There are a handful of business credit cards that don’t require personal guarantees, but they tend to have stringent requirements. For instance, you may not qualify under certain business structures and if your company’s revenue and sales figures aren’t high enough.
Dear Your Business Credit,
I’d like to get a business credit card for my startup but don’t want to give a personal guarantee. Are there any options out there for me? – Jason
In the years since I’ve been writing this column, your question is one of the most popular. The short answer is it is very difficult to get a business card for a startup with no personal guarantee.
Here’s why: Card issuers want to be paid back. When you run a new business, they are taking a big risk in lending you money. If the business fails, they want to get paid back.
By asking you to give a personal guarantee, they have the option of going after your personal assets, which are likely to be more substantial than those of a brand-new business, to make themselves whole.
That said, not all startups are the same. If you have created a high-revenue startup in your first year or two, you might qualify for a business credit card that does not require a personal guarantee. Card issuers may be willing to take a chance on going after the assets of the business if you cannot keep up with payments.
However, these cards generally have stringent requirements for applicants.
These are cards I am aware of that do not require a personal guarantee:
Brex Corporate Card for Startups
Designed for venture capital-backed startups and backed by PayPal co-founders Max Levchin and Peter Thiel, the Brex Corporate Card for Startups has no annual fee and unlimited points and requires no personal guarantee.
This is a charge card, so your balance must be paid in full every month. There is no APR. The card offers credit on a “dynamic” basis, taking into account the cash the company has raised as well as company spending patterns and credit history, for instance, rather than a personal credit score. The card offers rewards points on all spending, with higher rewards points on ride-shares, travel, “recurring software” and restaurants.
However, you must be part of a corporation or non-individual limited liability company. You cannot be a sole proprietor, an unincorporated partnership, an unregistered business or a business registered outside of the U.S. to qualify.
And you cannot be involved in certain business activities, such as the sale of marijuana, pyramid schemes, sale of guns and distribution of child pornography.
Amex’s program for startups
American Express’ corporate program for startups offers a variety of cards, including the American Express Corporate Green Card, the American Express Corporate Gold Card, and the American Express Corporate Platinum Card. The issuer says the program offers “full corporate liability and no personal guarantee” so that there is no impact on your credit score.
Stripe Corporate Card
The payment processor Stripe has also issued a corporate card that does not require a personal guarantee to businesses that use Stripe. The card requires payment in full every month, and does not charge interest or fees. As for rewards, there is an unlimited 1.5% cash back for all corporate purchases, which will be credited against your statement balance each month.
Eligibility is based on payment volume, the company’s history on Stripe, and the company’s bank account history. The company says firms that do not use Stripe can also apply, but Stripe needs to collect additional financial information from them.
Bremer Bank Visa CommUNITY Credit Card
One other option to consider, if your startup is a nonprofit, you might qualify for the Bremer Bank Visa CommUNITY Card. It requires no personal guarantee. It also comes with rewards and “generous credit lines.”
What if you don’t qualify for any of these cards?
For most small business cards, you will have to provide a personal guarantee. If that is the case, never borrow more than you can personally pay back to grow your startup.
It’s better to grow slowly and fund growth through cash flow than put yourself in a precarious financial position you can’t get out of. No entrepreneur can make good decisions under crushing debt. By avoiding it, you’ll have the peace of mind you need to achieve your vision for your business.