Credit card for small business
February 27, 2013 12:34 AM Subscribe
Need credit or charge card for a small business that has outgrown its President's ability to cover its obligations.
Five years ago a small business, an S-corporation, was founded in the USA, that has become successful. Last year we made just under a million dollars in revenue and expect to do better this year.
At the beginning it was just the President and one staff member, and the President opened an American Express business account in his own name (and his own tax ID number) to serve the purchasing needs of the company. This has worked well, but at this point there are three partners/co-owners and an office manager, each of whom holds an employee card and uses it (sometimes without getting their purchase order authorized, which is a different matter - poor discipline - but pertinent, as it has been really difficult to put a stop to it.) The President is rightfully concerned that he wouldn't be able to cover the corporation's monthly obligations as they now routinely exceed his salary, so he doesn't want this credit card in his name to be used any more.
Amex won't issue a card in the corporation's name alone until we have $4 million in annual revenue, which I don't foresee ever happening. We pay off in full every month and could therefore use a charge card or a credit card; we mainly use the cards for convenience in bookkeeping and in making payments on the things the corporation needs to buy.
Do any solutions exist that don't require a corporate officer to personally guarantee payment? It'd be particularly helpful to learn about people/companies in similar situations who found a solution they were happy with.
Five years ago a small business, an S-corporation, was founded in the USA, that has become successful. Last year we made just under a million dollars in revenue and expect to do better this year.
At the beginning it was just the President and one staff member, and the President opened an American Express business account in his own name (and his own tax ID number) to serve the purchasing needs of the company. This has worked well, but at this point there are three partners/co-owners and an office manager, each of whom holds an employee card and uses it (sometimes without getting their purchase order authorized, which is a different matter - poor discipline - but pertinent, as it has been really difficult to put a stop to it.) The President is rightfully concerned that he wouldn't be able to cover the corporation's monthly obligations as they now routinely exceed his salary, so he doesn't want this credit card in his name to be used any more.
Amex won't issue a card in the corporation's name alone until we have $4 million in annual revenue, which I don't foresee ever happening. We pay off in full every month and could therefore use a charge card or a credit card; we mainly use the cards for convenience in bookkeeping and in making payments on the things the corporation needs to buy.
Do any solutions exist that don't require a corporate officer to personally guarantee payment? It'd be particularly helpful to learn about people/companies in similar situations who found a solution they were happy with.
We have several amex cards for a small business and personal. I just recently put a limit on my amex blue cash card to keep weekly household spending in check - and uh oh - spending limit did not kick in and card was accepted for a purchase accidentally made over the "limit" I set.
Was just talking ealier with my husband about calling amex, tomorrow.
Just before this, we tried using the amex pre-paid to keep our budget on track. This system was annoying because re-upping the amount on the card involve either buying "credit" from your local grocery or drugstore for a charge of about $4 per $50 put on the card, or making a transfer from you bank account that takes AT LEAST 4 days to clear. Dishonorable!
I love amex, but maybe not for your purposes.
I'll update if it is relevant why my supposedly applied self-imposed limit on my blue cash card didn't "take." I was able to call in before the questionable transaction, and they seemed to be keeping track of my limit, so I don't know what happened there.Frankly, I was surprised when I tried the card and the latest charge was accepted.
Boo.
Other companies I've worked for had monthly limits on employee cards from Visa and Mastercard that seemed to work just fine for that purpose.
This is anecdata, FWIW.
posted by jbenben at 1:14 AM on February 27, 2013
Was just talking ealier with my husband about calling amex, tomorrow.
Just before this, we tried using the amex pre-paid to keep our budget on track. This system was annoying because re-upping the amount on the card involve either buying "credit" from your local grocery or drugstore for a charge of about $4 per $50 put on the card, or making a transfer from you bank account that takes AT LEAST 4 days to clear. Dishonorable!
I love amex, but maybe not for your purposes.
I'll update if it is relevant why my supposedly applied self-imposed limit on my blue cash card didn't "take." I was able to call in before the questionable transaction, and they seemed to be keeping track of my limit, so I don't know what happened there.Frankly, I was surprised when I tried the card and the latest charge was accepted.
Boo.
Other companies I've worked for had monthly limits on employee cards from Visa and Mastercard that seemed to work just fine for that purpose.
This is anecdata, FWIW.
posted by jbenben at 1:14 AM on February 27, 2013
You could also ask your bank for a line of credit.
posted by nicwolff at 5:02 AM on February 27, 2013
posted by nicwolff at 5:02 AM on February 27, 2013
Amex has a small business card that doesn't appear to have the $4 million in revenues requirement, and allows employee cards: Plum Card But you would be starting fresh, not using your President's credit history - which may be good or bad.
Note: I don't use this particular card, but have been a happy Amex customer for decades. They just send me advertisements about this card now and then.
posted by agentmitten at 6:37 AM on February 27, 2013
Note: I don't use this particular card, but have been a happy Amex customer for decades. They just send me advertisements about this card now and then.
posted by agentmitten at 6:37 AM on February 27, 2013
If using Visa instead of American Express is a possibility, I would take a look at the Chase Ink business cards, which is what the small company I used to work for used.
posted by eschatfische at 6:57 AM on February 27, 2013
posted by eschatfische at 6:57 AM on February 27, 2013
My corporation's income is way below yours, and we have several credit cards and a debit card on the business (debit card only used by me, the president). The bank grants x amount of credit, and I decide how much of that total each employee gets. The first card I had after buying the business was on my own credit, but we switched it to the business after about a year of operating history.
The big difference may be who we bank with. Ours is a bank with branches across our state, but not in any other state. So, in other words, a "local" bank. If you're with a bank that's national, you might inquire at your locally-owned bank and see what they could offer you.
posted by summerstorm at 7:35 AM on February 27, 2013
The big difference may be who we bank with. Ours is a bank with branches across our state, but not in any other state. So, in other words, a "local" bank. If you're with a bank that's national, you might inquire at your locally-owned bank and see what they could offer you.
posted by summerstorm at 7:35 AM on February 27, 2013
Response by poster: Thanks for all the helpful replies, folks.
posted by Protocols of the Elders of Sockpuppetry at 10:40 AM on February 28, 2013
posted by Protocols of the Elders of Sockpuppetry at 10:40 AM on February 28, 2013
Response by poster: Of note, both the Amex Plum Card and Chase Ink cards require the applying officer of the company to guarantee the payments, so for anyone who happens across this thread in future, neither fit the bill.
posted by Protocols of the Elders of Sockpuppetry at 1:01 PM on February 28, 2013
posted by Protocols of the Elders of Sockpuppetry at 1:01 PM on February 28, 2013
This thread is closed to new comments.
posted by Dansaman at 12:39 AM on February 27, 2013