How to Use Business Start up Credit Card to Starting Small Business

Using Credit Card Financing to Starting a Small Business

Best business start up credit card for starting small business: Most of the small business uses credit card to operate their business finances. It offers them convenience and a flexibility; you can pay easily to cover cash flow gaps and pay for short term business expenses. It also builds up credit which can be helpful in future if you are to apply for a loan or increase credit line. Here we will discuss on how to fund a new business with business start up credit card.

Business Start up Credit Card

If you are starting up a new business, credit card financing can make it much easier to take it off the ground. As it is a new venture, you won’t have any business credit. Another alternative you are left with is you can apply for a small business credit card on your personal credit. If you have good personal credit score, you will be approved a small business credit card, but you are running a big personal risk. If your business doesn’t run as expected and incurs massive debt, it will all be on your personal credit. With business failure, you will run into personal debt.

If you don’t have much capital to start a business or can’t manage to get loan which is quite difficult to get, then only alternative is to go for personal credit card financing. When you start a business with your personal credit card financing, you must consider following aspects.

  1. Go through your credit report thoroughly and make sure that your credit report is clear of any obligations. Estimate how much credit card bills you will have to pay for your business. Check if you can afford it. If you can’t, then stop the idea of applying for a business credit card on your personal credit.
  2. If you have excellent personal credit, you can negotiate with the business credit card issuer for lower interest rates. You will also need a huge cash advance to start a new business and make sure you negotiate interest rate on cash advance as low as possible. You can check with different credit card issuer and get it from the one who provides it at the lowest interest rate.
  3. If you are yet to have a house of your own or your child is to go to a college, you should think before taking the risk as it will lower your credit score even if you make timely payments.
  4. It is also advisable that you get a business credit card at fixed interest rate. With Variable interest rate, it is likely that the rate may increase. You also be careful that you make payment on-time, otherwise it may increase interest rate on your other business credit card too. You should also be cautious that you don’t cross credit limit, it can cause lots of financial burden and may reduce credit limit too.
  5. Business card comes with high spending limits, introductory offers, reward programs and discount offers on supplies and travel. There is annual fee to be paid, some of the credit card issuers provide it at 0%. You also have to pay interest on credit. You do some home work on different credit cards available and choose a right card that suits your business needs.
  6. Several credit cards are offered at introductory 0% APR for 9 or 12 months. It serves as 0% interest loans and you shouldn’t miss on such opportunities. You can make large purchase and pay on monthly bases without any interest. If you use it wisely, it can be very beneficial.

Though personal credit financing is not the best option for a start-up business, you can consider it if you are not left with any other financing option. Use it responsibly and replace financing at the earliest once the business gains momentum.

More Related Queries:

Leave a Comment