Credit cards offer a quick way to get cash advances, purchase equipment, finance inventory, etc. A quick phone call to your credit card company can cause an increase of your credit limit and can offer immediate availability of funds. However, as a business owner, you must know that in many cases, credit cards can become a problem if used to finance your business. Business advisors highlight the following reasons why you should stay away from credit cards when funding your company:
- Credit cards can have a higher interest rate than a business loan, or start with a lower and attractive interest rate but convert to a much higher rate after a promotion ends) or if your payments are late.
- Higher balances with credit cards have a negative effect on your credit score and can make it difficult to qualify for a business loan later on.
- You may be personally liable when using personal credit cards for your business.
- It’s easy to get maxed out and you can accumulate debt quickly that can be difficult to overcome.
Before using a personal credit card for to fund your business, consider a business loan. Many lenders offer short-term or long-term business loans depending on what your needs are, and most times like with equipment financing, it uses the same assets that you are purchasing as collateral for the loan.
Looking for a business loan? Easy online application with First Down Funding.
This post was written by fdfadmin