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You have a vision. You have a business plan. You have a team. You’re committed to the hectic start-up life and now all you need is some money to make it happen — but your chances of getting a business line of credit are slim, at best.
According to the Federal Reserve’s 2019 Small Business Credit Survey, credit availability was cited as the second-most common financial challenge for firms with employees in the past 12 months. Moreover, when they do get credit, more than half of small business owners reported they had to personally guarantee the loan or put their own assets up as collateral. The same problem exists with business credit cards, which often rely on the owner’s own credit score and his personal guarantee.
The Brex Card, powered by the Mastercard network, aims to provide a solution. This is a charge card—it must be paid off every month–and is issued based on a startup’s’ own funding or sales. The owner isn’t on the hook. Typically, to be eligible for the Brex card, businesses must have at least least $50,000 in their bank accounts or $50,000 in monthly sales.
Better yet, this no-fee charge card has a generous rewards program for cardholders who make Brex their primary business card, with reward redemptions for travel costs like airfare and lodging. Brex also offers a long list of discounts and credits for business services that can total thousands a year.
At a Glance
For the Brex Exclusive program (cardholders who make Brex their primary business card):
- Earn 7X points on rideshare/taxi costs
- Earn 4X points on travel booked through Brex Travel
- Earn 3X points at restaurants
- Earn 2X points on recurring software/SaaS
- Earn 1X points on everything else
- $0 annual fee
- No personal guarantor required
- No multiplier spend cap
- Sign-up bonus value worth over $25,000
For the regular Brex Rewards program:
- Earn 1X point on charges
The Brex card offers high point earnings across a range of categories, with the highest categories designed for the sort of expenses a startup might have. Cardholders will earn seven points per dollar spent on rideshare and taxi costs, four points per dollar spent on travel booked through the Brex Travel portal, three points per dollar spent at restaurants, two points per dollar spent on recurring software and SaaS and one point per dollar on everything else. These rewards are for accounts participating in the Brex Exclusive program, which is reserved for companies who make Brex their sole business card. Cardholders not in the Brex Exclusive program will earn one point per dollar spent on purchases.
There are no limits on how many points can be earned with Brex and the points never expire.
Brex offers two simple ways to redeem rewards: Using points to pay for travel booked through the Brex Travel portal or redeeming points for statement credit. Cardholders can redeem points by transaction and redemptions are usually processed within two days. There are no minimum redemption amounts.
One major benefit of Brex is that it partners with every major airline and lodging company, which gives cardholders more freedom in where they will use their points. One surprising aspect of the rewards redemption is Brex points can be used toward Southwest miles—which usually isn’t an airline offered through other rewards redemption programs. For a company in need of frequent domestic travel, this can be a great low-cost airline option. Additionally, points can be used or AirBnb stays—a reward not offered by other cards.
Accumulating Brex rewards points should be easy for startups whose employees do a lot of business travel (or work late and take Uber, Lyft or taxis home). Brex points are typically worth one cent, around the same amount for most rewards programs for other card issuers. To illustrate the value of Brex’s rewards, consider this example: A company spending $1,000 per month on Ubers or taxis (a realistic scenario, considering five employees can be granted their own cards without a fee) will earn $840 worth of points for Brex travel redemption or statement credit per year. (Here’s how it works: $1,000 at seven points per dollar comes to 7,000 points, worth $70 at one cent a point. Multiply by 12 months and you’ve got $840 a year.)
There is no limit to how many points an account can earn. Cardholders can maximize this benefit by adding up to five employee cards at no additional cost, which can help accounts accumulate points faster. Additional cards carry a charge.
Other Card Benefits
The Brex card has a ton of other benefits in the form of additional statement credits or discounts when signing up for certain services with your Brex card. The company’s website says it centers its offerings around “rewards that matter most” to startup companies. These rewards are for things like online ad spending, coworking space, and marketing software.
- Amazon Web Services: Brex will give you $5,000 toward Amazon Web Services spending in a year.
- Google Ads: Up to $150 toward Google Ad spending.
- WeWork: Up to 15% off list price for six months
- 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 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 six months
- Solium: $500 off first 409a valuation
- Experian: 50% discount on first year subscription of business credit monitoring
- Postscript: 25% off any plan for the first four months
- Integration with QuickBooks, Xero, NetSuite and Expensify
- Ability to set spending limits on cards
The Fine Print
Since the Brex card is a charge card, balances must be paid in full each month and there are no interest rates. Brex is connected to a business’ checking account and makes automatic withdrawals every statement period to pay the balance in full.
No annual fee and he first five cards are free; each additional employee card card costs $5 per month.
Companies Eligible for Brex Cards
Brex determines eligibility and credit limits based on spending patterns and how much cash the company has raised. Typically, companies with at least $50,000 in their bank accounts or at least $50,000 in sales each month are approved for Brex cards, according to a company representative. Company equity is reviewed to prevent fraudulent activity. Overall, Brex caters to companies as small as two employees to as big as 3,000 employees; but the “sweet spot” for its clientele, according to the representative, are businesses with between 50 and 200 employees.
How Brex Makes Money
Brex makes money off its partnership on the Mastercard network. Every time a card is swiped, Mastercard charges the merchant a fee, and Brex gets a cut of that fee.
Pros & Cons
What we like
The big sell with Brex is that it doesn’t require a personal guarantor. This is an extremely niche space in credit cards. It’s also alluring that despite its generous rewards program, Brex doesn’t charge an annual fee. Some of its travel perks are great, too, including being able to use points to book AirBnb stays.
Some business credit cards require lengthy application processes, but the sign-up process for the Brex Card can be completed in minutes, according to the company’s website. Upon approval, businesses are given virtual cards and can start spending right away, rather than having to wait for their physical card to arrive in the mail.
What could be better
The company’s website states the Exclusive Rewards program might not be provided to all Brex users and is limited to those who make Brex their primary business-spending card. Since the charge card limit is based upon equity and company funding, this card is for bigger startups who have likely already drawn attention, rather than smaller companies just getting off the ground.
The 7X point reward on rideshares and taxis is generous, but since these are lower-spend categories, they won’t add up as quickly as they would in a category like airline travel or hotels.
While the discounts are generous, not every cardholder’s company uses all of them. It’s also surprising to see Brex, which focuses heavily on travel, doesn’t offer reimbursement for TSA Pre✓ or Global Entry, unlike American Express.
While the first five cards are free, Brex charges a monthly $5 fee per each additional card; for a company with 100 employees, that could equal an additional $5,700 per year in costs. However, depending on how those additional employees use the card (say, most of them are using their cards for Uber), points can be earned back that could more than offset the additional card fees.
How it Stacks Up
Given that it doesn’t require a personal guarantor and is marketed specifically toward startups, ecommerce businesses and life sciences companies, Brex is a breed of its own in the credit card world.
The Brex card comes with travel concierge services, but falls flat in offering the premium travel perks, like free checked bags or priority seating, bigger card issuers are quicker to offer.
Is This The Right Card For You?
This card is best suited for companies with investors (i.e. money in the bank) or heavy cash flow. Smaller and newer companies likely won’t gain large lines of credit with Brex, and won’t get much out of its rewards program. There’s no annual fee on this card, and the bonus offers are generous and can help a growing business manage administrative costs. Brex can be a great option for entrepreneurs who don’t want to risk their own credit to use a business card but still want to reap the rewards of a credit card membership program.
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