We listened to the most inspiring story about Mahisha Dellinger, the pioneer behind the company CURLS, a natural hair care brand. Today, she is a CEO, an entrepreneur, an author, and a TV host. In 2002, she founded a startup that struggled to find capital to run her fledgling company. Her application was denied after applying for a small business loan despite having exceptional personal credit. She turned to credit cards to bankroll her company until the cash flow allowed.
Mahisha did not have access to a line of credit. She admitted that although this was a significant setback, she grew her company organically using personal credit cards to support it. Fast forward two years, her business crossed the 6-figure mark and, after four years, reached seven figures.
This account and many other stories capture the American Spirit.
It remains a challenging time to start and grow a business today. The issue is made even more so by a lack of funding for startups.
The Credit-Card Landscape for Startups
For startups, the idea of using credit cards to support the business may seem alarming. Weigh your options carefully before deciding this is the best route to funding the company. If you have a relationship with a Banker at your local bank, it would be a good idea to meet and learn what opportunities are available.
If you choose to use credit cards, personal credit cards are easy to use as long as you separate business expenses and keep them all on one card. When you can, the next step would be to secure a business credit card for expenditures. The benefit is that you can protect your personal credit rating and avoid spending the upper limit on your cards. Your business transactions on your business cards will affect only your business credit score.
Using a business credit card also gives you the added benefit of having a track record when you’re ready to apply for a bank loan. Bankers will rate the way you handle your business card and business debts highly on your application form.
If You Really Want or Need To Use Credit Cards for Business
Consider how using them makes the most sense for the organization. Sometimes you may not have a choice when faced with an opportunity to keep growing. Perhaps, use as a tool only when you know you will have the cash flow to replace the expense outlay within 30 days from a client.
There are many options for cards based on your credit standing, including rewards, terms, and rates that fit your needs.