There are a few things one should consider when it comes to debt based financing. Start with credit cards.
Credit cards are one form of funding option that are easily accessible to founders and small businesses. They tend to come with higher interest rates, however, a very large % of entrepreneurs get started with credit card funding.
Benefits of Credit Cards:
1. High Approval Rating
2. Fast Access to Capital
3. Most are Unsecured
4. Protections available for Purchases
5. Rewards
6. Build Business & Personal Credit
Downsides to Credit Cards:
1. Tend to Have High Interest Rates
2. Generally Lower Amounts of Capital Available
Types of Credit Cards:
1. Business Credit Card
2. Personal Credit Card
Whatโs different between a personal card and a small business card?
While many small business cards will still require a personal guarantee, the benefits of a small business focused card can be handsome. Many cards, such as the Capital One Spark Card below, give rewards for most business expense categories.
Over time, these benefits can add up. In fact, many small business owners will use American Express cards specifically for the travel perks it obtains them simply running normal business expenses through the card.
If you are the customer of a large bank already, such as Chase, itโs worthwhile exploring the cards they offer as well. If you have a long term stable relationship with them, youโll often get favorable rates and qualify for special rewards.
Recommended Small Business Credit Cards
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