Are you searching for no personal guarantee business credit cards? Let me be the first one to tell you that the credit card issuers for these types of cards do not advertise! Only the most creditworthy small businesses qualify and receive a pre approval invitation.
Some credit cards, like the Sam’s Club Discover Business account, will waive a personal guarantee if your company has less than $5 million in annual sales or revenues or is less than 2 years old or has fewer than 10 employees.
Now, if you’re designated as a sole proprietorship or partnership then you automatically disqualify and must provide a personal guarantee for this card. That should give you all the more reason to incorporate your business.
Among the well over 500 business credit cards to choose from, only 40 will actually extend credit to businesses without requiring a personal guarantee. But let me remind you that regardless of what you've read or heard, it takes much more than simply generating a paydex score to qualify for these cards -- and it's even less likely that a business will be invited to apply.
Recently I shared with you the top 10 biggest myths surrounding business credit and the 80 paydex score was ranked #1.
The reason for this was that an 80 paydex score with Dun & Bradstreet is said to be like having a 720 personal credit score. While there may have some truth to that comparison, there are some key details that get left out. For example, you can have four positive trade lines reporting with only $200 being the highest credit limit on all four accounts and still generate an 80 paydex score.
This is because Dun & Bradstreet’s rating system requires only four positive trade references; but if the four references you have are small limits, then this hardly qualifies your business as creditworthy in the eyes of these no-pg credit card issuers.
As result of this misinformation it's easy to get frustrated and just throw up your hands and say there is no such thing as business credit cards without a personal guarantee. But you'd be wrong!
Want proof?
Well, I just listed the Sam’s Club Discover Business card and there’s also the First Equity card -- to name just a couple. One of the things I like about the First Equity card is they report your card as a business line of credit to the business credit bureaus, which looks very good on your profile.
It’s not locating the cards that is difficult, when you have access to the right source like the Business Credit Insiders Circle where they provide the no personal guarantee business credit cards to members after they complete a business credit builder system.
The problem lies in getting business owners to understand what it takes to qualify. The other day I received an e-mail from a business owner boasting about his 80 paydex score asking for a list of my no-pg business credit cards. The first thing I asked was what types of credit has he established in the business name and what was the highest limits being reported.
It was no surprise to hear that he was only listed with Dun & Bradstreet and had 5 positive trade lines with the highest credit limit of $2500. He was definitely not in a position to apply for a no-pg card and it was apparent to me that he read from another source that all you need is a strong paydex score.
This brings me to another point about qualifying for business credit cards without a personal guarantee. Having only a Dun & Bradstreet file is like having only one personal credit file with the credit reporting agencies. Let's say all you have is a personal credit file with Equifax but have no file with Transunion or Experian. You would never be able to get approved for a mortgage because you don’t have a complete financial picture for lenders to review your creditworthiness.
The same thing applies to business credit lenders and credit card issuers. You can qualify for a business credit card with no personal guarantee but to be considered a credit-worthy business you must establish a strong credit file with the three main business credit bureaus. This includes a good blend of credit like vendor credit lines, a business loan, lease credit, and revolving credit.
Marco is founder of the Business Credit Insiders Circle which helps small business owners in establishing business credit.
You may contact Marco directly at: ceo@startbusinesscredit.com
Follow Marco on Twitter @MarcoCarbajo and read more of his insights on how to build corporate credit.
