Can I Get a Business Credit Card With No Personal Guarantee?

If you own a small business, you are probably used to separating your business and personal finances. But the two may intertwine when you take out a business credit card if the issuer requires a personal guarantee.

A personal guarantee is an agreement an owner or executive makes to pay back a debt if the business cannot. It acknowledges that you'll personally pay for charges on the business credit card if your business doesn't have the cash flow to make on-time payments. If your business defaults, the issuer could go after your personal assets -- even if you leave the company.

[Read: Best Business Credit Cards.]

"Some entrepreneurs are really attracted to the idea of getting credit without a personal guarantee, so if the business fails, they are not on the hook," says Gerri Detweiler, education director for Nav, a credit service for business owners. "But the lender is going to want to make sure you have skin in the game."

That's why nearly all business credit cards require a personal guarantee. You may be able to get a business credit card without a personal guarantee, but it could be difficult, and you may have limited options. Here's what you need to know.

How Personal Guarantees Work

When you apply for a business credit card, the issuer may ask for an employer identification number and financial information for the business. If the card includes a personal guarantee, then you'll also need to provide your Social Security number and allow a personal credit check.

You can find out whether a business credit card requires a personal guarantee by reading the card agreement and searching for the term "liable" or "personally responsible." Cards that need a personal guarantee will include a clause noting that both the business and the individual applying for the card on behalf of the business are liable for payment of the balance.

If the clause says you're "jointly and severally liable" for the debt, that means as the cardholder you're responsible for 100% of the debt, even if you only own 50% of the company. Unclear about the terms? Call the issuer, and ask for an explanation. You'll want to understand everything before you sign the cardholder agreement, as you're effectively co-signing the account.

Business owners may dislike personal guarantees because of the liability involved. If you default on payments, the issuer could go after your personal assets. And your company's business structure can't protect you, whether it's a sole proprietorship, a limited liability company or another type. Once you accept the personal guarantee agreement, it overrides any liability limits that come with the classification.

Another reason business owners try to skirt personal guarantees: Business credit cards that come with these may affect personal credit. Applying for a card typically results in a hard inquiry on the owner's personal credit report. For most people, a hard inquiry will temporarily knock off a few points from their credit score.

The personal guarantee might also have an ongoing effect on the owner's personal credit. Some business credit card issuers report all your account activity, such as utilization information and payment history, on your personal credit report. Others notify the consumer credit bureaus only when you're behind on payments.

What Happens if You Default on the Business Credit Card

You typically won't have to worry about the personal guarantee unless you fall behind on payments. In that case, the card issuer may write off the unpaid balance as bad debt and sell it to a collection agency. The collector will attempt to get payment and could even sue for it if the debt is within your state's statute of limitations. If a judge rules against you and grants a court order, the collector may garnish your wages or take money from your bank account.

Before getting to this point, try to get help from a credit counselor, who can explain options such as negotiating a payment plan.

If reported, missed payments, debt settlement and any other negative information related to the business credit card will damage your personal credit. Derogatory marks may remain on your report for up to seven years from the original delinquency date. In the intervening time, qualifying for credit, passing an employer's credit check or renting an apartment may be more difficult.

[Read: Best Credit Cards for Bad Credit.]

How to Get a Business Credit Card Without a Guarantee

There's a handful of ways to get a business credit card without the personal guarantee. Here are a few.

Apply for a card with a store or a small bank. Some cards, like the ones listed below, are upfront about when they'll waive the personal guarantee. You may need to wait for your business to grow if there are size and revenue requirements.

-- Brex Corporate Card for Startups. The Brex Corporate Card for Startups is a corporate credit card that foregoes personal guarantees. Underwriting is based on your business bank account balance, spending patterns and investors.

-- Brex Corporate Card for Ecommerce. This is a corporate card that requires no personal guarantee. It's designed for U.S. companies that have been in operation for at least one year and that make at least $50,000 in sales each month.

-- Sam's Club Business Credit Card. According to the card application, you can choose to waive the personal guarantee if you meet certain requirements. You should provide a personal guarantee if your company has less than $5 million in annual sales or revenue, has been in business less than two years, has fewer than 10 employees, or is a partnership or proprietorship. Otherwise, you may not be approved.

-- Bremer Bank Visa Signature Business Company Card. This card is available with no personal guarantee for medium- and large-size incorporated businesses, LLCs or LLPs. However, there's no specific guidance for what qualifies as "medium" or "large."

-- Speedway SuperFleet Mastercard. This business credit card can be used for gas at any Speedway location and anywhere Mastercard is accepted. It's available without a personal guarantee for businesses operating for more than two years and with more than five employees.

-- Shell Fleet Plus Card and Shell Fleet Navigator Card. These business gas credit cards are available without a personal guarantee.

Negotiate a waiver with the issuer. Some issuers may waive the credit card personal guarantee for businesses that fit revenue and longevity requirements. Specific requirements depend on the issuer, but an annual revenue of at least $1 million is a good baseline.

Negotiation won't be a quick and easy process, says Ginger Siegel, North America small business lead at Mastercard. Before you approach the issuer, make sure your personal and business credit profiles are healthy. You should also be a pro at explaining the business's finances, plans and resources. "Things kind of fall down in the storytelling," Siegel says, if you can't communicate those points.

If you're able to get the waiver, though, look for a trade-off. For example, did your annual percentage rate increase or your credit limit drop?

"I think there is some give-and-take there," Siegel says. "In other words, there's no free lunch."

[Read: Best Rewards Credit Cards.]

Get a corporate card. Companies may need to be open at least a year or two and maintain an annual revenue of $4 million or more. Although applications use the business's credit history only, corporate cards may come with drawbacks:

-- Rewards earnings may be lower than for small business or consumer credit cards.

-- You may have to pay off the balance in full each month.

-- You may need to provide a lot of financial information about the business.

Should You Accept a Personal Guarantee?

You'll be hard-pressed to find a business card without a personal guarantee, especially if your company doesn't meet certain requirements. Keep in mind that the guarantee will only hurt you if your company stops making payments. Accepting a personal guarantee opens up your business credit card options.

Entrepreneurs "should be realistic and understand that this probably is going to be a requirement," Detweiler says.

Although it's technically possible to get a business credit card without the personal guarantee, this agreement shouldn't be a deal breaker -- especially if you're confident in your company's future financial success.

Updated on Sept. 25, 2019: This story was originally published on an earlier date and has been updated with new information.