Two interesting credit cards for startup businesses
There are a variety of ways to fund getting a startup off the ground. They range from using personal funds to taking on outside investors. I have always been a proponent of startup founders putting some of their own money at risk. Especially if they are going to ask an investor to risk their money. When I have said that in the past I have meant that founders should risk some of their disposable income. I am not a huge fan of taking out a personal loan to launch your business. But, plenty of startup founders use personal loans in the very early stages. Their rationale is that they already have the credit available to them. Typically in the form of personal credit cards. While I get understand where they are coming from I think using personal credit cards for startup businesses is a bad idea. That is, unless you can avoid the negatives that often come with credit cards.
Usually personal credit cards have very high interest rates. Keep in mind that if you pay a credit card balance off in 30 days you don’t incur any interest charges. However, entrepreneurs that have shown poor money management in the past may find that difficult to manage. Not only do credit cards have high interest rates but they can often carry additional fees such as an annual fee. Another challenge is that credit card providers will usually require you to sign a personal guarantee. Which means you are responsible for the payment and debt.
But what if credit cards for startup businesses existing that had none of those things? Then I’d be more willing to support using them for launching a business.
Two credit cards for startup businesses that are intriguing
I recently decided to research if there any fintech companies that were specializing in credit cards for startup businesses. Lo and behold I found a few that I am going to share with you. A few points first though. I do not have any personal experience with either of these companies. Nor do I know anyone who has used their products. I am NOT being compensated to share their information. I am simply sharing some information I uncovered that I thought might be valuable for the SouthFound startup community. Finally, while both offer “no interest” as a perk, every credit card can be zero interest if you pay them off before your next billing cycle.
Brex
Brex fancies itself “the corporate card for tech”. According to their website their product(s) are used by some well-known startup companies such as Y Combinator and AirBnB. One of the best features that caught my attention is that they do not require a personal guarantee. Also, they don’t charge an annual fee or any interest (since the card is a 30-day balance card). But, the features of the card don’t stop there. It was the level of rewards they offer that really caught my attention. Below is a list of other features and points about the Brex credit card.
- 10–20x limits when compared to normal credit cards
- Insane rewards: 7x on ride-sharing, 4x on travel, 3x on restaurants
- Discounts on partner services: Zendesk, Sendgrid, Amazon Web Services, WeWork
- The card works worldwide since it is issued by MasterCard
- The service is integrated into other financial software such as QuickBooks Online (QBO) and Xero
- Since the card goes in the name of your business you will be building business credit
One of the drawbacks of the card is that it is not offered to sole proprietors.
Divvy
Another option, that is very similar to the Brex product, is a Divvy credit card. Divvy’s product is also offered in conjunction with MasterCard. So, many of the features are similar to the Brex card. Such as being available for use worldwide. Additionally, the Divvy card also integrates with QBO and Xero. This card has no fees, but only offers a 1% cash back rate.
I’d be curious to know if anyone has used credit cards to fund the launch of a business in the past.
I’m also curious in general what credit card people use for business.
Feel free to share your comments or thoughts.
