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Small business secured credit card: what is it?

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    If your business is new or you've made a few mistakes with your credit, it could be tough to get approved for a business credit card until you establish some history of managing your credit wisely. In this case, something called a secured business credit card may be a helpful solution.

    In this article, we'll share what a secured credit card is, how it works and how it differs from a traditional credit card.

    What is a secured business credit card?

    A secured business credit card is a way for businesses to build (or rebuild) a business credit history and credit score. It's different from a traditional credit card in that a security deposit is required. If you're approved, the business must put up collateral in the form of a deposit into a bank account. Your credit limit is typically equal to the deposit amount. However, you cannot use your security deposit to pay off your credit card bill each month. In fact, you're not able to touch the security deposit amount at all while the account is secured.

    The financial institution will treat your transactions and payments as they would a regular credit card and report your activity to the major business credit bureaus. If managed responsibly, over time your business could build a quality credit history and credit score, subsequently opening doors for other, non-secured financing.

    How do secured business cards work?

    During the application process, you'll make a refundable cash deposit into a bank account via debit or electronic transfer. That money then becomes the credit limit that you borrow against. This deposit acts as collateral that the card issuer can use to cover any debt you're unable to repay.

    Because you make a deposit during the application process itself, you're often approved right away. You'll receive your secured credit card in the mail several days later and once activated, you can use it immediately.

    Similar to other credit cards, you'll receive a monthly statement with all transactions during that billing cycle. If you don't pay off your balance in full by the due date, the balance rolls over to the next month and you'll accrue interest according to the card's APR. If you make consistent on time payments over time, you may be able to qualify for an unsecured business credit card.

    What happens to my secured credit card deposit?

    Your secured credit card deposit is kept in a bank account. When you're ready to close your account, you can pay off your balance and get your deposit back. Before closing your account, it must be in good standing with a zero balance. In some cases, your secured credit card may be converted to an unsecured card, after which you would receive your deposit back, minus any associated fees.

    Pros and cons of a secured business credit card

    With any financing opportunity you consider for your business, you'll want to weigh the pros and cons.


    • When used responsibly, secured credit cards can help you build a business credit score, which could be an advantage when applying for a future business loan, line of credit or unsecured credit card.
    • Some cards come with rewards and other business-related benefits, such as travel insurance.


    • Secured cards require a cash outlay up front, in the form of a deposit.
    • The amount you deposit as collateral often determines the credit limit, and this could be low to start out with if you're short on cash.
    • You may find that certain cards come with an annual fee.

    What's the difference between a secured business credit card and a small business credit card?

    The difference between a secured business credit card and a regular small business credit card comes down to the financial situation of your business as well as the risk associated with lending to you.


    • Collateral is required, typically in the form of cash deposit or savings account.
    • Since the collateral reduces the risk for a card issuer, secured business credit cards are often easier to obtain, even if the business has limited credit history or a low credit score.
    • The credit limit on a secured card is typically equal to the amount of collateral provided.
    • Often used by businesses looking to establish or rebuild credit history. Responsible usage may improve credit scores over time.

    Small business credit card (unsecured)

    • Does not require collateral.
    • Approval as well as credit limit are based on applicant's creditworthiness (includes credit history, income and business financials).
    • Can keep a business flexible since there is no collateral tied to the credit limit.
    • May be helpful for day-to-day business expenses and managing cash flow.

    In summary

    Secured credit cards may serve as a temporary but impactful way to establish your business credit. Consistent, on-time payments could improve your business credit score and ultimately unlock access to other financing options. While Chase does not currently offer secured credit cards, it can be helpful to understand how this specific kind of credit card works, regardless of which issuer you apply with.

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