If you're a business owner, getting a corporate credit card can be a hassle. Application approvals can take longer--up to 30 days--than it does to get a personal credit card. When you're a start up or run an e-commerce business that can expand quickly, you don't have that kind of time to wait. Entrepreneurs also face needing to personally guarantee the credit limit, which can lead to new businesses having lower credit lines than they really need.
Enter Brex, a fintech company that's making it easier for startups and e-commerce companies to do business, by eschewing legacy technology and building its own B2B financial services platform.
"Startups that have raised millions and are poised for hyper-growth can’t get slowed down hassling with banks requiring personal guarantees and offering meager credit limits," said Henrique Dubugras, co-founder and CEO of Brex, said in a statement at the card's launch last year. "Traditional credit models look at how much a company can pay back in a year based on profits, often disqualifying startups. We rebuilt the financial services tech stack from the ground up and created a new kind of card to specifically meets the needs of startups."
Brex has two different Mastercard products. The first is a rewards corporate card geared toward startups. The card has an online application with instant results on the approval status. Each account comes with five cards, and it's $5 per month for any additional cards. Along with no annual fees, the card also has no foreign transaction fees. It touts that it has no interest charges, but that's because this is a charge card with a 30-day payment schedule, meaning that the user needs to pay off the card in full every month.
The card's rewards program is points-based, but it offers more points based on categories that startups use more regularly. It offers 7x points for rideshares, 4x points on travel booked through its Brex travel hub, 3x points on restaurants, 2x points on recurring software purchases and one point on all other purchases. Unlike some other business cards, including some American Express corporate cards, there's no cap on earning points in categories that have multipliers. Cardholders can use points on booking travel through the Brex Travel hum, or they can redeem them for statement credits on specific transactions.
One interesting feature is a tracking ability that allows users to text or email pictures of their receipts, which are then matched to transactions. A company's card administrator can then track spending by category, and they can also set spending limits to help manage their money.
Brex's second Mastercard card, which is its newest offering, is a card for e-commerce companies that Brex positions as an alternative to working capital loans and credit cards. It offers 60-day, interest-free terms, which give businesses more flexibility in managing their cash flow. Brex determines the account's credit limit by predicting the company's future monthly sales, and ranges from 50 to 100% of that amount, up to $5 million. This gives small businesses more flexibility in scaling up without getting so much in debt that they can't pay it off. This differs from loans, which do have an interest rate, fees and a more strict payment timeline.
Like the startup credit card, Brex doesn't require a personal guarantee, which means that a business owner doesn't have to make themselves personally liable for the payments. Instead, Brex makes its approval decisions based on whether or not the company will be able to make the payments.
These two products can give small businesses a lot more freedom and flexibility in getting access to credit, and they can also save businesses the money it takes to obtain credit. For entrepreneurs, this could be an element that helps their company succeed. For financial services companies, this could be a game changer with how they do business.