Credit Cards for Startup Capital?
There are different bootstrapping options available to raise capital for our startup ventures. One of the methods is the use of credit cards. Startup Journal reports that this approach has gained popularity among entrepreneurs.
Card spending by small businesses on tax payments and preparation alone jumped by 80% in the 12 months ended February 2007, according to a report by Visa USA, based on data about spending on Visa cards by 600 small businesses during that period.
Now you’re wondering if this method is a practical solution to your startup needs. The answer depends on your objective.
When used to temporarily fill your financial gap, the answer is YES. Since many credit cards are not designed for small businesses, using this method is very risky. So, it must be used sparingly and only as a temporary solution to your problems.
Entrepreneurs usually resort to credit cards after being turned down by banks or other traditional lending institutions. Once you recover from your cash flow problem, try asking your local banks again for loans and refrain from using your credit card this time.
