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Many new entrepreneurs start out their ventures with poor credit, often because they have not yet had time to develop a business credit history. And without a good credit profile, it can be really tough in today’s economy to get a traditional bank loan for a new business. Fortunately there are several options for fledging companies that can provide some initial funding. For some firms, a business credit card may supply necessary financing, at least until a better score can be established.

A business credit card works much like a personal credit card account, but the maximum limits are often much higher to serve a business’ needs. The upside for a new business owner who has little or poor credit is that they are relatively easy to acquire, and no collateral is required. The loan limit may still be tied to the credit score, but can be bumped up after a several months of timely payments. With a business credit card, firms can access tens of thousands of dollars to fill orders, buy inventory or satisfy any number of business essentials.

The drawbacks of using business credit cards to finance a company include high interest rates and limited capital. Credit cards have some of the highest interest rates around when it comes to borrowing money. If a business owner is unable to payoff the bill each month in full, the interest can add up fast. Traditional bank loans are definitely preferable rate-wise once a business has built better credit. And of course, sometimes the credit card limit is not high enough to fund all of a business’ needs, leaving the owner to scramble for other sources.

Still, a business credit card can provide struggling entrepreneurs with they cash they need at least temporarily until less expensive financing is available.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources