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Wednesday, August 19, 2009

Use of Credit Cards Rises for Business Start-up Financing

Some years back, many business owners and small business entrepreneurs are hesitant about opening up a separate account for their business. But as the years pass, these business owners began to realize the efficiency and importance of a separate business account.

Business credit cards are great tools in helping business owners separate their personal funds from their business finances. While some entrepreneurs used to charge their business expenses on their personal credit cards, this has proven to be a result of confusion especially as the business grows and expenses accumulate.

Today, more and more companies- both large and small- are applying for business credit cards not only to build a separate a business account but to start-up the business as well. Because applying for a business loan can be a time-consuming and more complicated process of acquiring funds, start-up business credit cards provide a better solution to the challenge of putting a brilliant business idea to work.

Of course, this doesn’t mean that a business should altogether dismiss the need of applying for a business loan. Business owners are still encouraged to acquire the more traditional method of business financing once the business has gained its footing. However, small business credit cards gives a newly start-up business the opportunity to move on to its operations without having to wait for a very long time.

Equipment necessary for the business such as computers, fax machine, telephone units, scanners, cash register, printers, machines and other special devices can be purchased in advance to start the operations. Business credit cards are also a great help in purchasing stocks or raw materials that are needed for production. They are also ideal for accommodating unexpectedly large orders from customers. Business credit cards allow a business to deliver these orders on time even if they lack the cash at the moment.

While the business is still waiting for the approval of its loan, it can already start earning revenue out of the sales it produced on the first few months. Cash flow can also be distributed more effectively since there’s no need to rely on this money alone to fund all areas of the business.

There is no doubt that credit cards for businesses provide many advantages. Aside from avoiding cash flow shortage, other benefits include easier accounting and bookkeeping, being able to build a business credit and being able to earn rewards from the expenses charged on the card.

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Despite the risks associated with the wrong credit card use, business owners can make the most out of their business credit cards without getting stuck in debt. The key to using business credit cards successfully is to be responsible in submitting payments on time and to use them only for business purposes. Another important factor is not to maximize the use of the credit limit that is given. Yes, if a business owner learns how to handle his business credit card well, he should have no problem with using it as an aid to the success of the business.

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