Compare The Best Business Credit Cards For Bad Credit
We compare business credit cards available to UK businesses or directors with poor credit ratings
Updated: 12th September 2024
Recommended Business Credit Card For Bad Credit
- Uncapped 1% cashback with no annual fees
- Rates as low as 15.22% APR (variable)
- Credit facility of up to £250,000
- Redeem points for Avios (Business Rewards Card only)
- Up to 42 days interest free on card purchases
This guide looks at what business credit cards are worth considering if you or your business has a poor credit rating. We will also provide clarity on common myths like limited credit being the equivalent of bad credit, and whether your personal credit is really checked during a business credit card application. You may also be interested in our roundup of all the best credit cards for UK businesses or which business card are best for cashback and rewards.
What are the Best Business Credit Cards for Bad Credit?
Card Name | Annual Fee | Rewards | APR | Apply | |
|---|---|---|---|---|---|
 | Capital on Tap Free Rewards Card | £0 | 1% cashback uncapped | Rates as low as 15.22% APR Representative APR of 36.19% (variable) | Apply Here |
 | Capital on Tap Business Rewards Card | £99 per year | 1% cashback uncapped Avios Points | Rates as low as 15.22% APR Representative APR of 59.15% (variable) | Apply Here |
 | NatWest Business Plus Credit Card | £70 per cardholder | Cashback (limit of £600/year) 3% on fuel/EV 2% on trade supplies 1% on travel 0.5% on everything else | Rates start at 14.9% per year Representative APR of 34.9% APR | Apply Here |
 | Barclaycard Select Cashback | £0 | 1% cashback uncapped | Representative APR of 27.5% | Apply Here |
 | Funding Circle Business Cashback Card | £0 | 1% cashback uncapped Bonus: Earn up to £2,000 with 2% cashback in your first 6 months | Rates start at 14.9% per year Representative APR of 27.5% APR | Apply Here |
Card Name | Annual Fee | Rewards | Apply |
|---|---|---|---|
Capital on Tap Free Rewards Card | £0 | 1% cashback uncapped | Apply Here |
Capital on Tap Business Rewards Card | £99 per year | 1% cashback uncapped Avios Points | Apply Here |
NatWest Business Plus Credit Card | £70 per cardholder | Cashback (limit of £600/year) 3% on fuel/EV 2% on trade supplies 1% on travel 0.5% on everything else | Apply Here |
Barclaycard Select Cashback | £0 | 1% cashback uncapped | Apply Here |
Funding Circle Business Cashback Card | £0 | 1% cashback uncapped Bonus: Earn up to £2,000 with 2% cashback in your first 6 months | Apply Here |
Will I personally need to be credit checked to get a business credit card?
Yes, when applying for a business credit card, the card issuer will normally check the credit history of the applicant. This is a certainty for a sole trader.
It may also be true among private limited companies (Ltd) applications. However, the business itself also has its own credit history that will be also checked in this case. If your limited company isn’t long-established with its own credit score, your personal credit report will come into play.
Your personal credit score can therefore be influenced by conducting many business credit card applications in a short space of time but it will depend weather a soft or hard search is performed:
Soft search: These are background enquiries which will not affect your credit score.
Hard search: These inquiries will show up on your credit report and can temporarily lower your credit score if you have multiple done in a short period of time. They are typically performed for when applying for credit cards, loans, or property rental applications.
Credit Checks Performed By Business Credit Card
While most lenders will perform a hard check before issuing a credit card, it’s possible that some banks will have enough information on you (if you already have an account) to only perform a soft check. This is why high street banks are a good option for bad credit applications.
Capital on Tap Credit Checks
If you apply for Capital on Tap they will run a soft search on your personal file and also a search on your business file that other lenders will be able to see.
Barclaycard Payments Select Credit Check
Barclaycard sets your business credit limit by looking at your circumstances and the historical use of your Barclaycard account. Therefore, less emphasis is placed on your credit report because they have more existing information.
Barclaycard’s personal credit cards have a pre-application eligibility checker (soft check) to avoid an unnecessary rejection after a hard check.
Funding Circle Flexipay and Cashback Credit Check
If you’re a limited company, Funding Circle will quickly find out your credit limit without impacting your credit score. Funding Circle makes a promise that applications do not impact your credit score, implying they perform a soft credit check.
The degree to which your personal credit score is impacted due to late payments will depend on various factors, such as how strong and long the business’s credit history is and whether you have a personal guarantee.
Can your personal credit have an impact on your business credit?
Yes, poor personal credit history can reduce the credit limit and increase the APR agreed on a business credit card.
If your business doesn’t have much of a credit history, more weight will be placed on your personal credit file. Therefore, a startup is in more need of a founder with a strong personal credit history compared to an established business.
How do I get a business credit card if I have bad credit?
It’s still possible to get a business credit card with bad personal credit. Here are the key considerations:
- Apply for a secured business card, which may require a cash deposit to serve as collateral.
- Find providers with cards aimed at business owners with poor credit, such as Metro and Funding Circle.
- Use corporate cards if you have an established business.
- Avoid over-applying for various cards (which can temporarily lower your credit score) by assessing the likelihood of approval.
- Work on improving your personal credit. Consider registering to vote, using a credit builder and avoiding any more late payments.
Should I get a business credit card with bad credit?
Despite a reputation for being expensive, credit cards can be the cheapest form of credit for a business if the balances are cleared before interest is charged. Therefore, they can actually be a tool to improve your credit score. Here are some considerations of whether to apply:
Pros
- Access up to 8 weeks of interest-free credit to improve cash flow.
- Streamline your accounting by tracking your and your employees’ expenses.
- Set limits on spending and integrate with accounting software.
- Improve your credit score by making timely repayments.
- Benefit from cashback, travel rewards, and access to software discounts.
- Benefit from fee-free currency exchange.
Cons
- Your credit limit with poor credit will likely be smaller than other avenues.
- Less rigid repayment structure, meaning a greater risk of worsening credit score.
- If the interest-free period is exceeded, your credit will become very expensive.
What is the difference between bad credit vs limited credit
The confusion between these two comes from the idea that the baseline credit score of someone turning 18 or a startup is bad. This is somewhat true, but it doesn’t mean the credit history is bad, and this is more important than the simplified score.
This means that bad credit is often a business that has been using credit for some time, but has missed repayments or shown signs of risky behaviour.
But, limited credit means a business is a risk simply because of a lack of evidence. Its credit history may be minimal due to being a startup, and thus more emphasis is now placed on the applicant’s personal credit score.
Limited credit is slightly easier to overcome than bad credit assuming the applicant has a good credit score. If not, they both leave the applicant in a similar position.
In either case, you may be asking if you need a personal guarantee. This is where you become personally responsible for any debt accumulated on the business credit card. Of course, this was the case anyway for a sole trader and is thus more relevant to limited companies.
Personal guarantees aren’t ideal because they conflate your personal life with your business. But, they are effective in agreeing better terms or increasing your chances of approval.
What are the alternatives to business credit cards for bad credit?
As mentioned, secured business credit cards are an option, but less than ideal. Similarly, personal credit cards are an option but also suffer from the same problems.
Another consideration are prepaid business cards, which allow you to load up the card with funds and begin spending it (no borrowing takes place). Of course, this doesn’t facilitate the main need for credit, but it allows you to access some of the other benefits like expense management and collecting reward points.
Business prepaid charge cards are often slightly easier to be approved of because they must be paid off in full by the end of the month – this reduces your perceived risk. These typically have similar rewards to credit cards too. However, they do require high balances to be required in a linked bank account.
Lines of credit are another option in which higher credit limits are often approved compared to credit cards, and with lower interest rates. However, there is usually no interest-free period and cannot be used for cash (i.e. payroll).
Business loans are some of the most affordable ways to obtain credit. Banks may not approve bad credit applicants, but alternative lenders may. These often look more at the business’s financials and recent performance to determine creditworthiness. Or, creative solutions can be used for collateral, such as your future invoices or the equipment that is being purchased.
Finally, merchant cash advances are a good way to overcome poor credit by ensuring repayments are made as a percentage of future card sales. This is only appropriate for businesses using card terminals, but they allow lenders to view your monthly sales as opposed to relying solely on a credit report.
Typical eligibility requirements for business credit cards
Business credit cards vary in terms of eligibility. The baseline criteria to meet is to be a UK registered business (some allow sole traders). Many banks require applicants to already have a bank account with them,
Some may require a minimum trading history of a year or two, while others may require a minimum annual turnover. Many ask for neither of these, but will likely prohibit high-risk industries like financial services and gambling.
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