When you need money fast, and banks are turning you down because either you don't have enough time in business, your credit score is subpar, or the revenue just isn't there, there is the temptation to utilize a small business credit card. The money is immediate and super easy to access, right?
The problem with going this particular route however, is that there are a number of pitfalls and traps associated with small business credit cards that can ultimately send you down the path of even more financial problems.
At First Union, we frequently work with small businesses in just this situation. They need money immediately and not wanting to endure the endless bank application process or worried they won't qualify when all is said and done, they turn to us. We offer a custom tailored loan, merchant cash advance, and line of credit programs that you can actually qualify for and which deliver the money fast! This way, you've prevented yourself from having to use that dreaded credit card.
Below are a few of the reasons to avoid taking out the money you need with a business card.
Interest rates. While there are short term loan programs for instance that have higher rates, these are nothing compared with what you're most likely going to end up paying on a credit card purchase or cash advance over time. The APR can escalate quickly, especially if you don't pay it back the right way.
Credit Scores. One of the reasons the bank won't qualify you is because of your FICO score. Well, if you take out a substantial amount on a credit card and then pay it back slowly, or worse default, your credit score is going to take a major hit.
Your own liability. The credit card is generally issued to you, which means you are thus personally liable, which means if you can't pay or default in some way, you are going to be penalized, not necessarily the business.
We would love to help you assess your financing needs and come up with the best program possible—before you resort to credit cards. Call today and let us help your business thrive!