Tag: Brex

Hot Topic: Brex for Money Management and Building Business Credit

Brex is a money management tool for businesses. They offer many services, but the big draw for startups and small businesses is the option for a business credit card that reports to Experian and Dun & Bradstreet, thus helping them build a strong business credit score.

Who Is Brex Really For?

They offer a number of services that can help many businesses manage their finances in a more streamlined, efficient manner. But, what types of business do they work best for? Will they work for your business?

What Brex is Meant to Do

This is a business money management system that integrates with your accounting software. It allows you to track expenses and, depending on the level of service you choose, can also help with paying bills and controlling spending. This is the purpose.

Start by opening a Brex cash account. This is not a bank, but they do have a partnership with the FDIC to ensure your funds are secure.

Check out how our reliable process will help your business get the best business credit cards.

Everyone that opens a cash account gets a corporate card. It works similar to how a debit card does, drawing from your cash balance daily. However, unlike a debit card, they report these draws as payments on your account to Dun & Bradstreet.  In turn, your business credit score grows. This is, assuming your business is set up properly to have an established business credit profile.

Since this card is secured by the balance in your cash account, and limited to that balance, you do not have to worry about underwriting. However, since the balance in the cash account is money you already have, it cannot really be an option for funding your business. Rather, it’s a way to manage the funds you already have and use them to build business credit.

Brex for Funding

There is also another option if you qualify. They do offer a more traditional card. This option offers limits that will go up to 20x higher than that of a typical corporate card. Instead of checking your personal credit score, they base approval and credit limits on business financial information, including available cash, spending patterns, and more. This means it may be more accessible to those that do not have a great credit score.

If you qualify for this card, you will have to pay your entire balance monthly.  This is a step up from paying daily as you go, like with the cash card. It’s more like net financing.  You cannot carry a balance from month to month, but it is more flexible than the cash card because you are not limited to the balance in your cash account.

Both cards offer nice rewards in terms of points that you can redeem for a number of things like:

Also, you can get cards for your team members and set individual spending limits. This is a major plus for managing spending. There are even virtual card options for online spending. Brex integrates with common accounting programs including Quickbooks, Xero, NetSuite, and Gust, among others.

Since you pay the card off from month to month, there is no interest. There is also no fee for standard service, but you can upgrade to premium service at a cost. Currently premium accounts start at $49.99 and offer more expense management options.  You can use rewards points, if you have them, to pay for premium service.

Using Brex to Build Business Credit

While Brex is a fabulous option for managing business finances, it doesn’t really work for business funding when it comes to startups.  Here’s why. The corporate credit card that most startups qualify for only has a limit up to the amount of cash you have in your cash account.

Of course, that’s not a bad thing for managing financing or building business credit. There are no fees, and your positive payment history goes to two of the big three business credit reporting agencies. It’s a win-win.

Check out how our reliable process will help your business get the best business credit cards.

However, you are only able to use funds you already have on hand. Payment is taken from your cash account daily, and you cannot carry a balance. This means that, while this card is a great tool for helping you build business credit and managing funds you already have, it doesn’t actually help you get additional funds for your business.

The corporate charge card isn’t a bad deal and can help with cash flow management and funding. However, it’s more of a starting point if you cannot qualify for a true business credit card. It’s a stepping stone to get another account reporting to business credit, so that you can qualify for more funding in the future.

Brex Online Reputation

The Better Business Bureau has Brex rated at an A+. They have 4 reviews, all which are bad, and 3 complaints over the course of 4 years they have been in business. That isn’t terrible, but it is concerning that all of the bad reviews are pretty recent. One is related to a bonus offer, and the other 3 are customer service related. You should definitely be aware, but this is a very small number of negative issues being reported for the 4 years they have been in business.

TrustPilot has many more reviews and gives them an excellent rating at 4.8 stars. The small percentage of negative reviews on TrustPilot tend to be from those who did not qualify for accounts. Those who have accounts and use the system seem to be happy.

Check out how our reliable process will help your business get the best business credit cards.

Is Brex Right for Your Business?

The answer to this question really depends on what you are looking to accomplish. If you need a system that helps you manage funds in real time, this is a great option.  It’s also an option if you are having trouble getting approval for business credit cards.  It’s worth a shot to see if you qualify for the corporate charge card.

If your sole purpose is to build business credit, Brex can help, but you can’t do it with Brex alone. Your business has to be fundable, which can take time. Also, you need more accounts reporting than just one. Brex can be a part of this, but you need more.

Business credit building is a process. There are a number of steps, starting with how your business is set up and going all the way through applying for the right accounts at the right time.  A system like the Business Credit Builder can walk you through the whole thing, saving you a lot of time and frustration.

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3 Reasons You Need a Brex Alternative

Brex is a fee free banking alternative for businesses. They offer many services, but the big draw for startups and small businesses is the option for a business credit card that reports to Experian and Dun & Bradstreet, thus helping them build a strong business credit score. It’s not enough though. You need a Brex alternative.

You Need More Than One Brex Alternative to Get Everything You Need for Your Business

First, I highly recommend Brex for a number of things.  Yet, while Brex does offer a lot of great options for businesses, it really can’t be an all in one solution.  For many reasons, including building business credit, you are going to need a Brex alternative.  Actually, you are going to need a few of them.

Using Brex to Build Business Credit

While Brex is a fabulous option for managing business finances, it doesn’t really work for business funding when it comes to startups.  Here’s why. The corporate credit card that most startups qualify for only has a limit up to the amount of cash you have in your Brex cash account.

Now, that’s not a bad thing for managing financing or building business credit. There are no fees, and there is no personal guarantee required.  Your on-time payments are reported to two of the big three business credit reporting agencies. It’s a pretty sweet deal.

However, you are only able to use up to the amount of money you already have. Payment is taken from your cash account daily, and you cannot carry a balance. This means that, while this card is a great tool for helping you build business credit and managing funds you already have, it doesn’t actually help you get additional funds for your business.

Furthermore, one account reporting is not enough to effectively build business credit.  You need to find a Brex alternative, really a few, to do that.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Brex Benefits

That’s not to say that you shouldn’t use Brex at all.  It is a useful tool, and actually has many benefits aside from helping you build business credit for your business.  It can definitely help you manage your cash flow. It’s also a great way to help keep your business expenses separate from your personal expenses.

The card also offers a pretty great rewards program. You can earn points at various levels depending on the type of purchase. Points can be redeemed for cash, statement credit, gift cards, and most recently, crypto!

Brex Drawbacks

With the standard Brex corporate card, you only have access to the amount of money you already have in your cash accounts.  What if you need more? There is the possibility of qualifying for a card that works more like a regular credit card.  The limit can be from 10 to 20 times higher than traditional cards.  You have the option to pay it monthly rather than daily, and you can pay from the account of your choice.

The thing is, not everyone qualifies for this card.  Qualification is based on a number of factors, including investors, cash balance, and spending habits.  Brex then sets the limits accordingly.  This isn’t bad in and of itself, as it’s a chance to get a credit card without a credit check, and it reports to Experian and Dun & Bradstreet.

However, you still cannot carry a balance, and again, one card is simply not enough to build strong business credit.

Why You Need a Brex Alternative

If Brex is so great, why would you ever need a Brex alternative?

# 1: You Need Actual Financing

Other than the one step up card where you have the possibility of a higher credit limit, there is no real financing available through Brex. Even if you get the higher limit card, it isn’t revolving credit. It’s more like net 30 credit, as the balance has to be paid at the end of the 30-day billing cycle.

If you need actual financing like a revolving line of credit, you are going to have to find a Brex alternative. Of course, finding financing that is as easy to qualify for as Brex is not easy.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

#2: You Need More than Brex Reporting to Your Business Credit Profile

If building business credit is your goal, and it should be, Brex is not enough.  The business credit building process has many steps.  These steps must be completed in order, and the first one after establishing a business credit profile for accounts to report to, is to get accounts that will report.  Brex is one.  You need a lot more than that to build a strong business credit score.

#3: You Need More Funding Than Brex Offers

Even if you get the higher limit card option from Brex right away, one card will likely not be enough. Besides not being enough on its own to build business credit, you may very well need more funding than that to run your business.  It depends, of course, on the limit they set based on the specific qualifications of your business.  Even if the limit is fairly high, you need more than one business credit card to build a well-rounded business credit portfolio.

Is There a Brex Alternative?

A Brex alternative is not necessarily to be used instead of Brex, but rather as an additional tool for your tool box to be used in conjunction with Brex.  Here are a few other tools for your tool box.

Credit Line Hybrid

This is a unique and powerful business funding tool that, like Brex, can also help you build your business credit because it reports on-time payments to your business credit profile. Unlike Brex however, the Credit Line Hybrid works as an actual, revolving credit line up to $150,000.

You do not have to submit any documents, and you can get an interest rate as low at 0% initially. You can get approved with a personal credit score of 680 or better, or like many other businesses, you can use a credit partner with a high enough score to qualify if you do not. The credit is still in your business name, so you will still be building credit for your business.

401K Financing

This is another powerful funding tool that few business owners know anything about.  It is a way of funding your business that uses funds from a 401K, but it is not the same as a loan from your retirement account.

In fact,with 401K financing, called a ROBS by the IRS, you can fund your business and still keep earning interest on your investments. A qualifying account will have at least $35,000 in it, and you cannot still be contributing. It also needs to be from a previous employer, not your current employer.

Starter Vendors

How about a Brex alternative for building business credit? If one account is not enough, how do you get more? How many more do you need? You need 5 to 8 accounts initially reporting to be able to qualify for most business credit cards. These have to be accounts that will both extend credit without a credit check, and that will report those payments to the business credit reporting agencies, just like Brex does.

The issue with that is, only 7% of companies that extend credit to businesses report payments. They may report missed payments, but that doesn’t help. There are some vendors however, that will do just that. We call them starter vendors.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

They will issue net terms on invoices without a credit check and report payments.  They use other factors to determine creditworthiness, like time in business, balance in business bank accounts, and more. Sometimes, they will require a few initial purchases before approving for net 30 terms.

These types of accounts, combined with Brex, can help you build strong enough business credit that, eventually, you will be able to qualify for any business credit card out there.  Then, you can be sure you always have the funding you need to run your business.

Brex Is Great, But You May Still Need a Brex Alternative

While Brex can work very well as a business money management tool, it’s not really intended to be a funding source.  Furthermore, even though it can be a wonderful addition to your toolbox for building business credit, it is not possible to build business credit with just one account reporting. You would never try to build a house with just a hammer or just a screwdriver. It takes a toolbox full of tools. That’s what Brex is. It is one very useful, multipurpose tool in the toolbox to help you build business credit, which is the foundation for a strong, well-rounded business credit portfolio.

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