Brex credit card review: For start-ups without a credit score

Henrique Dubugras and Pedro Franceschi first came up with the idea for Brex when they participated in Y Combinator, a tech start-up accelerator. While their original idea was to build a virtual reality company, they quickly realized how difficult it was for start-ups and small businesses to secure financing from traditional banks.

Instead, they created Brex, a business credit card that didn't just consider credit scores for approval but also looked at how much money a business has raised, its existing cash balances and its revenue.

Looking at these different metrics when determining a company's eligibility for a card makes Brex stand out. For example, if you run a start-up, Brex will consider how much cash your business has on hand. If you have an e-commerce business that's low on cash because you have to constantly buy inventory, Brex will focus on your revenue. If your company doesn't have revenue and hasn't raised cash, Brex will check credit scores.

Brex also happens to be one of the few business cards that doesn't require a personal guarantee, meaning business owners aren't personally responsible for any debt they can't pay off that's been racked up on the card.

While Brex initially started as a corporate credit card for start-ups, it has since expanded its target customer to include small and large businesses, with a specific focus on e-commerce firms like ClassPass and SoFi.

Below, Select explores the different types of Brex credit cards, their rewards and other business cards available on the market to help you decide if Brex is a good fit for you.

• Types of Brex Cards offered
• Welcome bonus
• Benefits and perks
• How to earn and redeem Brex points
• Rates and fees
• Card comparison
• Who the Brex Card is best for
• Bottom line

Brex offers two types of no annual fee corporate cards: a credit card that is paid off daily and a credit card that is paid off monthly. Brex isn't just a credit card — it also includes a cash management account called Brex Cash that's available to all companies using a Brex Card and is required for companies using the specific Brex card that is paid off daily.

Brex Cash acts like a business bank account, with no fees, minimum balances or limits to worry about. If you invest money in a Brex Cash account, it's protected for up to $500,000 by the Securities Investor Protection Corporation (SIPC) although it's not FDIC-insured. As a result, Brex will deposit your cash in a partner bank or a government money market mutual fund.

Both corporate cards that Brex offers are charge cards, which require cardholders to pay off their balance in full whenever payments are due. Unlike traditional credit cards, you won't be able to revolve your balance.

The Brex Card that is paid off daily works similarly to a debit card. Purchases are deducted from your Brex bank account daily and you're only able to spend the amount of money that's currently available. This particular card is available to businesses of any size.

The Brex Card that's paid off monthly requires companies to meet certain size and revenue qualifications. You can pay off your balance using any bank account and will be eligible for a higher credit limit, even if it's more than what's currently available in your bank account.

Brex is also able to extend credit limits up to 10 to 20 times higher than those offered by traditional credit cards because of real-time underwriting. While traditional business credit cards require that an individual be able to pay off the balance in the event of bankruptcy, Brex regularly monitors the bank accounts of business owners to adjust the credit limit based on the user's available cash balances and revenue, which minimizes the risk of a business defaulting on their card.

Brex is currently offering new cardholders 10,000 Brex points after spending $1,000 with their Brex Card, plus an extra 10,000 points after spending $3,000 within three months of opening an account. Those who link payroll to their Brex account within three months can earn another 20,000 points on top of that.

Brex offers a number of useful features for businesses, including integration, expense management and instant payouts, letting businesses that use vendors or payment processing networks such as Amazon, Square, Stripe, PayPal or Shopify to receive revenue instantly instead of having to wait seven to 14 days.

You're also able to utilize vendor-specific credit cards with Brex, meaning you can use different cards for different vendors. As a result, in the event that one card becomes compromised, you won't have to worry about it affecting any of the others.

There's no limit on the number of Brex Cards that are available to a business, so if a company wants a credit card for each of its 5,000 employees, it will receive 5,000 credit cards.

Brex also offers an expense management product, allowing business owners to easily keep track of employee, vendor and general expenses. It also helps companies identify excess spending with features like receipt matching — employees can take photos of their receipts and send them to Brex, which then matches them against lists of expenses and consolidates that information within the platform.

With the Brex Card, you'll have access to benefits associated with the World Elite Mastercard® for Business program, including the following perks:

• Cellular wireless telephone protection, including $1,000 in coverage annually if your phone gets damaged or stolen (up to $800 per claim and two claims a year) when you use your Brex Card to pay for your cell phone bill
• Discounts on popular software for businesses, such as TurboTax, Microsoft 365, QuickBooks® and Salesforce Essentials
• MasterRental Insurance, which covers damage or theft of a rental car if you use your card to pay for it
• Complimentary ShopRunner membership, worth a value of $79 per year for perks like free return shipping and unlimited free two-day shipping
• Mastercard's Easy Savings program, which lets you score rebates for hotel stays, dining, car rentals, gas and other business expenses throughout the U.S.

Earning Brex points:

Cardholders earn Brex points that never expire, although the points-earning rates for each card are slightly different. Those with the Brex Card that's paid off monthly will receive one point less in most of the spending categories, for instance, 7X points on ride-share services, 4X points on travel booked through the Brex Travel portal. Here's the breakdown for the Brex Card that's paid off daily:

• 8X on ride-share services
• 5X on travel booked through the Brex travel portal
• 4X on restaurants
• 3X on eligible Apple purchases made via the Brex Rewards portal
• 1X on all other purchases

Plus, if your business is part of the technology or life sciences industry, you'll earn more for spending categories that are specific to your industry, such as 3X points on recurring software (technology) or 8X points on conference tickets and 2X points on lab supplies (life sciences). If you have the Brex Card that's paid off monthly, you'll get 2X points on recurring software (technology) and 7X points on conference tickets (life sciences).

Redeeming Brex points:

Brex points can be redeemed through the Brex Travel portal, as well as for gift cards, statement credits or airline miles through one of its eight travel partners including Aeromexico, JetBlue, Avianca, Qantas, Singapore Airlines, Air France KLM, Asia Miles and Emirates. You can also redeem Brex points for bitcoin or ethereum cyptocurrency by creating a virtual wallet, which acts like a bank account, in order to redeem and deposit it.

The Brex Card has no annual fees and no foreign transaction fees.

While there are number of other corporate cards available on the market, there aren't too many without an annual fee. Many of the other cards also use traditional underwriting methods, so you'll need to have either a good or an excellent credit score in order to qualify.

The Capital One Spark Cash Plus Credit Card is a good choice if you want a charge card that gives a 2% flat cash-back rate on all of your purchases. There is a $150 annual fee, but like the Brex Card, it comes with useful features for business owners, such as account management tools.

The Business Platinum Card® from American Express is a good choice for business owners who can afford a higher annual fee of $695 (see rates and fees) in return for luxury perks like Marriott Bonvoy Gold Elite status, up to $200 in statement credits for Dell purchases and statement credits for Global Entry and TSA PreCheck®. That said, the Brex Card wins when it comes to rewards, as the Amex Business Platinum Card only offers 5X points on flights and hotels booked through AmexTravel.com. Terms apply.

The Brex Card is best for start-ups and other businesses that don't want to pay an annual fee for their corporate cards but still wish to earn generous rewards for their purchases.

Brex distinguishes itself from other corporate cards by using unique underwriting criteria. If your business doesn't have the credit score to qualify for a traditional business credit card, it could be a good option since Brex takes other metrics, such as cash on hand and overall revenue, into account.

That said, because the Brex Card is a charge card, business owners won't be able to revolve their balance from month to month and will miss out on other perks such as the 0% introductory period typically offered by other business credit cards.

The Brex Card is so much more than just a credit card, offering a number of features that make it easier for small businesses and start-ups to manage their expenses and transactions with different vendors.

The card also offers generous rewards — up to 8X points on purchases made with the Brex Card that's paid off daily and slightly fewer, topping off at 7X points on purchases with the Brex Card that's paid off monthly. Keep in mind that if you plan on going with the Brex Card that's paid off daily, you'll have to invest your money in a Brex Cash account that is not FDIC-insured.

Overall, the Brex Card offers a number of benefits for business owners who would otherwise be unable to secure a corporate credit card without having a good credit score. As a business owner, however, you'll have to make sure you have enough money to pay off your bill either daily or monthly.

For rates and fees for the Business Platinum from Amex, click here.

Information about the Capital One Spark Cash Plus has been collected independently by Select and has not been reviewed or provided by the issuer prior to publication.