Starting your own small business is perhaps one of the most significant decisions you’ll ever make. One of the things you need to consider for it is how you’ll be financing your business. Of course, saving money for capital would be your best option. But let’s face it, not everyone has the means to save up enough money for a business. Your best bet is to rely on other financing options like using your credit card or taking out a small business loan. Here’s what you need t know about them:
Small Business Credit Cards
If you have a credit card that you use for purchases, you can utilize it to help you get the funding you need for your business, especially when dealing with large business expenses. Business credit cards are specifically designed to help fund small to medium-sized businesses. These business credit issuers rely on your business credit report to determine if you will be granted credit and how much you will receive. So how exactly do you do this?
It all starts with building business credit through budgeting funds appropriately. Every business has its own day-to-day expenses, and using your credit card wisely will help you deal with those expenses. You just have to remember to keep your credit utilization low and make all your payments on time.
Advantages of Small Business Credit Cards
Having a small business credit card in the right hands can be one of the most reliable financial tools for any entrepreneur. Using a credit card to pay for your business expenses does have its own advantages, such as:
- Managing your cash flow more effectively by giving you 30 days to pay off expenses without interest.
- Separating your personal expenses from your business expenses
- Taking advantage of the rewards system of most credit card companies like cashback promos and reward points.
- Gaining the ability to monitor and control employee spending with employee cards that all earn rewards and are tied to the same account.
- Having the chance to pay off your startup costs with a 0% APR offer.
Small Business Loans
Aside from using credit cards, taking out a loan is one of the most reliable ways to finance your business expenses. A small business loan allows you to access capital even before your revenue streams start flowing. It’s also a great way to build business credit, just like using a credit card. In a way, it also functions similarly as a credit card as it also requires the right amount of discipline to use it.
Advantages of Small Business Loans
Loans may just be the single easiest way to get the money you need. It’s basically a reliable way of injecting cash into your business with just about the same amount of risks as applying for a business credit card. You can use a small business loan in a number of ways, such as:
- Investing in a company vehicle.
- Using the money to hire more people.
- Refinancing any existing debt.
- Buying inventory or equipment for your business.
In order to keep your business operations running smoothly, you need to have enough start-up funds to jumpstart your business. This guide shows how credit cards and loans are two different but equally viable options of generating funding for your business.
Porter Capital offers working capital solutions to businesses all over the country. We work with companies from various industries through invoice factoring and asset-based lending. Our flexible financing solutions are precisely what every small business needs to get working capital loans in Alabama. Apply now to get instant funding for your business.