If you've recently started your own business, you may want to consider a secured business credit card. Most businesses nowadays can't operate without credit and mixing your personal credit with your business credit can be a big mistake. Unfortunately, most new businesses don't qualify for unsecured business credit cards, especially if the business owner has had credit problems in the past. That's when a secured business credit card can come to the rescue.

What's a Secured Business Credit Card?

Unlike traditional, unsecured business credit cards, secured business credit cards are guaranteed with a security deposit. When you open up your secured business credit card account, you place a specific dollar amount into a savings account and that savings account is held by the credit card issuer. The card issuer then sends you your secured business credit card.

The amount of your credit line depends on how much money you deposit into the savings account. If you deposit $300, your secured business credit card will have a credit limit of $300. If, for some reason, you don't pay your credit card statement and default on your account, the bank takes your security deposit to satisfy your debt.

What To Look For In a Secured Business Credit Card

If your business doesn't qualify for an unsecured credit card, a secured business credit card is the perfect way to establish credit. However, not all business credit cards are created equal.

When looking for a secured business credit card, make sure you apply for one that has reasonable annual fees ($59 or less) and a reasonable interest rate (less than 12 percent). Because you are securing your line of credit with a deposit, the bank is assuming minimal risk and that should be reflected in a lower interest rate.

It is also important that you earn interest on the security deposit that serves as collateral for the card. Someone is going to be earning money from the interest your deposit earns. It should be you rather than the bank issuing your secured business credit card.

Building Your Credit

When you begin using your secured business credit card, make sure you make your payments on time, every time. Because you are just now establishing your business's credit history, every payment counts and being late even once can do harm to your company's credit rating.

By using your secured business credit card and managing it wisely you'll be well on your way to creating a solid credit history for your company and putting your business on the right financial path.