Business Credit Cards and Business Debt – A Dangerous Combination

Business Credit Cards and Business Debt – A Dangerous Combination

Business Credit Cards and Business Debt – A Dangerous Combination Linda Adams

Does your business rely on credit cards for working capital? A recent study conducted by the Ewing Marion Kauffman Foundation shows that almost 60% of small businesses relied on credit cards to provide funding for operation during their first year. The study concluded that reliance on credit cards to finance the early years increased the likelihood that a business would be in the 50% of startups that failed within 4 years.

Amazingly even a debt as small as $1000 made a significant difference in a company’s ability to survive past the 5 year mark. The pattern for credit card use show an increase in debt over the first 5 years of operation. It is those companies that start to pay down that debt by the end of their 4th year or so that are the ones to succeed. The extra burden of paying off the credit debt is often too much for some young companies who might otherwise have succeeded.

The increased use of credit cards for small businesses is a result of the ease in which cards were obtained even up to 2 years ago. They are easier to get than business loans or lines of credit… Of course there are many other factors that impact a business’ ability to make in these tough economic times, but the use of credit, even in small amounts, early on seem to take their toll.

<p>Unfortunately, the new laws that recently went into effect for personal credit cards do not impact the business credit card industry. This report reinforces the need for the same kind of reforms for the users of business credit as there are now for personal credit. As I mentioned in a previous Ezine article from June, if you use your personal cards for business and have more than a $25,000 limit with a high balance, your personal card may be viewed as a business card and exempt from the personal credit card laws.

Are you still using wither personal or business credit cards for your business? Are you able to pay them off or are you running an increasingly large balance each month? Keep yourself out of that 50% who go under by making a conscious effort to decrease you dependence on credit cards for things you can pay cash for. Work to decrease those balances and make sure you don’t lose your shirt!

Linda Adams is an innovative and seasoned facilitator/educator with more than 20 years experience designing and implementing programs for audiences of all ages. She is dedicated to helping others realize how important their credit is to every facet of their lives. Visit her websitehttp://www.cleancreditqueen.com for more educational articles and go to http://www.cleancreditqueen.com/navbar1/products.html for a list of products to help you take charge of your credit situation.

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Small Business Credit Cards – How to Benefit from Them.

June 5th, 2009 | Posted in Small Business Credit Card

Small business credit cards will save you a fortune..

In time and money as well! We all know time is money right? Well saving those precious minutes, hours and seconds is exactly what small business credit cards can do for you. In addition to this small business credit cards supply much better benefits than regular credit cards, making sure more money stays in your pocket.

The IRS demands that you separate personal expenses from business expenses. Now, you can see that using different credit cards for personal and business makes perfect sense right? Now that you think about it I guess it might even feel obvious.

Instead of plowing through hundreds of lines of different purchases and singling out which is which, simply get two completely different reports. They will be completely separated and you will have two different, separate bank accounts.

Even if you do not own a small business, a small business card should be used when traveling for your company, or making purchases on behalf of your employer online.

But what’s different about having one small business credit card and one regular?
The main purpose of having a small business credit card is to save money. They offer neat benefits such as lower annual percentage rates, larger credit lines than normal and last but not least the incredibly convenient prolonged grace period.

How does this save you money? Well, you pay less, you can keep the debt without debt increase for a longer period of time, and you pay less interest when you finally have to.

It’s not that easy.
Although it sounds easy, it’s not the effort equivalent of taking a step, or clicking a single link. Acquiring the perfect small business credit card is the tricky part of the solution, of course learning about the cards themselves are not exactly half the way.

There are many ways to start searching for the right credit card. Google, or use your favorite search engine, and search for the term “small business credit cards”. Slowly work your way through each and every of the significant looking results, separate the honest from the self serving recommendations, check each and every feature and benefit of the different programs and calculate what works best for you.

Or, you can quickly find out what people recommend, check the numbers of those major and/or minor credit card providers, quickly find out which would be best for you, verify that their service is on the right side of the law and that their licenses and other legal information is correct.

Find some excellent recommendations at
cardratings.com and
bankrate.

One quick step on the road to complete 100% verification of the legibility of the credit card provider, is to simply search for “[credit card provider] complaint” or “[credit card provider] is a scam”. If there are many recommendations and there are signs that it has been around for quite some time, you can proceed.

But make sure you proceed with caution, if anything causes you to be the least bit suspicious, search harder, ask other people, check databases that store complaints and confirmed scams for the provider’s name. Only when you are completely sure proceed, order the credit card and prepare for a lifetime of savings, in time and money.