Using a Business Credit Card to Fund Your Startup

Business credit cards have been around for many years, but have only recently explicitly targeted true entrepreneurs by offering special financing incentives. American Express established the gold standard in the genre of small business credit cards and focused on the business executive with exclusive small business credit card options. But, the business card market has finally taken notice of the backbone of the American economy – the small business sector.

Now, many major credit card issuers like Advanta and Citibank are aggressively going after the small business market with a diverse array of credit card products. These financial services juggernauts are offering everything from rewards, cash back and airline miles to huge initial credit lines with 0% introductory periods.

What isn't explicitly stated in most credit card offer's features is the fact that small business owners can leverage business credit cards for startup capital. These little pieces of plastic can actually be the life blood to fuel and sustain a business startup. Once the financial pump has been primed, revenue from operations can be used to repay these micro-business loans before the finance charges become too onerous.

For example, a small eCommerce startup might need five thousand dollars to buy a computer, pay for a hosting service and buy an initial round of online advertising placements. But once the initial business revenue starts flowing in, the credit card balances can be repaid. And, if the small business credit card used features a no-preset spending limit (i.e. a dynamic credit line) the credit line will increase as larger and larger expenditures are made and then repaid.

Everyone has heard of the brazen independent movie producers that have financed their first film with a wallet load of personal credit cards and lived to brag about it. But many entrepreneurs, while not exactly a risk averse group, a probably a little wary about putting their personal finances into play for launching their ventures. And this is where small business credit cards can come to the rescue.

Beyond mere financing, these types of credit cards can provide a host of other benefits that are critical to small business success. These benefits include expense and revenue tracking and the ability to download statements into business budgeting software applications like Quicken. Expense management can be a make or break proposition for startups, so leveraging this aspect of a business credit card can be vital for long term success.

So, if you are contemplating taking control of your financial future and living out your dreams by launching a business startup, consider the benefits of using a business credit card to fund, track and reward your business activities.

Published: 3/15/2007

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. CreditCardXPO.com recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.

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