Small businesses are often recommended to cover certain operational expenses with business credit cards. But not everyone can qualify for the most advantageous options. And when you carry a balance month-to-month, it’s very easy to unknowingly accrue a dangerous amount of debt. Entrepreneurs who are facing these circumstances might consider a charge card instead.
Charge cards are a lot like credit cards, except for one major difference. You have to pay off your full balance at the end of each month, as opposed to gradually paying off the balance with smaller payments. For this reason, charge cards have no interest rates and very few fees.
Some charge cards are also designed for specific industries. They might offer rewards programs for common expenses or accommodate unique cash flow circumstances.
One of the more recent examples is the Brex Corporate Card, which is designed exclusively for tech startups. If you can meet the criteria for eligibility, the Brex Corporate Card could be the perfect card for your needs.
In this guide, we’ll go over how the Brex Corporate Card works, how to qualify, along with the pros and cons of making this your primary credit card.
Specific questions we’ll answer include:
What is the Brex Corporate Card?
Unlike many business credit cards and charge cards, the Brex Corporate Card does not require a personal guarantee or a minimum credit score. The credit limit is also significantly higher than most business credit cards. Signing up for the Brex Corporate Card gives you a myriad of discounts and credits for common products and services in the tech industry. And if you make the Brex Corporate Card your primary card, you can earn extraordinary rewards on business expenses like travel, food, and recurring software charges.
Who is Eligible for the Brex Corporate Card?
Eligibility and credit limit are based on your spending patterns, cash balance, and the amount of money you’ve raised from investors. There’s no credit check, personal guarantee, or collateral required. So, if the business is unable to pay back its debt, the owner doesn’t have to worry about personal assets being seized.
Brex obtains your financial information when you link Brex to your business bank account during the application process. This also allows Brex to see if your account is linked to any other business credit cards.
Since business bank accounts require employer identification numbers, you’ll need one to apply. Thus, unregistered entities like sole proprietors and general partnerships are not eligible.
Now for the cold facts: Applicants usually need at least $20,000 in their business bank account and/or must perform at least $50,000 in sales every month depending on what line of business they’re in.
The fate of your application will be decided in a matter of minutes. Once you are approved, you will immediately gain access to a virtual card. Your physical card should be delivered in three to five business days.
There are no interest rates because the balance must be paid in full at the end of the month. When you link Brex to your business bank account, you give Brex the ability to deduct the full balance automatically every statement period.
There’s no annual fee, nor are there any foreign transaction fees. You can also get four extra physical cards for free, just in case you want someone else (i.e. co-founders, employees) to have a copy. After that, each additional card costs $5 per month.
With no fees or interest rates, you’re probably wondering how Brex makes any money. It turns out that Brex has a partnership with Mastercard, which charges a merchant fee whenever someone swipes the card. Brex makes money by taking a cut of that fee. This should give you an idea of the kind of businesses Brex is geared towards: thriving startups that plan on using the card quite often. If Brex is your primary card, you should theoretically use it multiple times per month.
Your credit limit fluctuates in accordance with your business’s cash flow. Remember, Brex is linked to your bank account, so it knows when your balance goes up or down. If your balance is higher than it was when you initially applied, your credit limit may increase. On the other hand, if your business depletes most of its bank balance, the credit limit will likely decrease until the balance recovers.
This system is called “dynamic credit.” It essentially prevents businesses from unknowingly spending money they can’t afford to pay back at the end of the month. Businesses also don’t have to contact Brex to increase their credit limit, or wait several months (at least) to qualify for credit increases.
Welcome Program/Sign-up Bonuses
When you sign up for the Brex Corporate Card, you automatically earn 75,000 bonus Brex points. The points system is arguably Brex’s most desirable feature, but we’ll get to that later on.
Earlier, we established that the Brex Corporate Card is designed for tech startups. Well, when you sign up, you gain a myriad of discounts and credits for common expenses in the tech industry. This includes digital marketing services, project management tools, and CRM (Customer Relationship Management) platforms.
Here are the tech-related discounts and credits you get for simply signing up for the Brex Corporate Card:
- Amazon Web Services: $5,000 in credit to be used over one year.
- Google Ads: Up to $150 toward Google Ad spending.
- WeWork: Up to 15% off list price for a six-month membership at a US location
- Carta: 20% discount on first year subscription, implementation fees waived
- Salesforce: 25% subscription discount, up to $375
- Twilio: $500 in credits, must be used over one year
- SendGrid: $130 off a monthly subscription of the new Pro 100K Plan
- Zendesk: $436 worth of credits per month, for your first 12 months
- Instacart: $25 off three orders of $75 or more
- Hubspot: 40% off subscription for the first year, 20% off the second year
- Caviar: $35 off of three orders of $75 or more
- Expensify: 50% discount for your first six months
- Solium: $500 off first 409a valuation
- DocSend: 3 free months
Rewards Program: Eligibility
Before explaining Brex’s rewards program, it’s crucial to note that the following rewards are only available for “Brex Exclusive” members. To become a Brex Exclusive member, all you have to do is make Brex your exclusive, or primary, corporate card. In other words, you cannot have another business credit card or charge card linked to your business bank account. The Brex Corporate Card must be your go-to card for business expenses.
If you are not a Brex Exclusive member, your only rewards are 1x points back on all purchases, or one point for every dollar you spend. All Brex Corporate Card holders can also redeem their rewards points in a number of ways. First, you can redeem your points for cash back at a value of 1 cent per point. It usually takes 1-2 days to process redemptions, and there’s no minimum for redemption amounts.
The second way is by transferring your Brex points to the following airlines at a 1:1 ratio:
- AeroMexico Club Premier
- Cathay Pacific Asia Miles
- Avianca LifeMiles
- Air France/KLM Flying Blue
- Qantas Frequent Flyer
- Singapore Airlines KrisFlyer
- JetBlue TrueBlue
What is the Brex Corporate Card Rewards Program?
Brex Exclusive members get 7x (seven points per dollar) for rideshare and taxi purchases, 4x points on travel expenses booked through Brex Travel (flights, hotels, and Airbnbs), 3x points back on restaurants and coffee shops, and 2x points back on recurring software expenses.
Like the aforementioned discounts and credits, Brex’s rewards program is based on common expenses for tech entrepreneurs. There’s no cap for Brex rewards points, and they never expire.
Brex Rewards Potential
To understand the true potential of Brex’s rewards program, we must envision common scenarios for tech startups. For example, most tech startups are located in cities, where it’s more sensible for employees to use ridesharing services and taxis than personal cars. Many startups cover employee transportation expenses with business credit cards. These expenses could theoretically add up to around $1,000 per month. Since Brex offers 7 points per dollar on ridesharing or taxis, that company would earn $70 in points per month.
Brex’s travel rewards can also be used for every major airline and lodging company. This includes Southwest Airlines, which is reportedly omitted from most other business credit card rewards programs. And if you were surprised to see Airbnb in the program, you’re not alone. Brex is literally the only business credit card or charge card that allows cardholders to use points for Airbnb stays.
As your primary business credit card, you’ll use Brex for a great deal of expenses. Keeping track of these transactions is much easier thanks to Brex’s numerous bookkeeping features. Your receipts from Brex purchases can be uploaded to your account on the Brex website. If you use popular accounting software tools like QuickBooks, Brex will automatically integrate your transaction data into your accounting records. As of now, Brex integrates with QuickBooks, NetSuite, Xero, and Expensify. If your accountant needs to access your records, simply give him or her your Brex account information.
Brex Corporate Card: Pros & Cons
At this point, it should be abundantly clear that the Brex Corporate Card is meant to be used by a very specific type of business: tech startups with plenty of funding and monthly revenue. Thus, the pros and cons of the card will depend on how well your businesses fits in to this group. Since the target market is so specific, tech startups are probably the only businesses that should even consider the card. If you don’t belong to this group, the cons will greatly outweigh the pros.
So, let’s proceed under the assumption that your business is indeed a well-funded tech startup with massive potential.
We’ll start with eligibility. It is extremely rare to find a business credit card that does not require a personal guarantee, credit check, or collateral. A personal guarantee makes the business owner personally responsible for the business’s debts. If the business fails, the credit card company can seize your personal assets. Brex has no personal guarantee because they know card holders might not be comfortable risking their personal assets on a business that has only been alive for a few months or so.
Owners of young businesses might also have little credit history or poor credit from using personal credit cards on expensive startup costs. The lack of an annual fee is a rarity as well, especially when you consider Brex’s extensive rewards program.
And while other business credit cards have fairly lengthy applications, the application for the Brex Corporate Card can reportedly be completed in a matter of minutes. You can even start using the virtual card immediately after approval, which can be very helpful since every day counts in the business world.
Lastly, Brex’s sign-up bonuses and rewards program could theoretically save a tech startup tens of thousands of dollars a year. Hubspot, Salesforce and Zendesk are three very popular tools for tech startups that become much cheaper with the Brex Corporate Card. Many tech entrepreneurs don’t do much traveling, but virtually all tech startups have recurring software expenses. Brex offers 2x points back for these expenses, and therefore provides an incentive for startups to acquire more of the tools they need to succeed.
As we said before, well-funded tech startups are the only businesses that would reap more advantages than disadvantages from the Brex Corporate Card. We can’t recommend the card for all tech startups because you need at least $50,000 in your business bank account to qualify. And unless your business has a steady revenue stream, paying back the full balance every month could be an issue. Hence, new businesses that have yet to find their legs should look elsewhere for business credit cards.
As if Brex’s target market wasn’t already narrow enough, the card’s rewards program has an additional requirement. You cannot have any other business credit cards linked to your business bank account. So, in order to access the rewards program, you must be far enough in your journey to have obtained substantial funding, but not far enough to have already obtained a business credit card. It seems that Brex is targeting tech startups that have reached a highly specific stage in their development.
Businesses that frequently use ridesharing services and taxis will likely reap the most benefits from Brex’s rewards program. If your business does not fit this criteria, you’d probably prefer a card that offers 7x points back for another expense, like travel or lodging.
And though the sign-up bonuses do feature a variety of popular software tools, many tech startups don’t use a single one of them. These startups might be more intrigued by discounts and credits to similarly popular tools like Slack, Monday, or Kissmetrics.
Which Businesses Should Use the Brex Corporate Card?
The highly specific requirements for the Brex Corporate Card (and its rewards program) should give you a pretty clear picture of Brex’s target market. Above all else, your business should be heavily capitalized and/or have a steady revenue stream. Regardless of where the money comes from, you’ll need to maintain a high bank balance every month in order to pay back the card’s balance in full. If you have no concerns about that department, you can move on to the next most important requirement: the tech industry.
Since there’s so many business credit cards to choose from, businesses often narrow their search by prioritizing sign-up bonuses and rewards programs. If a well-funded tech startup were to base its decision on these factors, the Brex Corporate Card would likely be a no-brainer. Not only would the company save money on vital resources, but it would also have a much easier time deciding which resources to choose. Tech startups have a ton of choices when it comes to software tools. With Brex, they can access some of the most reputable options for discount prices. This makes the alternatives significantly less appealing. Why bother shopping around when there’s no competition in terms of price?
The rewards program is obviously geared towards individuals that use ridesharing services as their main source of transportation. Such individuals usually live in big cities and rarely go more than a few days without using Uber, Lyft, etc. Brex’s rewards system for ridesharing is so advantageous that it doesn’t really make sense to get this card if you rarely use the aforementioned services.
Brex Corporate Card: Is This the Right Card for You?
Most tech startups would benefit from Brex’s discounts, credits and rewards program. But only some have the financial means to fulfill the requirements of a charge card. And even less are so early in their development that they don’t already have a primary business credit card.
For this reason, it’s safe to conclude that Brex’s target market is tech startups that have all the funding they could ever want, and almost all of it has come from investors. Has your business already begun earning steady revenue on its own? If so, your business is probably too advanced in its development to meet Brex’s criteria.
Odds are, your business is already subscribed to a number of software tools, already has its own bookkeeping system, and already has a primary business credit card. Also, a more experienced business has likely had its share of ups and downs. When you’ve seen how tumultuous revenue can be month-to-month, the idea of a charge card seems like a recipe for bankruptcy.
In summary, the Brex Corporate Card is a sensible choice for very young startups that have recently raised a great deal of funding. If you have yet to raise funding or are already fully operational, it’s probably best to consider other options.
Introducing: Brex Cash and Brex 1
Brex has released two new services in accordance with its mission to become the one-stop shop for its customers’ financial needs. The first release is Brex Cash, which is a corporate cash management account that directly integrates with Brex cards. Second is the Brex 1, which is a corporate card that functions like a debit card for your Brex Cash account.
Here, we’ll go over how each service works, how to qualify for both, and the unique benefits they provide to Brex customers.
What is Brex Cash?
Brex Cash is essentially a bank account for Brex customers that lacks several drawbacks of traditional bank accounts. Customers get free domestic and international wire transfers, free ACHs, and free mobile checks. Brex Cash does not carry the fees associated with traditional bank accounts, like minimum balance fees, overdraft fees, maintenance fees, returned deposit fees, inactivity fees, and account closing fees. The absence of a minimum balance fee stems from the fact that there is no minimum monthly balance.
If you currently use the Brex 30 charge card, opening an account with Brex Cash increases your credit limit by 50%. You might be thinking, “What if I don’t have the Brex 30 card and don’t meet the requirements for eligibility?” Well, that’s why Brex 1 was created. In just a bit, we’ll explain the relationship between Brex Cash and Brex 1.
Who is Eligible for Brex Cash?
Brex Cash is available to any US-based company that does not belong to Brex’s list of prohibited or restricted businesses. Sole proprietorships are also ineligible.
And yes, you can open a Brex Cash account even if you have other bank accounts. In fact, there is no limit to the amount of bank accounts you can have as a Brex Cash customer.
What are the Rewards of Using Brex Cash?
Brex Cash customers gain access to the standard rewards program for Brex cardholders. This bountiful program includes a $5,000 credit to Amazon web services over two years, 20% off an annual Zoom subscription, 25% off an annual Monday subscription, and much, much more.
What is the Brex 1 Card?
The Brex 1 Card is just like a debit card, save for a few small differences. When you use the card, the money gets deducted from your account at the end of the day, as opposed to right away.
Also, cardholders have a daily spending limit of 80% of their Brex Cash balance.
Who is Eligible for the Brex 1 Card?
There are only two mandatory requirements for the Brex 1 Card. First, you must have a Brex Cash account. Second, you cannot have the Brex 30 Card.
After all, the Brex 1 Card was created for customers who cannot meet the fairly steep requirements for the Brex 30 Card. For example, if you don’t belong to an industry related to technology or life sciences, your minimum monthly balance for the Brex 30 Card would be at least $100,000. Professional services like accountants or medical practitioners would have to maintain a monthly balance of $250,000.
What are the Rewards of the Brex 1 Card?
The Brex 1 Card does not have a points-based system in which customers earn rewards through transactions. However, all Brex 1 cardholders qualify for the aforementioned standard Brex rewards program.
Which Businesses Should Use Brex Cash and the Brex 1 Card?
Like all other Brex offerings, Brex Cash and the Brex 1 Card are geared towards early-stage tech startups. You could draw this conclusion from the rewards program alone. Odds are, a more established business has already built an arsenal of subscription services and isn’t looking to take on more recurring expenses.
An established business has also probably developed a solid banking partnership. Though Brex Cash customers can have other bank accounts, this might not make sense considering Brex’s complete lack of fees. In other words, why run the risk of incurring fees from another bank account when Brex eliminates this risk altogether?
Thus, an early-stage tech startup should definitely think twice before opening a traditional bank account and getting a traditional debit card. Brex may be a safer option for their tumultuous finances, and no bank can compete with their standard rewards program.