Using A Credit Card To Fund Your Business
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Using a Credit Card to Fund Your Business
Overview
More entrepreneurs are turning to personal credit cards to finance their businesses. While this may provide a short-term solution, it can lead to significant financial problems down the line.
Growing Trend
The influx of credit card offers urging you to seize spending power has led many small businesses to rely on personal credit cards for funding. Reports indicate that nearly £2 billion per month is being spent using credit cards, not just for reimbursable business expenses like travel and entertainment, but also for routine operational costs, including company car expenses.
Why It’s Happening
The convenience and availability of credit card funds are enticing. It's almost impossible to visit a store without encountering a credit card promotion. For many small business owners, this option seems preferable to enduring a rigorous loan application process with a bank.
Traditional bank loans often require detailed explanations and collateral, perhaps even your home, to secure approval. In contrast, credit cards can provide quick access to substantial sums?"sometimes up to £50,000?"without such scrutiny.
Consider the Risks
Banks rigorously assess the feasibility of your business plans, which may feel restrictive but serves to protect you from unwise borrowing. This process helps prevent significant debt accumulation by evaluating risks you might not have anticipated.
Choosing a personal credit card for business funding exposes you to personal financial risk. If you can't repay the debt, you might face aggressive collection actions and lose personal property?"a situation much harder to deal with than a declined loan application.
Conclusion
While credit cards offer immediate financial relief, the long-term consequences can be severe. It's crucial to carefully consider your funding options and seek advice when necessary.
Useful Contacts
- [Debt Advice](http://www.adviceguide.org.uk)
- [Credit Card Advice](http://www.creditcards-gb.co.uk)
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