Obtaining business credit cards with no personal guarantee is not at all difficult. Major credit card companies review many factors about a given business in order to consider it to be creditworthy.
They evaluate a business’s income, his tax profile, and often his liabilities, to determine if it’s a good credit risk or not. Some of this information is given on the credit card application itself. This procedure is the opposite of having a businessman give his personal guarantee to be given credit.
Often, a businessman has to offer some of his assets as collateral to obtain business loans and credit. His house is usually the most common asset pledged, since it’s his most expensive one. But if a credit card company views a particular business as being in solid financial shape, then it’ll have no problems awarding credit to it. Sometimes this credit can be a limited amount in the beginning.
Then, as the business pays its credit back on time, or even early, the credit card company will often increase its credit line. A business can continue to get bigger and bigger increases the better it pays.
For a substantial business, giving business credit cards with no personal guarantee is really not that big of a risk. The companies have vast experience knowing which businesses are most likely to succeed upon start-up. And they can easily tell just how well a business is doing based on both the nature of the business and how long it’s been operating.
Many businesses fall into niches. Credit card companies evaluate these niches. The most general distinguishing factor is businesses that are product-driven and ones that are service-oriented. Then there are the various business sectors. Some sectors are more financially viable than others. There’s the fashion sector, the health sector, the academic sector, the restaurant industry, the sports industry, the pharmaceutical industry, the cosmetics sector, and the toys industry, to name some. Based on comparisons and experience, each business will be evaluated for it’s creditworthiness. Moreover, the longer a company has been in business, the better the financial risk it is regarding having credit extended.
And if a business has a lot of liquid assets, such as cash on hand in banks, this will help the credit card company make a favorable decision in deciding whether to give out credit without any personal guarantee. This is true even if the cash isn’t collateralized to guarantee the line of credit on a given card.
Some businesses who can establish excellent banking relationships and history will fare better when it comes to a company deciding whether to hand out some credit. But most every business will be able to secure even a moderate amount of credit on an issued card, even if it doesn’t have much of a banking history.
Credit cards make billions of dollars by extending credit. That’s another reason why they’re often so lenient in granting businesses credit. Extending credit cards to businesses sans a personal guarantee goes back many decades in this country. These companies can easily see the excellent financial track record specific businesses have had, so they’re not hesitant to continue extending more credit by issuing cards.