The credit card making waves

This Company Wants to Even the Playing Field for Startup Access to Capital

It’s an uncertain time and Brex’s corporate card may be the safest option for some businesses.

In the last year, credit availability was the second-highest financial challenge for employer firms with fewer than 500 employees, says the Federal Reserve’s 2019 Small Business Credit Survey.

And, with a slew of new challenges currently facing small (and large) businesses in the wake of the COVID-19 pandemic, this moment is presenting many new, layered questions for businesses and startups. And one corporate credit card may be able to provide some answers.

What is a Brex Credit Card?

Brex co-founders Henrique Dubugras and Pedro Franceschi aim to even the playing field with their two-year-old fintech company that’s making waves in the startup community. Brex issues credit cards to startups and other ventures looking to get their company off the ground. Additional Brex offerings include a high-yield business cash management account with no transaction fees.

There’s no doubt that it’s an uncertain and unsettling time for startups: The New York Times reported in early April that more than 50 startups have furloughed or laid off about 6,000 employees amidst the coronavirus pandemic—a number that has only grown. TechCrunch cites supply-chain dysfunction, facility closures, and decreases in staff productivity as challenges startups currently face in this new landscape. There may be relief for some small businesses through the recently passed CARES Act stimulus package, which provides loans and grants to assist with payroll, rent, and other operating expenses, but there have already been issues with the rollout.

"The New York Times reported in early April that more than 50 startups have furloughed or laid off about 6,000 employees amidst the coronavirus pandemic."

And while opening a new corporate card may not be as top-of-mind for startups as cutting costs to survive, Brex is trying to mitigate some stress: The company announced that their Brex for Startups cardholders now have access to a remote rewards program that gives them points on food delivery and tools like Zoom and Slack, as well as other expanded discounts. Companies like Outdoor Voices and Boxed are a few of Brex’s customers, and there’s been no shortage of praise for the startup that’s raised over $300 million in known venture capital. Here’s what else you should know about Brex cards:

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What kinds of businesses may be a good fit for a Brex card?

Brex offers several corporate cards, with different rewards tailored to startups, life sciences companies, and ecommerce firms. Only US companies (such as C-corps, S-corps, or LLCs) may apply for a Brex account. The company underwrites with Employer Identification Numbers (EINS) and looks at a company’s credit history rather than an entrepreneur’s personal credit score. Sole proprietors and freelancers aren’t eligible.

Brex especially serves a niche for well-funded early-stage companies with little credit history (ecommerce companies must make a minimum of $100,000 in monthly sales to qualify). Businesses are evaluated on—and credit limits are determined by—cash flow, funding, and spending patterns. It’s a charge card, which means balances are deducted automatically ona rolling basis from a company's bank account, so having regular cash flow is important.

What are some perks and benefits of Brex cards?

The application process for a Brex card is fast and easy. Companies can be approved in minutes and have instant access to credit, with physical cards arriving in a few business days. Plus, there are no annual fees.

"Brex especially serves a niche for well-funded early-stage companies with little credit history."

As for rewards, Brex cardholders see a wide range of diversity when it comes to points and rewards. Brex has partnered with a wide range of companies to help deliver customized reward packages to its customers. Consider: Seven points on rideshares and taxis; three points on restaurants and travel; two points on recurring software expenses; and one point per dollar on everything else (like digital ads and servers). Exclusive cardholders don’t have a cap on rewards and receive access to other travel perks, as well, such as transferring points at a 1:1 ratio with airline partners like JetBlue and Asia Miles.

Even if a company’s not ready to make Brex their sole corporate card, Brex for Startups and Brex for ecommerce cardholders get discounts on a bunch of other services through their partner offers, such as a $5,000 spending credit for Amazon Web Services.

An important note: Brex does a great job of offering a wide range of rewards that would be enticing and applicable to most startups, but beyond the hype, a company should consider whether they currently spend in Brex’s reward categories to truly reap the benefits.

What are some differences between Brex and other cards?

Besides the exclusive rewards Brex offers that you won’t get with a traditional small business card, there are some other differences. Brex says their card for startups has spending limits that are 10 to 20 times higher than other corporate cards; for reference, the average small business card spending limit in 2016 was $56,100. Since traditional cards typically require a personal guarantee and some issuers report card activity to consumer credit bureaus, applying for small business cards may affect an entrepreneur’s credit.

"Cardholders get discounts on a bunch of other services through their partner offers, such as a $5,000 spending credit for Amazon Web Services."

There are other business credit cards aimed at startups, and Silicon Valley Bank has offered cards to startups since 2008 (they offer both charge cards and regular corporate cards with revolving credit). Those options may be better for some startups, but Brex doubles down on being the safest choice for entrepreneurs, since they don’t have to worry about their assets being used as collateral if their business were to fail.

How else is Brex adapting in the COVID-19 landscape?

In a recent statement, Brex COO Paul-Henri Ferrand relayed the company’s commitment to their customers, adding that cardholders and new customers can now opt into a new remote rewards program and expansion of discounts on key remote work services. Brex’s customer support team is active during regular business hours, and Ferrand promised more updates in the coming weeks.

“As a leader of a company so deeply intertwined with the finances of so many businesses across the country, and as the husband of a small business owner, I am personally focused on solutions,” Ferrand wrote. “We are hearing the challenges you’re all facing firsthand, and taking action to help.”

In March, TechCrunch reported that Brex acquired three companies spanning customer support, security, and ecommerce to build itself out as a well-rounded bank for startups, and not just a corporate card. So the company is continuing to expand.

Final Thoughts

Ultimately, corporate cards may not be top-of-mind for everyone in this current climate, but there are options out there that can potentially alleviate stress and help startups better manage their finances. In good times and uncertain ones, Brex certainly seems to be in the business of making access to capital easy, smooth, and clear-cut.

Ready to sign up? Brex has a special offer for referrals from Supermaker.

The corporate card with no personal guarantee, 10-20x higher limits than traditional cards, and rewards tailored to help you grow.

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