Financing Your Small Business With Plastic: a Capital Idea?
When operating a business you handle expenses with cash or credit. Credit generally comes through loans or other types of short term financing. However, many small business owners are now dipping into their business credit cards to fund business operation. Figuring out when it makes sense to use credit cards in your business -- and how best to use them -- can be confusing. You need to understand your cash flows, when they occur, and the certainty with which they occur just to name a few. Fox Business continues, “Like many founders of startup companies, Scott Yates didn't have a line of credit from a bank to smooth out financial bumps when he launched MyTrafficNews.com in Denver in 2001 to help commuters stay aware of driving conditions.
So Yates sometimes tapped his credit cards to cover routine office expenses and tackle more urgent situations -- such as making payroll when a client was late sending in a check. "At the maximum, I had maybe $20,000 in debt," says Yates, who built the company's revenues to about $250,000. He sold the company to Traffic.com in 2006. Many business owners, like Yates, see credit card financing as a tool that can be handy in the right circumstances. In its 2011 Year-End Economic Report, the National Small Business Association found that about 33% of small businesses had used credit card financing in the past 12 months to meet their capital needs. Credit cards ranked the third most commonly used source of capital financing, behind only bank loans and the earnings of the business…”
Source - Fox Business