Financing on Credit Cards?

A few bloggers noted this week that they’ve gotten into trouble using credit cards to launch their businesses or finance expansion. This is actually a fairly common problem, caused in our opinon by not having a good grip on your business plan, and how much money the launch or expansion will take under the worst circumstances. For example, one of our Solutions Forum clients just got into financial trouble when the City tore up the street in front on his restaurant, cutting his business by 50%. And there wasn’t enough cash limit on their credit cards to keep going. Fortunately, we arranged a takeover by another, larger company with cash resources, and the street is almost done, so they’ll make it. This is one option for you: part of something is better than 100% of nothing.

But there some other common sense things you can do:

1. Credit card interest rates in the US are 20-30%….does your project pencil out under those terms?

2. If the plan doesn’t pencil out, can you go to friends and family? (They should ask you for a plan of repayment, however much they love you)

3. Have you downloaded one of our business plan templates? These templates will force your thinking into financial terms, rather than just emotional terms. You should really do this before going to credit cards, or any other lending source.

4. Rule out banks under most circumstances. At least in the US, they’re only lending to larger borrowers. No startups, unless they’re well collateralized.

5. Shop the crowdfunding sites. There are several besides; we’re going to do a blogpost on them in the near future.

6. Take our course A11 on Funding a New Business or Alternate Funding for Established Businesses….they’re more than worth the $29, and we refund your money if you don’t think so.

We hope this helps.


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