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Financing a small business with a credit card

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Just as with any other financing option for your small business, you are going to find that there are pros and cons of financing your business with a credit card.When you decide to open a small business, the best way is to have the money all saved up, but that isn't very often the case.Therefore, most small business owners have to rely on some form of financing.

When you start to look to a credit card for your financing needs, you can look at two different types of credit cards: cards in your name on your personal credit or business cards that establish business credit.

Business credit cards are sometimes hard to obtain with a new business, simply because the business doesn't have any established credit for them to look at.If your business is approved for the business credit it will most likely be in reflection of your personal credit.

If you are using your personal credit card or cards then you put your own personal credit at risk.This is a huge downfall for this financing option, if your business fails there is a good chance that your credit is ruined.

After weighing the facts if you decide to use your personal credit cards then you need to make sure that you keep your business purchases separate from your personal purchases.If you get them mixed together then you are going to run a huge risk at tax time of having lots of confusion, and even worse an audit.

You may find that the interest rates on credit cards are higher than if you were to take out a loan, so make sure that you have checked out the other options as well.You may also find that although the interest rates are slightly higher that they have more lenience on amounts and dates of payments.

If you have a card that offers rewards for purchases, such as flyer miles, cash back, or anything else then they may pay you back with great benefits for your business.Also look for business cards that offer credit limit extensions over time, they can grow with your business and make your future purchases easier.

Make sure that you have checked out many credit cards and that you are getting the best rewards and the best interest rate.If you have done you shopping then you know that you are not getting ripped off.

You need to be making over the minimum payment each month, if you are making just enough to pay the minimum then you will never get your cards paid off.The purchases should be taken care of just as fast as you can.Credit cards should be as temporary as you can make them, being paid off with every extra dollar that you come across.

Make sure that you have read the fine print and that you know what to expect from your credit card company.If surprise charges and fees show up on your card then you are going to have a harder time working out payments.

If you are able to keep your job while you are starting your business then using a credit card to finance your business shouldn't be a problem.If you aren't doing anything but your business then you may have problems making your first payments if the cash flow hasn't started yet.Keep in mind that cash flow won't come for a while and that you might have to use some of your own money to make the first few credit card payments.

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