Finance your Business Using Business Credit Cards

Starting up a new business and short of finances???? Use your credit card. 

A lot many start-ups use credit cards as a means of supportive finance for their businesses. One of the world’s biggest corporations, Google, was also initially funded by credit cards. Mr. Sergey Brin and Larry Page, entrepreneurs of Google, utilized the entire limit of their credit cards for buying second hand computers and open source software. Though they cannot be used as the only means of financing for your start-up, they can buy a couple of important things that your office might need. 

There are two kinds of cards you can use to finance your start-up – personal credit cards or business credit cards. Financing through personal credit card would mean, you buy office stuff from your retail credit card and pay the bills when you can. This can be done in the case when a business is too young to get a business credit card.  

Aditya Basu, the founder of Xtreme TV, who started his business in 2003, used his credit cards as one of the sources of generating his seed fund. “Start-ups are most of the time short of cash. So to buy things such as computers and printers one can use credit cards. Most of us start as proprietors so our needs are also limited to basic business requirements.” 

But with the concept picking up, commercial banks have also started issuing plastic money for the purpose of buying for business. These are called business credit cards, especially tailored for the needs of small businesses and self-employed people. Most of the private banks like ICICI, HDFC, Citibank issue business credit cards for the purpose.  

“Business credit card is different from the retail credit card in several aspects. By consolidating all the business expenses on this card one can control the overall expenses incurred,” said an executive from the Citibank bank.

Talking about the benefits that a card holder gets on a business card, an executive from the ICICI bank said, “Another advantage is that most business cardholders get discounts on office supplies, stationery, furniture, machines, travel tickets, hotel bookings etc.”

“A business card adds value to your business. The higher limit for most of the business cards is upto Rs 10 lakh. The limit for your card will be fixed depending on your income proof,” said an executive from the HDFC bank.

Business cards are generally used for last minute purchases or unexpected expenses, such as a new computer, for short-term expenses you'll be able to repay quickly. They are also used to control cash flow, like when you want to isolate all travel and entertainment expenses on a certain piece of plastic to keep cash from trickling out of another account.  

To conclude, an entrepreneur should carefully shop for a business credit card with proper understanding of the interest rates and fee structures. In addition managing credit scores in a proper manner with a good prepayment plan will surely lead the business to success.