The 4 Best Unsecured Business Credit Cards for Small Businesses
- Capital One Spark Classic for Business: Best unsecured credit card for building credit history.
- The Blue Business Plus From American Express: Best unsecured credit card for startups.
- Chase Ink Business Cash: Best unsecured credit card for cash back rewards.
- Capital One Spark Miles Select for Business: Best unsecured credit card for travel with no fee.
Every small business owner is different in that everyone is pursuing different individual goals, but of the same overarching ones—in that money is a constant consideration and extra cash is always welcome. Although going all-in on a small business loan can be a big step that not every company is willing to make, a business credit card is a smart decision for almost all small businesses that need immediate access to capital.
With that in mind, should you use unsecured business credit cards for your business spending? Likely, the answer is yes. These credit cards are very helpful for business owners in case of cash-flow emergencies and also let you incorporate credit card usage into your business regularly to take advantage of benefits and rewards.
But what is an unsecured business credit card? What’s the difference between an unsecured and secured business credit card? And how do you know which card you should use? We’re here to answer those questions. We’ll explain exactly what unsecured small business credit cards are, the benefits and drawbacks of using them, and how to choose which one is right for your business.
What Is an Unsecured Business Credit Card?
You might be unfamiliar with the term “unsecured credit card,” but you’re certainly not unfamiliar with the term “business credit card.” The vast majority of business credit cards, in fact, are unsecured. Therefore, in most cases, the terms business credit card and unsecured business credit card are interchangeable.
The difference between a secured vs. an unsecured credit card, on the other hand, is that a secured credit card requires a security deposit when you sign up in order for the lender to mitigate risk. The deposit is less than or equal to your credit limit and if you maintain good payment history, you can get your deposit back. Secured business credit cards are great tools for business owners who need to rebuilt credit. Unsecured business credit cards, then, are basically everything else—and what you’re thinking of, likely, when you think of any credit card. Unlike secured credit cards, unsecured business credit cards require no personal guarantee. You have a credit limit, you spend up to that limit, and then you pay back your balance.
There are lots of perks to using unsecured business credit cards for your business spending. For one, they’re hugely helpful for providing short-term cash flow if you need it. Additionally, there’s such a large variety of options for these credit cards, and therefore, business owners can pick the card that gives them the best rewards for their spending.
The Benefits of Unsecured Business Credit Cards
Now that we’ve explained what an unsecured business credit card is and how it differs from a secured credit card, let’s discuss why you would want to use this card for your business. Here are a few benefits:
There’s no doubt that you’ll see a time where your business is short on cash. Perhaps account receivables are behind or sales are slow. In these situations, having access to a little more short-term credit comes in handy, especially if it’s crucial to ensuring that your business continues to operate smoothly.
Plus, a huge factor with these business credit cards is convenience. You can quickly access funds, giving you a much needed financial cushion for those unpredictable occasions. Since small business loans are larger endeavors for many businesses (with lots of paperwork), or not an option for others who need to build a credit history or establish time in business, unsecured business credit cards are a useful alternative.
Additionally, these credit cards are also often easier to qualify for than some loan products because of the sheer range of them available on the market. Card issuers have the ability to offer different cards with different terms to business owners across a range of credit histories.
Keep Personal and Business Finances Separate
Essential financial management for your business becomes easier if you use a business credit card. It’s 100% necessary—and one of the 10 basic rules of accounting—for your personal and business finances to stay separate. Your bookkeeper has to keep them apart for tax purposes, and using a business credit card will make that job simpler.
Not only can you separate your business spending and track it on dedicated statements, but many card issuers offer other free services, such as online tools, to manage record keeping. For example, your bookkeeper can categorize, track, and receive year-end account summaries to speed along their process. Utilities like these can even simplify the process if you outsource bookkeeping, especially when it comes to monitoring tax payments and navigating audits. On the other hand, if you’re doing the books yourself, you can save time sorting through receipts.
In addition, unsecured business credit cards also give you the ability to limit how much your employees can spend. To explain, if you set a monthly budget for your assistant to only spend on office supplies and she tries to purchase items that aren’t from an office supply store, then the transaction will get rejected. This way, you don’t have to worry about unauthorized employee spending, but you can still give them the ability to make necessary business purchases.
Many unsecured business credit cards offer rewards programs, just like the ones you have on your own personal credit card. With your business spending, you can earn in your preferred categories, like cash back, airline miles, preferred pricing, and more. A business rewards credit card, therefore, can be a great way for your business to save money. Cash back can be reinvested, or miles you and your employees earn can turn into free flights and hotels for business trips.
To decide which kind of rewards card you should get, you’ll want to do a mini-audit of your business spending. What do you spend the most money on? Is there a category or type of product on which you consistently spend? Or, is there a store in which you do most of your spending? Would you prefer straight cash back?
Once you have an idea of your priorities and spending habits, you can get an unsecured business credit card that will bolster your available short-term cash as well as help you earn the best rewards for your business along the way.
Disadvantages of Unsecured Business Credit Cards
There are always caveats to heed with any type of credit product, of course. Before using an unsecured business credit card for your business spending, make sure you’re aware of these potential pitfalls:
- Interest rates on business credit cards vary widely. They’re generally higher than on personal credit cards and small business loans. If you tend to carry a balance, you’ll have to be certain that you choose a card with this in mind.
- Your card issuer reserves the right to change your interest rate. This can depend on how you use or manage your credit card account.
- You’re still personally responsible for your business credit card. If you accrue business debt, you could be personally liable. This also includes any authorized spending on an employee’s card linked to your account. Plus, depending on your agreement with the card issuer, late or nonpayment could negatively impact your credit report.
Best Unsecured Business Credit Cards for Small Business
If you think you’re ready to go forward and apply for a business credit card—as we’ve mentioned, there are numerous options you can choose from. Here are four of our picks for the best unsecured small business credit cards:
Best for Building Credit History: Capital One Spark Classic for Business
If you know your business needs to build or rebuild credit history, try the Capital One Spark Classic for Business for your business spending. There’s no annual or foreign transaction fee, and you can still earn rewards—unlimited 1% cash back on every purchase.
Best for Startups: The Blue Business Plus from American Express
Great For: Making purchases with a 0% intro APR periodRead Full Review
- 12 month 0% intro APR period on purchases from the date of account opening
- 2X points for the first $50K spent
- No annual fee
|Intro apron purchases for 12 months from the date of account opening||Regular apr||Annual fee||Minimum credit|
|0%||13.24% – 19.24%||$0||700|
As a startup, sometimes you have to make big purchases but can’t pay them off immediately. The American Express Blue Business Plus Card gives you a 12-month 0% APR introductory period and no annual fee. After your 12 interest-free months are up, however, a variable APR sets in at a rate depending on your creditworthiness. This rate will also vary with the market, so be sure to see the terms and conditions for the latest APR information. With this card, you can build your business credit history and also earn 2x points on your first $50,000 for every dollar you spend in purchases each year.
Best for Cash Back Rewards: Chase Ink Business Cash
Great For: Typical business expensesRead Full Review
- $750 signup bonus if you spend $7,500 in first 3 months
- 0% intro APR for 12 months on purchases
- 5%, 2% or 1% cash back depending on where you spend
|Welcome offerafter you spend $7,500 on purchases in first 3 months||Rewards ratedepending on where you spend||Annual fee||Minimum credit|
|$750 cash back||5%, 2% or 1% cash back on purchases||$0||660|
The Chase Ink Business Cash Card is one of the best cash back rewards cards on the market, which is a worthy choice for an unsecured business credit card. With its tiered rewards categories, you’ll get either 5%, 2%, or 1% cash back based on certain purchases—so if you spend a lot on office supplies, restaurants, or gas, you’ll see dividends here.
Best for Travel With No Fee: Capital One Spark Miles Select for Business
With no annual or foreign transaction fee, the Capital One Spark Miles Select for Business is a solid pick if you want to earn travel rewards with your unsecured business credit card. You’ll earn a flat 15 miles on every dollar you spend and get a 20,000-mile signup bonus for spending $3,000 in the first three months with the card.
Unsecured Business Credit Cards: The Bottom Line
Ultimately, you have to decide what kind of finance and business spending plan works best for your business. However, using unsecured business credit cards is a great option for so many different business owners.
Startups and new businesses, for example, that aren’t currently eligible for other financings (due to a lack of credit history) can get access to much-needed funds by using an unsecured business credit card. Additionally, small businesses needing to supplement their cash flow on the short-term can also use an unsecured credit card to their advantage. Likewise, business owners who are looking for strategies to maximize savings, or ways to grow their business can substantially benefit as well.
Just like with any credit product, as long as you know the potential risks involved, an unsecured business credit card is a great option for business spending—even more so when you choose the best one of your particular business.
Brayden is a credit card expert and the former vice president, new markets at Fundera. He’s passionate about helping businesses take advantage of the best credit card offers on the market, from the longest 0% intro APR periods to the richest cash back and travel rewards bonuses.