In my recent blog, I talked about some of the benefits of using business credit, especially when compared with personal credit or even business loans.
There’s a lot you can do with business credit, and we’ll specifically look at these three things:
Debt consolidation
Investments
Lastly, we’ll look at the number one mistake people make when funding or scaling their business.
3 Things You Can Do with Business Credit
1. Fund a new business or scale a current business
One of the major things you can do with business credit is funding or scaling your current business.
As any business owner will tell you, the lifeline of any business is your cashflow.
And a major reason why most people don’t start a business is the lack of capital.
However, with a 0% business credit card, you have maximum flexibility and the ability to start things, something that you wouldn’t be able to do without the funds.
As mentioned in my previous blog, when you use a business card to fund a business, you can use balance transfers to get 0% interest for 12-60 months.
You also get:
Extremely low minimum monthly payments
The ability to pull cash from your card
These are things that you just can’t do on the personal side.
2. Debt consolidation
Another thing you can do with business credit is to consolidate your debit, especially any personal debit you might have.
This is a fantastic way to pay off personal credit balances you may have, using the cash from a 0% business credit card.
I’ve mentioned before that keeping the personal side of your credit in good standing is what allows you to access business credit, along with other perks.
3. Investments
Investing is a great way to make passive income, but there is of course risk involved.
By using business credit, you have 0% that allows you to take bigger investment risks and thanks to balance transfers, you can extend the time to pay the money back.
This can allow you to invest in the stock market or in crypto currency with your own liquidity, while starting or funding a business on 0% business credit.
A few things that you can invest in with a return on investment (ROI) before you pay any interest include:
Amazon automation
Fix and flip real estate
Live events
Product inventory for bigger sales
The 2 Mistakes to Avoid When Funding or Scaling a Business
As mentioned above, one of the first things you can do with business credit is to fund or scale a new business. This also extends to investing in that business, with products or marketing.
However, one of the worst mistakes people make when it comes to funding a business is using your personal credit card.
Guys, this is a horrible idea for a lot of reasons:
This is the quickest way to ruin your credit. As you invest more in your business, your card utilization goes up, which negatively affects your credit score.
With your credit score tanked from the high utilization of the above, this actually bars you from getting new cards or even better cards.
Personal credit cards have higher rates versus business credit cards.
Another big mistake people make is funding their business with a personal loan. Just like using personal credit, this will end up hurting you in both personal and business:
You are automatically denied for a personal loan if you check the ‘business’ option. Banks do not want you to use personal loans for business.
Personal loans have higher APR% that can start immediately, versus a grace period (like 6-12 months) you would get using a business credit card.
Personal loans have very high minimum payments.
Tax liability and asset protection issues with personal loans
Again, using personal loans or credit cards to fund, start, or scale a business just doesn’t make sense and worse, ends up hurting your personal credit in the long run.
Business credit is a far better way to reap the benefits of 0% interest, while pursuing your business goals.
If you’d like to learn more about getting and using business credit, join the Credit Stacking community.