Financing Your Start Up With A Credit Card

One of he most popular ways to fund a start up company is with the help of credit cards. A credit card gives the entrepreneur easy and fast access to much needed funds while he or she is in the process of building a company. Many of million dollars companies have been started with a simple credit card.

Personal loans from family members and friends are also highly favoured as finance for start up companies.

Cisco Systems, a successful company was founded by Sandy Lerner and Len Bosack and if wasn’t for their personal credit cards they might have never seen the levels of success they found thanks to their fluid funding tool.

Other business success stories are also based on credit card funding such as the story of Google and how Sergey Brin and Larry Page pulled their cards to fund much needed office equipment and computers to get rolling.

Movie lovers also know too well of the any famous directors who had to resort to the practice of funding their celluloid success with the help of a credit card to get off the starting blocks.
Start up funding exposed:

While a personal credit card can be and is a great tool to fund a start up venture it can be a bit of a grey zone because of the legalities involved. These days many banks offer you a business line of credit to fund a business. However, what many entrepreneurs fail to understand is that even these loans will be your personal responsibility in the event of a repayment default.

Unless your business is registered as an incorporated entity you will be made legally responsible for all debts accrued whether you apply for a business line of credit or a business credit card.

The problem for most start ups is that unless they have a guarantor with enough financial clout behind them they won’t be able to incorporate their company in the first place.
Check for exclusions:

One of the first things you should do when looking into start up funding is to see whether some of your personal assets can be excluded from your personal guarantee. Another option is to see whether the loan guaranteed percentage will decline as the business matures.

Never sign credit card contract unless you understand the legal implications of it.

Despite the possible financial implications sometimes entrepreneurs have no other option than to fund their business with a personal credit card. The same applies to personal loans from friends and family. Check what is expected of you and be sure you have a backup plan for the worst case scenario.

Business start ups mustn’t be a financial nightmare before they even take off. With a bit of financial diligence and planning you should be able to make the most of your options.