Secured business credit cards: A complete guide

As a business owner or entrepreneur, you need good credit to get approved for a business credit card—but you need a credit card to build good credit. So, what do you do?

If you’re just getting started or your credit score isn’t where you want it to be, a secured business credit card could be a smart move. While the rewards might be more limited than a traditional card, using it responsibly can help you build your business credit—and unlock better financing options down the road.

What you’ll learn:

• If building business credit is your goal, a secured card can be a smart choice.

• Secured cards can help build business credit, but there are drawbacks to consider, like limited reward benefits and an upfront deposit.

• Some credit card issuers, like Capital One, provide a variety of unsecured business card options instead—designed for different credit scores and offering diverse reward opportunities.

A secured business credit card is a type of credit card that requires a refundable security deposit. This deposit acts as collateral, which makes it easier for business owners with less-than-perfect credit to qualify.

The security deposit typically influences your credit limit, so you can make purchases up to that amount. Just like traditional or unsecured credit cards, you can pay off the balance each month, which helps you manage cash flow and build business credit. If used responsibly, a secured business credit card can improve a business’s credit profile, and it may even open the door to higher credit limits or an unsecured card down the road.

When deciding which type of business credit card is best for you, it helps to understand the differences between secured and unsecured cards.

• Secured cards: These cards ask for a deposit upfront, making them a great option if you’re looking to build your business credit from scratch or improve a low credit score. They are often easier to get approved for, especially for new or small businesses.

• Unsecured cards: These cards don’t need a deposit and are generally available to businesses with credit scores ranging from good to excellent. They are typically designed to offer a range of business-grade rewards, lower interest rates and access to higher credit limits. And while some secured cards offer rewards, they tend to be more limited.

Which one you choose really depends on your business’s credit score and what you’re looking for in a card.

If you’re looking to build or repair your credit, a secured business credit card can be a great tool. Here’s why:

Starting a business or building a solid credit profile can be tough, especially if you don’t have a strong credit history. Secured business credit cards are easier to get approved for because they reduce the risk for lenders with that upfront deposit. If your credit is limited or poor, these cards can be your first step toward building a solid credit foundation.

Using your secured card responsibly—like keeping your balance low and making payments on time—can help establish a positive credit history. Many secured cards report to the major business credit bureaus, which means your smart payment habits could help you qualify for unsecured cards and better financing in the future.

While secured business credit cards can be useful for building credit, they have some drawbacks, such as upfront costs and fewer reward opportunities.

Unlike unsecured business credit cards, secured cards require a refundable security deposit, which serves as collateral. This upfront cost can tie up cash that could otherwise be used for business expense management. If your business has limited working capital, this could be a challenge.

While some secured business credit cards offer rewards, they’re usually more limited when compared to unsecured options. 

You may miss out on benefits like travel rewards, cashback or statement credits, which can help offset costs. So, if maximizing rewards is a priority for you, an unsecured card could be a better fit.

When choosing a secured business credit card, it’s all about finding one that matches your financial goals and helps build your credit. Here are three tips to help you make the best choice for your business.

1. Look for a card that reports to the business credit bureaus. Keep in mind that not every secured card reports to the major business credit bureaus, and that’s important if you want to build your business credit. Choosing a card that reports to these agencies means your good credit habits can help boost your business credit score.

2. Compare upfront costs and fees. Depending on the card issuer, security deposit amounts will vary. Some cards require a minimum deposit of a few hundred dollars, while others let you put down more if you want a higher credit limit. Be sure to also check for annual fees, maintenance fees and other charges so you’re not caught off guard.

3. Ensure the credit limit fits your business. Take a look at your regular spending and make sure the credit limit can cover your business costs while keeping your credit utilization low to maintain a healthy credit score.

Wondering if a secured card makes sense for you? Ask yourself:

• Are you trying to build or rebuild your credit? If your business doesn’t have a strong credit history, a secured card can be a great way to establish or rebuild credit. By using it wisely and making payments on time, you can boost your credit profile—leading to better financing options.

• Have you been denied an unsecured credit card? If your business has been denied due to a limited or poor credit history, a secured card is a great alternative and can help you build credit to qualify for an unsecured card in the future.

• Do you need access to credit with less risk? Secured cards require a deposit, which cuts down the lender’s risk, making them a safer choice for businesses that need credit without the risks that come with unsecured cards.

If you answered yes to any of the above, a secured card might be a smart step toward building your business credit and opening doors to more financing options down the road.

A secured business credit card can be a helpful tool if you’re looking to build or improve your business credit. They’re generally easier to get approved for—but keep in mind, they do come with an upfront deposit and limited rewards.

If you’re a small-business owner looking for more flexibility and greater reward potential, an unsecured business card might be a better fit. For example, the Capital One Spark Classic is a great alternative for businesses looking to build credit without requiring a security deposit. And with no annual fee—plus the potential to earn unlimited cash back rewards—it’s an excellent choice for small-business owners aiming to improve their credit and maximize their business spending.

Ready to get started? You can start by seeing which Capital One business cards you are already pre-approved for and take the next step toward building your business credit.