Finding a business credit card that doesn't require an entrepreneur to personally guarantee the debt is like finding a parking spot at the mall on a rainy Saturday: There are options, but they're either unappealing or not a fit.
But a company called Brex has created a corporate card for startup companies that rejects traditional underwriting methods. Instead of evaluating applications based on a business owner's personal credit, it focuses on other numbers: revenue, funding, expenses and size.
"It starts with the technology," says Michael Tannenbaum, chief financial officer of Brex.
Brex says it can issue cards faster, and with higher limits, than other options, all without a personal guarantee. The Brex Card works on the Mastercard network, there are no annual fees or foreign transaction charges, and cardholders can earn rewards.
What makes Brex different?
Brex focuses on emerging or early-stage companies and currently only accepts applications from venture-backed and mid-market companies. Here's what sets it apart from some other cards in its category:
- There's no personal guarantee. A personal guarantee requires an applicant to accept personal liability for a business debt, such as on a credit card. If the business goes belly-up, the creditor can go after the applicant's personal assets. With the Brex Card, there's no founder liability if the business isn't successful.
- Personal credit scores aren't a factor. Brex determines the creditworthiness of a business by evaluating its cash flow, spending patterns and financial backing, rather than the applicant's own credit history.
- You don't need to provide a Social Security number. The Brex Card requires a company to provide basic details, including its employer identification number, and access to its bank information. If your application is approved, you'll get an answer within minutes, and you'll be issued a virtual card that can be used right away, with a physical card to follow by mail within days.
- Brex is a charge card, not a credit card. That means the balance is due in full each billing cycle, and you can't carry debt from one month to the next. The upside of this is that you don't pay interest. The downside: You can't float debt for very long. Your account will be automatically debited for the balance, so you'll need to have sufficient resources on hand.
- Credit limits may be higher than you can get elsewhere. Brex's website notes that credit limits are based on factors such as the money a business has raised and its spending patterns. According to Tannenbaum, Brex's method of evaluating potential cardholders allows it to offer dynamic credit limits that rise along with a business's cash flow. "What we don’t do is take your FICO score or look at some other data and say your limit is $10K and either contact us if you need more, or we’ll check back in a year and see if we can give you more," Tannenbaum says. "That static concept is not something we do."
- It limits your ability to overspend. Brex's credit model updates in real time, so if a company depletes most of its cash in a given month, the credit limit on the card will be reduced until there's more cash in the bank account. "We monitor cash in the bank, so we always know if a customer can pay," Tannenbaum says. He notes that it's rare for a company to charge a high percentage of its net worth on a card that doesn't allow it to carry a balance.
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What kinds of companies should consider Brex?
Tannenbaum says Brex fills a specific market niche. It's a good choice for entrepreneurs with thin or nonexistent credit files who have high-growth venture-backed companies.
Companies that might be a good match for the Brex Card include those that:
- Are willing to pay the card off in full within 30 days using automatic debit.
- Are comfortable giving Brex access to view their company bank account and other funding information.
- Might need access to a high line of credit.
The Brex Card may not be a fit if you or your company are:
- A sole proprietorship or a mom-and-pop shop that doesn't have a high cash flow.
- A small business that doesn't spend in the reward categories Brex offers. (More on that below.)
- A business owner who wants a card that offers upscale travel benefits.
How Brex rewards loyalty
Brex's Exclusive rewards program lets eligible cardholders earn points on their purchases. Those who make the Brex Card their only company card can earn elevated rewards at the following rates:
- 7 points per dollar spent on rideshares and taxis.
- 4 points per dollar on travel booked through the Brex portal.
- 3 points per dollar on restaurants.
- 3 points per dollar on Apple products purchased through your Brex dashboard.
- 2 points per dollar on recurring software expenses.
- 1 point per dollar on all other purchases.
Those who opt to use the Brex Card in tandem with other cards can earn a flat 1 point per dollar on all spending. Rewards can be redeemed at a value of 1 cent per point as a statement credit against a transaction made on the card.
According to its website, Brex will determine eligibility for its rewards program by using information provided by the customer and via third-party providers authorized by the customer to give Brex bank account information.
There's a sign-up bonus: Get 10,000 points when you spend $3,000 on a Brex Card within your first 3 months. Brex also offers cardholders deals and discounts at various vendors that startups may find appealing, including Amazon Web Services, WeWork, Google Ads, Salesforce, Twilio, Caviar, Instacart, Zendesk and Snapchat.
Is Brex right for your business?
If you fit the profile, few corporate cards offer as many benefits and rewards without an annual fee as the Brex Card does. But a corporate card isn't right for every business owner, and other options might better fit your spending patterns.
Someone looking to finance initial startup costs, for example, might consider The Blue Business® Plus Credit Card from American Express, which offers an introductory rate of 0% intro APR on Purchases for 12 months, and then the ongoing APR of 16.74%-28.49% Variable APR. Terms apply (see rates and fees).
Those who anticipate a lot of air travel may place more value on getting elite lounge access. In that case, The Business Platinum Card® from American Express could be a better fit, despite its hefty annual fee of $895 (see rates and fees).
For more potential options, see our roundup of best business credit cards.
To view rates and fees of The Blue Business® Plus Credit Card from American Express, see this page. To view rates and fees of The Business Platinum Card® from American Express, see this page.
