Depending on what you need the money for, credit cards may provide an easier way to finance the startup or expansion of a business. If you need a lot of working capital for the business, you could do a cash advance but the interest is typically very high. We know that nobody goes into business to lose money, but have witnessed several entrepreneurs throw caution into the wind and leaned heavily on credit cards to get started. Some were very successful, some however were not.
Currently business credit cards are easier and faster for most people in funding a business. Even though the credit card is in the business name, the owner’s personal credit is going to be a huge factor in getting the card. Any type of business from a freelance sole proprietor to multinational LLC is eligible to get a business card.
There are several reasons to get a business card over a personal card including:
• Typically having higher spending limits
• Access to discounts for business related products and services
• Easier to track expenses for the business
• Teaser intro offers like zero interest rates
• Ability to get signup bonuses and extra points that you can use for cash back or travel
Downside to using a credit card to fund a business include:
• Higher interest rate than a loan
• Potential to spend more than expected (just like with personal cards)
Credit cards are a very flexible means to starting or expanding a business but having a plan to at least make the minimum payments.