cards for their new businesses, only one name came up.
“We belong to all these different networks of startups,” Tamarkin said. “I asked a bunch of people, ‘What cards do you use?’ I had heard of Brex, it was on my mind, and when a couple of other people told me they used it, I thought, okay… it should be good for us.”
Like so many other businesses these days, Brex is trying to help its customers manage the ripple effects of the pandemic.
The option for a different kind of rewards points accumulation is one product of that. Brex saw its customers drop their spending on restaurants and transportation by 63% in the month of March. At the same time, there was a 63% increase in spending on food delivery and remote collaboration software, Mahrus said.
Overall, there’s been a 10% drop off in customer spending so far, though that could continue to increase, depending on the length of the lockdown and the extent of the larger fiscal crisis.
Meanwhile, Brex is also trying to help facilitate its customers’ applications for loans from the federal Small Business Administration.
“We’re doing the best we can,” he said, “to support our customers and help them make it through this quarantine period.”
The three corporate cards of Brex
Brex’s three corporate cards, at a glance, include:
|Card||Annual fee||Rewards rate||Introductory bonus|
|Brex Corporate Card for Startups||$0|
|Brex Corporate Card for Ecommerce||$0||None||30,000 in Brex Rewards points upon signup and waived card fees for life ($300+ value in the first year)|
|Brex Corporate Card for Life Sciences||$0||30,000 in Brex Rewards points upon signup and waived card fees for life ($300+ value in the first year)|
Should you sign up for the Brex Corporate Card for Startups?
The Brex Corporate Card for Startups is certainly unique, and it has a lot of benefits to offer the right kind of business owner. If you’re looking for a business card that requires no personal guarantee, has competitive rewards and can offer a large credit line, this could be a great choice. However, having to pay off a balance in full every month might not make sense for every business, and some users have had trouble integrating the card with their business software.
No matter what startup business credit card you choose, be sure to do your research and find out if the earning structure, business tools and payment structure align with your needs.