Because such a large segment of the population is now unemployed or underemployed, many have thought about starting their own business. Most businesses need some type of working capital for supplies, advertising or for license fees. As an entrepreneur, many do not have access to investors for their business ideas or plan so the next best “investor” is yourself, using your personal credit card to fund the new start up business. This article discusses the pros and cons of whether you want to rely upon your personal credit cards to fund your business.
For many, using their credit cards is the only way that they can get their business off the ground. However, you really need to watch whether you can afford this type of financing. If you are unable to pay off the balance on the card, you will incur interest charges, and sometimes at a very high interest rate of 28% or more. Before relying on luck as to whether you will have enough clients to pay for next month’s credit card bill, I suggest that you explore getting a personal line of credit. Many credit card companies, banks and credit unions are offering lines of credit these days…and a majority of them will have better interest rate terms than 20% a month. If the business plan doesn’t work out, then talk to a debt settlement attorney who can help you negotiate a reduction in the debt owed on the credit line, or on those credit cards. It is better to have tried and failed than to never have tried at all.