Credit Cards An Often overlooked source of startup cash. Proceed with caution
Using credit cards to finance a new enterprise is a uniquely late 20th century phenomenon. Since credit cards didn't exist until the 1970s to any large degree, this wasn't possible.
However, once people learned the ease with which they were able to access vast sums of ready cash easily, it didn't take long before a new strategy was born.
Many businesses have started out this way, particularly home businesses.
The combination of no loan approvals, instant cash availability, and no credit other than what you already have, far outweighs the cold hard fact that this is a potentially very expensive debt that needs to start being repaid next month!
Even those fortunate enough to take advantage of 0% loans on their credit card still have to pay the piper at some point, and with all the recent meltdown in the consumer credit markets, and the immense debt loads that borrowers are now carrying, this money has become harder to get, and can be wildly expensive.
That said, if you can stomach the pressure of having to float this obligation, then this may be a way to bootstrap your small or home business into being.
You are limited only by your credit limit, and your ability to repay the monthly obligation you incur.
These days, however, credit card companies are becoming very wary of a rash of charges made very quickly, and are lowering credit limits even on customers who have outstanding credit and little debt thus far accrued.
It's just a very cautious environment, and one that doesn't show any signs of abating anytime soon.
Typically, this type of financing is merely a bridge until you have some sort of income coming in to replace having to use your credit cards for working capital.
You'll want to make this as brief a loan as possible, as it is very easy to keep amassing debt, and before you know it, your fledgling business now has a sizable debt load. Not exactly how it needs to start out.
The best way to avoid that scenario is to have a definite plan going in. Know how much you intend to borrow, and endeavor to not go past that number.
Do your best to avoid maximizing credit lines, as this is a red flag to not only that particular credit card company, but to anyone else who happens to view your credit report, and can adversely effect your credit score.
Another key tip is to use this type of money to pay for real goods, such as computers, phones, or other items needed to carry on your business, as opposed to things like salaries.
At the end of the day, you want to have assets you can use. Pay people, and yourself, from the income you receive if at all possible.
Credit card financing can get you from A to B rather easily. Just be sure to keep an eye on the rest of the alphabet that follows!
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Real Estate - Is There Available Money In Your Property?
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