How do you finance your business growth?
Many entrepreneurs running small and medium sized businesses have found that corporate and personal credit cards can be a viable financing tool. They provide the purchasing power for a small business as it finances the gap between selling their products or services and getting paid for them.
Corporate credit cards invariably have higher spending limits than personal credit cards. While this seems to be a good thing, corporate credit card users should note that some card issuers report their corporate credit activity together with their personal activity, thus distorting their personal credit picture. Looking at their personal credit picture might lead one to think that as an individual they are grossly over-extended — not good for the individual or their business. There is a misconception that registering a corporation somehow limits this business liability, but in most start up situations and for new businesses, a personal guarantee will be required on a corporate card. If the business is registered as a sole proprietorship, the owner and business are one and the same as a legal entity, so this will be reflected in a joint credit report.
Another potential credit card ‘trap’ is that it becomes too easy to use the card and run up what quickly becomes permanent debt in the company. The cards get maxed out and the company is left with a solid core of debt to be serviced on a monthly basis. If the business is growing rapidly there will usually be little opportunity to pay down that credit card debt as the ongoing growth requires more working capital to fuel that growth.
Growth will always demand more capital — the successful entrepreneur is the one who finds alternatives to expensive credit card debt. We have solutions that may work for you. Check out our website link: https://casbmanagementgroup.com/business-financing-types.
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