There have been lots of post lately on business credit cards lately. I have also been doing some research into this area of small business credit cards and have found out a few interesting things.

One of the things I set to find out was whether you had to personally guarantee your “business credit card”, whether having one helped you build your credit history. So I started making my round of calls to all the major credit card issuers. Here is what I found out.

1. Small Business Credit Cards Require Personal Guarantee

Yes, even though it is a “small business credit card”, you are personally liable if your business (or rather business credit card) misses any payment. When you apply for a business credit card, your personal credit score will be pulled by the issuer and your approval based on that.

But I thought that that business credit cards do not require personal guarantees? Well, the type of business credit cards you are probably refering to are corporate credit cards. Most credit card issuers have corporate credit cards, but these are issued by the corporate department rather than the credit card department. To qualify for a corporate credit card, your business needs to have a certain amount of revenue, a certain number of employees and even a certain length of existence. If you business meets these criteria set out by the banks, then these cards will not require personal guarantees.

Not all “Small Business Credit Cards” will build your business credit history

Many business experts will tell you that you need to build your business credit as soon as possible to enable you to get lines of credit at good rates in the future. Aside from incorporating your business properly and registering with business credit bureaus like Dun & Bradstreet, you need to establish a line of credit from a few suppliers, open a business bank account and get a business credit card.

But I found out that a couple of regular business credit cards do not actually report to business credit bureaus! So here is the results of my investigation on this matter.

Advanta Business Cards – Does not report to any business credit bureaus although they reserve the right to!

Capital One – Reports to Equifax Small Business

Discover Business Card – Reports to both Business credit bureaus (Dun & Bradstreet and Equifax) and personal credit bureaus (Experian, Equifax and TransUnion).

Citi – Reports to Dun & Bradstreet. Does not report to personal credit bureaus unless you are late on payment by more than 65 days.

Chase – Reports to Dun & Bradstreet. Does not report to personal credit bureaus.

Bank of America – Reports to Dun & Bradstreet.

American Express – Does not report to any business credit bureaus but reports to personal credit bureaus as a business card.

As you can see, both American Express and Advanta Business Cards do not report to business credit bureaus. Hence, if building a business credit history is important to you (as it should be), then you should actually avoid both these issuers. But if you do not care about building a business credit history, then which card you get shouldn’t really matter from that perspective.

Anyone Can Apply For a Business Credit Card

What most people do not know is that anyone can apply for a business credit card. You actually do not need a business to do so. Just apply as a “sole proprietor”. If fact, many of us have left business credit cards out when we compare which cards to get. In fact, you may be missing on some very good cards as a result of not looking at “small business credit cards”. I shall be exploring this soon in upcoming post.

This entry was posted on Wednesday, February 21st, 2007 at 03:59 and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.