There are very few sources of capital for a small business and this is why financing business using credit cards has become so popular. It saves the small business owner the dreary hassle of finding a good bank loan or borrowing from friends. It is also easy to pay back credit card debt within a short period of time compared top servicing a bank loan. But what are the real advantages of financing business using credit cards?
- When you finance your business using credit cards, it is a good chance to build your credit rating. A good credit rating is very efficient because it helps you access more financial support from banks and other institutions. This also gives you a lot of credibility with individual lenders
- As noted earlier, financing your business using credit cards is easier than acquiring a regular bank loan. There is a lot of red tape involved when you want to get a bank loan and this will often deter you. With a credit card loan, you do not need a guarantor and this perfectly ensures your financial privacy.
- There are many reward points that can be gained when you repay your credit card debt. By financing your business using credit cards, you can collect many reward points which you can then use to procure business assets or provide for other business necessities such as hotels or airline travel.
- Financing your business using credit cards is very handy because you can manage debts between two credit cards. This makes it easier to service the loans at any one time not to mention the positive credit ratings gained.
There are two main methods of financing your business using credit cards;
- You can use credit cards to acquire assets required to run the business. Such assets include fax machines, office furniture, computers among others.
- You may also use your credit cards as working capital or for purposes of cash flow management.
A credit card is a subtle means of business financing and can be the solution for many small business owners who are in a rut on where to get funds. Banks might have locked small businesses out of loan access but credit cards can certainly solve the problem of startup capital for many small business owners.