For as long as you can remember you?ve wanted to start your own business, to be your own boss. The idea of creating something from scratch and watching it grow and thrive under your tutelage is enough to gives you chills. You?ve spent years preparing for the day that you could call yourself a proprietor. You?ve taken classes. You?ve worked as employee at businesses similar to the one you dream of owning. You?ve studied demographics. You?ve applied for licenses and permits. Yo…
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For as long as you can remember you?ve wanted to start your own business, to be your own boss. The idea of creating something from scratch and watching it grow and thrive under your tutelage is enough to gives you chills. You?ve spent years preparing for the day that you could call yourself a proprietor. You?ve taken classes. You?ve worked as employee at businesses similar to the one you dream of owning. You?ve studied demographics. You?ve applied for licenses and permits. You?ve been advertising the grand opening for weeks. You?ve hired a team of employees. You thought you were ready for anything, but now, as you stare at the monthly bank statement in your hand you realize that you over looked one small detail. You had no idea how much the chore of getting your business up and off the ground was going to cost.
Looking at the final number on the statement you realize that your dream business going to fail before you even open the doors for the grand opening.
You have a few options. You could beg your parents for a loan. Providing they have enough money it might be a good idea. Most parents are willing to help out and if you fall a little behind they aren?t as likely to shoot you in the kneecaps.
You could apply for a bank loan. While this is a viable option odds are you already have at least one sizeable loan and have also tapped into several additional lines of credit. The other flaw with this plan is that most banks are wary of giving loans for new businesses. Who can blame them? The odds of a new business surviving the first five years are something like two out of five. Many of the owners of these failed businesses have sank most if not all of their personal money into the new business and are forced to declare bankruptcy when the business folds. These are high risk loans for banks.
You could apply for a business credit card.
Why apply for a business credit card?
There are several reasons for a small business that is just getting of its feet to have a business credit card. There is a grace period. While the idea of the interest rate might make a small business owner hesitate, most business credit cards come with a zero percent interest rate for the first twelve months. Since it is nearly impossible to start a business without acquiring debt most business credit cards allow you to transfer a balance from other accounts for as low as five dollars. This is a great option to get out from under a loan that has a higher credit rate. Most credit cards offer free cards for employees to use, this frees the owner to send their employees out for small miscellaneous expenses, like office supplies and meeting with clients without having he hassle of an expense account. In many cases the customer rewards alone are a reason to acquire and use a credit card. Many business credit cards provide travel bonuses that the business can use to help off set some business expenses. Other cards provide a five percent cash back bonus on all purchases.
Run a simple Google search and you?ll quickly be overwhelmed by the sheer number of credit cards that are available for businesses just like yours. It is tempting to apply for the first one that offers a big bonus and not read farther. Doing this would not be a good idea.
There are a few simple things to consider when you?re choosing a business credit card.
The first step in finding the perfect card for your business is a card comparison. Find a website that offers to line all the major credit cards in a row and let you see all their bells and whistles in one place. This will save you the time and headache of approaching each company individually.
Check, double check, and triple check the interest rates. If you look hard enough it?s possible to find a card with an interest rate as low as nine percent. On the other hand there are the ones that charge an interest rate of nineteen to twenty percent. The extra ten percent adds up fast, especially on high ticket items.
Read up on the annual fees. It is not uncommon for a company to charge as much as one hundred and fifty dollars each year simply for the privilege of using their card. Many companies waive this fee but only the first year.
A credit card can help a small business with the staggeringly high start up fees and in some cases are actually more financially rewarding then a bank loan.