Need capital for your small business (SMB)?
Maybe you’re looking to launch a new business.
Maybe you’re hoping to scale operations and expand your reach.
Maybe you’re simply looking to remodel your storefront.
Whatever your goals may be, small business credit cards unlock the financing to fulfill them.
The only question is, which one is right for you: secured or unsecured credit cards?
In this article, we’ll explore the differences between the two, reveal how they impact your business credit, and provide resources to help you find the best card for your company.
Note: while secured and unsecured credit cards exist for personal use, this article focuses solely on secured and unsecured small business cards.
What Is a Small Business Credit Card?
As an entrepreneur, you have multiple funding routes to consider.
For example, you can unlock “free money” through grants, open a business line of credit, or pursue SBA loans (which are partially guaranteed by the U.S. government.)
But what if you need fast (and revolving) access to capital?
In that case, you might want to open a small business credit card.
After all, these powerful financial tools deliver high credit ceilings, great rewards programs, and essential tax deductions for your company.
Though there are many small business credit cards on the market, most come in two forms:
secured and unsecured.
What Is a Secured Small Business Credit Card?
Secured small business credit cards are like standard credit cards, with one key exception:
they require a cash deposit.
Fortunately, this one-time collateral payment is totally refundable and helps “secure” the card (hence the name).
In most cases, the up-front deposit is equal to the available credit limit. For example, if you put down $500 as collateral, you would then have a $500 line of credit.
Once you provide collateral, you can use your secured card however (and wherever) you like: to swipe in stores, to tap with your mobile wallet, or to make purchases online.
If you are new to credit (or have poor credit), a secured small business card could be a great fit.
Though they have modest credit limits, secured cards make it easy to build your business credit history without running the risk of getting overextended.
Over time, you’ll be able to graduate to unsecured credit cards.
What Is an Unsecured Small Business Credit Card?
An unsecured small business credit card is a “normal” credit card—unlike secured credit cards, they don’t require a deposit.
Instead, qualification fully depends on creditworthiness.
According to Experian, a FICO® score of 670 or higher is typically needed to obtain an unsecured small business credit card.
Upon qualification, you will gain access to high credit limits, extensive rewards programs, and even rental car insurance (and trip cancellation protection).
While business credit and personal credit are separate, they can overlap in surprising ways.
In fact, most lenders review your personal credit history when you apply for an unsecured small business credit card.
That’s why it’s crucial to practice sound financial management in every facet of life.
Secured vs. Unsecured Credit Cards: Key Differences
As we’ve discussed, secured and unsecured credit cards have one essential difference:
secured cards require a deposit, while unsecured cards do not.
However, there are other notable differences to consider, including fees and APR.
The following table reveals everything you need when comparing secured vs. unsecured small business credit cards:
| Key Features | Unsecured Small Business Credit Cards | Secured Small Business Credit Cards |
| Is a security deposit required? | No | Yes. The amount is typically over $200 and is fully refundable. |
| What’s the minimum age to apply? | 18 | 18 |
| What are the credit score requirements? | 670+, depending on the card. | 580 — 669, although in many cases, a credit score is not required. |
| Average APR (i.e. interest rates)? | 18% — 28% (as of fall 2023) | 25% — 30% (as of fall 2023) |
| Average credit limit? | $56,100 (according to Experian). | In most cases, the credit limit is equal to the security deposit. |
| Is there an annual fee? | Yes (in most cases). | No (in most cases). |
| Are rewards included? | Yes | Sometimes |
That leaves one more question: how do secured and unsecured cards affect your company’s credit history?
Impact on Business Credit
Ultimately, secured and unsecured credit cards are far more similar than they are different.
After all, they can both be used to access revolving credit and strengthen business credit.
There’s only one caveat: whichever card you choose, you’ll always need to pay your credit card bills on time and in full. If you can consistently do that each month (or whenever your bills are due), you will steadily fortify your business credit.
The opposite scenario is also true (as you probably guessed).
Late and/or minimum payments will hurt your business credit history and expose you to the dangers of compound interest. Therefore, delinquent payments won’t just undermine your reputation with lenders—they’ll also siphon off your hard-earned money.
To enhance your business credit, you can also keep your credit utilization ratio below 30%.
For example, if you have an unsecured credit card with a maximum credit limit of $10,000, you should aim to borrow under $3,000 at any given time.
While that number might seem stringent, it’s a fact in the financial world: borrowing more than 30% will negatively affect your credit.
Who Should Get a Secured Credit Card?
If you’re new to business credit (or your business credit isn’t ideal), a secured card could be an ideal match.
Maybe you recently immigrated to the U.S. and haven’t yet established a business credit history here.
Or, maybe you do have some business credit but are currently unable to qualify for an unsecured card.
That’s totally okay.
If you find yourself in either situation (or something similar), a secured card will give you the financial tools you need to build your business.
Plus, as you use your secured card responsibly (as we’ve seen above), you’ll position yourself for an “upgrade” soon.
Then, after your business credit score increases, you’ll have two options: have your card issuer transfer your account to an unsecured card, or apply for a brand-new business credit card offer online.
Your secured card isn’t forever—it’s a tool to help you graduate to something even better.
Want to explore the best secured small business credit cards on the market? Compare offers with the lowest APR and best rewards rates.
Who Should Get an Unsecured Credit Card?
Unsecured business credit cards are great for entrepreneurs of all experience levels.
In fact, whether you’re starting or expanding a company, an unsecured credit card has a lot to offer.
As we mentioned, the average credit limit on a small business credit card is a whopping $56,100.
With that kind of increased cash flow, you could buy new equipment, invest in marketing and advertising resources, or simply renovate your storefront.
The possibilities are endless.
Plus, you’ll earn amazing rewards like cash back and travel miles along the way.
Just remember: if you qualify for an unsecured credit card, always make full payments whenever they’re due (and limit your credit utilization ratio to 30%).
Welcome to uLink Business
It’s a great time to be an entrepreneur—especially for immigrants.
In fact, immigrants are 80% more likely to start a company than native-born citizens, and comprise almost 22% of all business owners in the U.S.
As a result, immigrant SMB owners now dominate the highest echelons of the corporate world.
According to a 2023 report by the American Immigration Council, 44.8% of Fortune 500 companies were founded by immigrants or their children.
If you ever have doubts about your future, remember these statistics. People on your path have succeeded before, and you’re well on your way to joining them.
The only question is: what financing routes will you pursue?
Secured and unsecured credit cards, SBA loans, and lines of credit are all available to you. When used strategically, they can open up doors to help you build the business of your dreams.
At uLink Business, we’re dedicated to linking your small business to the world at large. That’s why we make international payments as seamless as possible.
Reach out to learn more!
