Most businesses require money to start and to grow, and generally, business owners need to obtain some sort of financing in order to get the money they need. It can be challenging for a start-up business with no assets to secure a loan from a bank, especially in an economy where banks are limiting their lending. If you do not have other sources of funding to draw from, credit cards may be your best – and only – financing option.
At first, you may think it will be expensive to finance a business using credit cards, but it doesn’t have to be. In fact, several business people have successfully started their small and home-based businesses with the help from these financing alternatives. Others use this funding technique as a line of credit to successfully grow their businesses.
Obtaining Credit
If you already have a credit card you can use to start your business, this may be the right move for you, instead of opening a new account. Once you start using it for business, however, you will want to designate it for company expenses and use it exclusively for business and not personal purchases.
If you decide to open a new account, keep in mind that the card does not need to be advertised as a “business” credit card. You can get a regular or a business account, but in either case you will want to use the card exclusively for business purchases. Because you have this option, the number of cards you can choose from is greater, which means it will be easier to get a better deal and save money.
Sometimes it can be easier for home businesses or start-ups to open an account under a personal name rather than a business name because they have an established credit history. With a good financial background, it is easier to secure a higher credit limit than without any history at all.
How to Save Money with Credit Cards
When you start a new venture, you want to be careful to not waste your money. It is important that you minimize the interest you pay and avoid hefty annual fees. Use comparison tools online that let you see rates, fees and benefits of multiple cards at one time. This can save you lots of hours and dollars.
Credit companies that offer zero percent introductory rates can save business owners hundreds of dollars, especially if they are able to pay back the borrowed funds by the end of the introductory period. On top of that, cash back, travel or rebate reward programs can also put money back in the business owner’s pocket.
More Benefits
At a time when many products and services are exchanged online, credit cards make it easier for small businesses to purchase items on the web that the company needs. Sometimes the company needs supplies or equipment before it can complete a project that will bring in revenue – leveraging money with credit cards in this manner can help a small business get off the ground.