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Use Your Credit Card To Finance Your Business

 


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It is quite possible to finance a new business venture using your credit card. However, it can be a risky proposition to use a persona credit card to finance your business. Although, as a stop-gap arrangement it is quite possible to use a personal credit card to fill the empty slot between raising capital and getting positive cash flow provided you are alert and do some creative planning.

Once your business reaches a break-even point, make sure you stop using your personal credit card and approach a bank to finance your business venture.

If you starting a small business venture then you can use your personal credit cards for two things - one asset acquisition and the second is working capital.

Every business needs to have telephones, scanner, printer, copier, mobile phones and other equipment and devices that can help the business execute its operations. You can get most of the items required to set up your office for little or no money but paying small monthly installments spread over a period of time. This is where you can use your personal credit card. Usually large office supply stores have special payment terms if customers use the credit cards supplied by these stores and it is an option worth exploring.

The second area where you can use your credit card is for working capital. If you charge the cost of goods to your personal credit card, it is quite possible that the bank may extend the grace period and you can match the account receivables to the grace period. This means that your business would have to only pay the balance close to the due date.

The other option would be to carry forward the outstanding cost of goods to the next month where in the current month you pay just the minimum payment on your credit card. Once you receive the payment from your buyer the following month, you can pay the principal amount plus the interest in full.

There are ways and means of using your personal credit card effectively to grow your business but it should not be a long-term alternative either for you or your business.

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