Your Business Credit

Almost all business cards require personal guarantee


If no one in your organization wants to guarantee a business card, you’ll probably need to look at other options such as reimbursing expenses on personal cards and establishing trade credit with suppliers

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QuestionDear Your Business Credit,
I am a trustee at a private country club, a tax exempt organization. We need a card for daily purchases, but none of the trustees wants to personally guarantee a credit card. Do we have any options? — Jim

AnswerDear Jim,
With many golf clubs busy at this time of year, it makes sense to have a credit card for convenient purchasing. Unfortunately, finding one that does not require a personal guarantee can be tougher than booking a tee time on Saturday morning.

Generally, if you want a small business card, someone will need to personally guarantee it. However, if the club’s revenues are above $1 million, you may have another option.

In an earlier column (“Will an ITN help me get a business card without a personal guarantee?“), I discussed a type of credit card that is available without a personal guarantee. The Bremer Bank Visa Signature Business Company Card is available to established medium- to large-sized incorporated businesses, LLCs or LLPs with annual sales between $1 million and $10 million and minimum annual net income of $350,000 in each of the previous two years. I am not aware of any other cards that do not require a personal guarantee.

If that option does not work for you, I would suggest the trustees who are authorized to make purchases each use their own personal credit cards to do so. Then have them submit a request for reimbursement. Make sure you create written guidelines about what type of spending is acceptable to the club, so there are no misunderstandings. Also put some checks and balances in place so no one is signing off on his own expenses.

Relying on multiple cards can be cumbersome — and it can use up your personal credit — so you might also want to consider trying to establish trade credit with key suppliers. For instance, if you regularly order food for the clubhouse restaurant from a certain supplier who knows you will pay your bill, the supplier might be willing to extend credit to you without anyone guaranteeing it. Similarly, a local office supply store might be willing to give you trade credit. Given that you run a facility that lends itself to holding events such as fundraisers, you may also be able to barter use of your space with local businesses and professional service firms that supply things you need.

I should add that you and the other trustees are wise to be cautious about putting your own credit on the line. Country clubs may be luxurious places, but many of them have struggled to overcome the effects of the recession. A research report by IBISWorld found that there was only 0.7 percent annual growth in the industry from 2010 to 2015.

That said, the future is looking brighter, so you could be seeing some good years ahead. “In the coming years, the industry will return to moderate growth due to high corporate profit, rising disposable income and increased consumer sentiment,” IBISWorld’s analysts wrote. Even so, there’s no sense putting your own credit at risk to guarantee your club’s purchases if you can find some other alternatives.

See related: To get a business loan, you may need to buff personal credit, Business or personal credit: Which can be built faster?, Is the primary cardholder for nonprofit personally liable?


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