Entrepreneur gets big funding for his startup without any collateral. See how he did it.
Facing trouble in getting funds for your business? Well if it is still in the startup phase then you can use one of the best business credit cards to fund your company. There are many business owners which find this to be risky, but if you do it correctly, you would not have to face any sort of problems or go through a default.
Before you actually start using a business credit card, be sure to choose a reputed name like American Express, Bank Of America or Capital One business card. These cards offer you many features which make your payments easier. Moreover if you pay the full monthly amount within the grace period, no interest will be incurred. Other than this, for every purchase that you make, you earn reward points. These can later be used for any of the frequent promotional offers.
While you can use a business credit card, be sure to do this the initial days. As soon as you, replace this source with better funds such as bank finance program or leasing arrangements. As a guideline, a good time to switch to another funding source is when your company reaches the break even point, and your monthly expenses start covering the basic operational costs.
Several small business owners often use business credit cards for asset acquisition. This implies that you use a business card to buy tools which are needed for smooth operations in your company. The list can include any equipment such as phones, fax machines, personal computers, printers, mobile phones and the like. Using a credit card to buy these items would not burden you with debt, and you will be able to pay it off in a relatively short time, once you start earning profits.
Weigh your utilization of operational equipment and the expected games. If revenues are being earned every quarter, so even with a 15% interest rate, you might only be paying about 7% more than the actual price. This value is true only if you pay the balance within six to seven months. If you take longer than this, you would end up paying more than 40% of the original amounts. So the trick is to pay the remaining balance after you receive the first few revenues.
You can also use a business card for your cash flow management or working capital. Even in this case, the loan is easy to pay off if you use a few strategies or avail specific features. As an example, when you swipe the plastic to purchase COGS, your bank may give you an extension in the grace period. Also if your financial agency synchronizes your account with the buyer, you may be permitted a longer grace period.
If you cannot pay within the grace period, carry the balance amount for around three months, and only make minimum payments. The interest amounts incurred would not be that high this way. However, when your customs start paying you, be sure to pay your credit card balance as well.
Compare Top Business Credit Cards