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October 2016
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Financing Your Business With a Credit Card and a Loan
Create a customized financing solution for your business

Combining a business credit card with a loan can be a great move when you�re starting a business or looking for more funding to expand. Added flexibility, security and the ability to combine the two to create a customized financing portfolio are just some of the many reasons why.

Here are some of the benefits you can enjoy by combining a business credit card with a loan.

Fast Money

If you need money quickly, chances are your fastest option is a business credit card. One reason for this is the fact that the application will be decided based on your personal creditworthiness, which may be all you have if you haven�t started your business yet.

�You don�t have to wait until your business has been established for a specific period of time before you apply for a small business credit card,� states Gerri Detweiler in an article for the Time magazine Small Business Startup Guide.

In addition to the fact that you can receive funding before your business plan proves itself to lenders, using a business credit card from the get-go makes it easy to keep your personal and business finances completely separate, which has several advantages.

�For one thing, you�ll find bookkeeping easier, helping you avoid tax-time headaches that can arise when you mingle accounts,� states Detweiler. �And credit cards offered to small business owners often come with rich rewards and generous sign up bonuses.�

With many business opportunities, time can be a key factor. If you apply for a business credit card at the same time or before you submit your loan application, you can be prepared to keep good records and seize early opportunities.

The Ability to Start Slowly and Think Small

While credit cards do offer speed, they can also help you slow down the startup process. Many successful businesses start very small and grow slowly so that they have time to assess risks and fine-tune their business plan. If you can operate from a home office before opening a separate location or can begin selling your products or services online, you may be able to keep costs so small that your personal savings and a credit card are all you need for the first few months. This will even help you gather financial information and demonstrate creditworthiness to bolster your eventual loan application.

Even if your business is already established, you may appreciate the small scale of a business credit card if you need only a small amount of money. Purchasing new equipment can be easily managed with a business credit card, for example, while avoiding the long process of applying for a new loan.

Combining Flexibility With Great Rates

While the flexibility and fast approval of business credit cards make them great tools for business owners, they can�t compete with a business loan when it comes to interest rates.

�Using credit cards to fund a venture is an attractive option � especially for startups that may not have a lot of cash flow,� says the founder of Renters Warehouse and Entrepreneur contributor Brenton Hayden. �Still, using credit cards isn�t without its risks. Should you run into trouble or the business fail to take off as planned, and you�re unable to pay back the balance on time, you�ll be stuck with high interest rates.�

In order to get the best rate and save the most money for your business, major financing should come from either savings or a loan. A business loan from your local financial institution can give you the best interest rate and be the ideal complement to your business credit card.

�While [financial institutions] are often the sources of SBA loans, they also are lenders of conventional loans,� says Business News Daily senior writer Chad Brooks. �The biggest pluses of conventional bank loans are that they carry low interest rates, and because a federal agency is not involved, the approval process can be a little faster.�

When you work with your local financial institution, you can speak directly to experts who know your community well and who can help you arrive at the best combination of financing tools that give you maximum flexibility and a strong foundation for success.


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