DO NOT USE YOUR PERSONAL CREDIT CARD TO FINANCE YOUR BUSINESS
October 20th at 6:29pm Published by firstdownadmin
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 cost of working capital than business funding, or start with a lower and attractive cost of working capital but convert to a much higher cost of working capital 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 business funding 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 business funding. Many funders offer short-term or long-term business funding 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 funding.