Get Your Business Funded: Creative Methods for Getting the Money You Need

Credit Cards and Your Business

Pop quiz! What do you think are the two most common funding methods entrepreneurs use when starting their ventures? If you said “friends and family” and “credit cards,” then congratulations! You get to pass Go and collect $200 (or maybe $20,000). According to a recent survey by the Pioneer Institute, those two funding sources are the most popular startup financing strategies. And it is not hard to see why. Friends and family members usually offer very easy terms, and credit cards are readily available.

In fact, there are a lot of great things to be said about using a credit card to fund your business. You do not need to show your business plan to a bank and get them to sign off on it and you do not need to convince an investor that yours is the best idea since sliced bread. You don't have to barter away equity in your company and you don't have to be turned down by people who don't get you. You can use the cards when and where you like and to the extent you can afford. So it is not surprising that credit cards are a popular choice.

The important thing, however, is to use them wisely. Whether you use your own credit or that of your business usually depends upon your situation and needs. Startups typically have no business credit so the entrepreneur is forced to use his or her own credit to fund the business. More mature companies will likely have a credit history and, as such, using a business credit card is more doable. In any case, it's a better ...