Financing small businesses…with credit cards

by Trivirus

I’m aware most of you aren’t self-employed or small business owners, but understand I’m not a fan of the system either. I’m just trying to “play by the rules” because, last I checked, there’s no revolution going on, and making a living for myself is, you know, slightly important. So please don’t inject politics into this discussion, I know the capitalist system sucks, etc.

For the 5-8 readers who might possibly benefit from this knowledge, I ask you that you read about my experiences and provide feedback. For the rest of you, think of it as entertainment.

The #1 issue for someone getting up and running (Whether you’re starting an ecommerce store, a consulting firm, or whatever) is obviously funding, which as I pointed out is mandatory. If you don’t plan on spending a minimum of $5000 for the first 6 months you’ve already lost.

If you don’t have savings or don’t WANT to tap your savings (absolutely understandable), credit cards are the best way to go.

Credit cards have 4 excellent features compared to other options (private equity, SBA loans, begging family, etc.):

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1) Many of them have 0% intro APR, meaning no interest on debt for like a year. You also only need to make the minimum payment which is like $25-40 per month.

2) The process is largely automated. Yes, you have to speak with a rep because they’re deathly afraid of fraud, but if you “exaggerate” (wink wink) the amount of revenue your “business” receives, as well as your yearly “income,” you can easily get a credit line of $5K or more per card.

3) If you happen to get stuck in a situation where revenue isn’t coming in for a couple months and debt is growing, it’s not the end of the world. Whereas if you take out a business loan, you make monthly payments based on the total amount you borrowed, regardless if you’re actively using it or not.

4) Most credit cards are unsecured – if you declare bankruptcy for your business, your personal assets won’t be seized and sold off. Yes, it’ll kill your credit score, but it’s better than slaving away for a pittance every day. (And credit scores can be rebuilt in anywhere from 3-7 years)

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Great options:

Capital One – approved my application even though I’ve only been business for like what? 2 months? lol

American Express – same, very quick and speedy process.

Mediocre:

Chase – pretty strict criteria, esp 5/24 (can’t have applied to more than 5 CC’s in the past 2 years, or else auto reject). Looks like they are still haunted by the moochers who cost them billions back in 2007 – 2009 (and by moochers I am obviously referring to Wall Street)

Bank of America – same with Chase

Avoid like the plague:

Wells Fargo – bad, don’t bother.

State Farm – atrocious, don’t bother.

I wanted to go more in depth on other options but I think with a little understanding you’ll see why a line of credit beats every option out there, unless you plan on “going Facebook” (good luck with that) or something.

 

 

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