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Secured business credit cards are an excellent option for business owners with poor credit but reasonable assets. Unlike a traditional credit card, secured business credit cards require that cash assets be held in a savings account, which the lender can then use as collateral for providing loans
Secured business credit cards typically carry higher interest rates and come with higher fees. Secured credit cards tend to be given to owners with poor credit, and thus are often considered to be a high risk for lenders. The terms of the loan will place requirements on the savings account, often requiring that a certain minimum deposit be kept at all times (ranging from a few hundred to a few thousand dollars). Typically, the amount in this savings account will mark the credit limit (or a percentage thereof) of the credit card. This savings account cannot be used to pay bills; it must be held as a separate and accessible collateral account.
While this may not sound like the best deal available, secured business credit cards are often the only option available for business owners with bad credit or otherwise lacking in creditworthiness. Even businesses that have faced bankruptcy are eligible. This helps give them access to credit, and allows them to get back in the game by giving them a means for credit building. This is also an excellent option for businesses that don’t yet have the credit for unsecured business credit cards, and want to provide their business with a means of initial credit building, as well as adding some dignity to the business by having plastic.