By Adam Jusko, ProudMoney.com, firstname.lastname@example.org
The Brex Visa Corporate Card is a card that aims to give startup companies fast access to credit without the need for a personal guarantee from a company founder or top executive. Many small business credit cards do require such a personal guarantee, so the Brex Visa could be attractive to startup businesses.
Seems To Target Mostly Tech Startups
However, Brex seems to mainly be targeting tech startups that have good-sized investments from venture capitalists or other deep-pocketed backers, meaning their ideal customer probably has a good cash position even if the company as a whole doesn’t have a credit history for Brex to consider. In other words, they’re probably not going to approve a local startup restaurant owner in Minnesota. (Or wherever outside of Silicon Valley.)
In fact, some of Brex’s own backers are tech-focused venture capitalists or individuals, including two PayPal founders, Peter Thiel and Max Levchin.
Let’s look at some card specifics, and then we’ll return to who is likely to want the Brex Visa as well as who is likely to be approved for it.
- The Brex Visa is for corporations and LLCs, so no self-employed individuals or partnerships that don’t have a more formal corporate structure.
- The Brex Visa is a charge card, not a credit card. That means no revolving balances; the complete balance is paid off every month.
- Payments are automatically debited from the company bank account, which obviously means you must give Brex access to your company bank account. (Which you’ll actually have to do anyway in order to get the card, because they check your bank account balance as a way to decide on your initial credit line.)
- No annual fees as long as you use 5 cards or under in your company. If you want additional cards beyond 5, you’ll be charged $5 per month per additional card.
- The Brex Visa offers a rewards program, though details are few at this point. However, the little information that is available again seems skewed toward tech startups, with listed reward partners including Amazon Web Services and DoorDash food delivery. Most small business credit cards are more likely to give rewards for things like office supplies, shipping, Internet and phone service, etc.
- The card is not issued by a major credit card bank, but instead by Sutton Bank, a small Ohio bank that seems to have partnered on a few other tech-related financial products, though definitely not a household name by any means.
Overall, the Brex Visa is an interesting card that probably fills a real need in the startup space, especially with the attractive feature of not requiring a personal guarantee in order to access the card’s credit line.
However, the startup space that consists of well-funded companies with hundreds of thousands or millions of dollars in the bank is a very small slice of the overall small business economy. For most small businesses, their limited cash reserves are exactly why they want credit in the first place, to help with cash flow or to finance purchases today that they believe will pay greater dividends tomorrow. In addition, the rewards on the Brex Visa might be great for a tech startup but meaningless to other types of startups.
Perhaps the Brex Corporate Visa will expand its aspirations in the future to help fund a greater variety of businesses, but for now they are mainly focused on startups with some cash on hand. If that’s your company, Brex may be for you. Most small companies, however, will need to look elsewhere to satisfy their business credit needs.