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Starting and growing a small business requires plenty of capital. And yet, without a strong or long business history most lenders are hesitant to loan money to new companies. The result: many fledgling small businesses turn to their credit cards to finance their operations. In fact, the U.S. Small Business Administration reported that 65 percent of small business owners rely on credit cards regularly to provide working capital.

The problem with maxing out personal or business credit card to finance daily operations is that the interest rates can be debilitating. Plus if a business has a hard month and cannot make its minimum payment, its business credit score can take a dive. Here are several tips on how to safely use credit cards without killing your business credit.

Research Your Own Credit Report
You can request a copy of your personal credit report with any of the three major credit-reporting agencies: TransUnion, Experian, and Equifax. Dun & Bradstreet is the agency that reports business credit transactions. By learning what your business credit history looks like you can evaluate whether you have room to keep borrowing or if you need to do some cleanup in order to improve your score and potentially get your spending limits raised. Building a good business credit report is an essential step in securing small business loans with lower interest rates.

Make Timely Payments
Late payments are the surest and quickest way to damage your business credit score. A lower score will lead to fewer loan opportunities. If you find yourself unable to make your monthly payments, it’s time to reassess your business revenue goals. It may be necessary to either cut back on spending or find other boot-strapping measures to finance your business needs until revenue can increase.

Have a Financial Plan
Relying on credit cards should only be a short-term funding solution. Make a plan for how long you will use your credit cards for working capital, how you plan to increase revenue or up your attractiveness to traditional lenders, and have an end date goal for shifting to a new source of business funding.


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