Most of the entrepreneurs withhold their dreams because of the lack of funding. Are you planning to use your Credit card to start a business? If you are looking for the pro and cons of using a credit card for startups, then you have landed the right kind of web page. In this article, I am going to give you a complete insight regarding the advantages and disadvantages of Credit cards.
What are the pros of credit card funding?
There are many pros when it comes to funding using a credit card. It will stand like support and will minimize your burden of fund collection. It also reduces the challenges that come from other loans. Few of the best advantages are:
- The ability to retain maximum equity
Most of the people who desire to start up their own business will have a line of confidence. They fail to get the insights of overall expensive that idea hit them. The more trouble and challenges you give your company is the more risk you have to face regarding the financial score of the company. It might also contribute to the selling or closing of the company. Having a safe and minimum fund, even if there are low chances of the financial meltdown is exceedingly considerable.
- Low-interest rates
Usually, credit cards come with very low-interest rates. Even though it gives marginal profits to the banks compared to eth personal loan and business loans, almost every bank insists distributing credit cards t eth customers. This is because even people are aware of the consequences and the advantages of credit cards.
- They are bank imposed
Credit cards come with low-interest rates, and most often, they are limited to smaller purchases. It is completely bank imposed and has less burned on the customers. You cannot buy extensive loans over credit cards. Credit cards are friendlier than other types of loans.
What are the cons of credit card funding?
- They cannot act as a security
Credit cards are not for security purposes. It cannot take the place of an asset. Credit cards have their margins and are not entertained to cross them for great financial activities.
- It can damage your financial scores
The credit scores denote the essential impression of the financial industry. A little damage to the credits card business can affect your entire financial performance and opinion. It cannot be reverted since the scores are one time and you do not know how and when it has happened.
- Credit cards are unstable
Credit cards are highly unpredictable. They do not provide stability like liquid cash. The payments made by the credit cards have less weightage than the other means.
Credit cards or loans?
The majority of new businesses will fund their start up costs with a loan, it is very rare that a new business will be granted a business credit card. In order for a business to apply for a credit card, 1 years worth of trading history accounts will be needed. As a new business does not have any trading history, it is likely that no lender will offer a credit card.
Most businesses will use a loan to fund their start up costs. Start up loans can vary in size usually anywhere between £500 – 50,000 although the majority of start up costs are towards the lesser end of the scale. Start up loans can be applied for online with new age lenders, however if you are looking at applying with a bank you will more thna likely need a face to face consultation. Payday Pixie provide UK Loans to start up businesses despite the word ‘payday’ being in their title they also offer loans of up to £50k through another one of their brands.