Applying for a secured business credit card works a lot like applying for an unsecured business credit card. Either way, you’ll submit an application to your card issuer of choice. Your application will include information about yourself and your business, and the credit card company will probably run a credit check before approving you.
The biggest difference? Collateral. Before you can use your secured credit card, you’ll have to offer up collateral in the form of a cash deposit (usually into a specific bank account).
In most cases, your credit limit will be directly tied to how much money you deposit as collateral. For example, your credit limit might be 90% of your collateral deposit. As you can see, that means that secured credit cards don’t work so well for big cash advances or extra working capital. Because really, you’re only borrowing money you already had on hand.
Instead, secured credit cards are designed to help you build credit by developing a good credit history―even if you’re starting with bad credit or no credit. Your credit card activity will get reported to credit bureaus, which then affects your credit score and overall credit profile.
So as you use your card for business expenses and then repay your balance on time, you’ll start to see improved business credit. Before you know it, you’ll be able to qualify for the best business credit cards―which will be unsecured business credit cards that don’t require collateral.