Is it true to use a credit card for business or business capital? The answer is not absolutely wrong and is not absolutely true, depending on the situation and conditions. Do not rush to make decisions, consider first the disadvantages of using a credit card for business capital or business.
Is it High Risk, Use a credit card for Business Capital or Business?
Running a business will certainly always be synonymous with a number of capital, even though the type of business that you will run is only small scale. Often capital becomes an obstacle for most prospective entrepreneurs. Are you feeling this way too?
Speaking of business capital, there are actually two sources that you can consider, namely money yourself or other people’s money (OPM ). What if the money we have cannot meet 100% of capital? Inevitably, you have to use other people’s money. Some other types of money:
Other People Money, Company Stock / Ownership Scheme
If you choose this option, you have to find investors to fund your business. Instead, you have to give some ownership to investors.
Other People Money, Debt / Loan Schemes
If you choose the second option, then you have to find a loan source. There are several loan sources, such as:
- Loans to known people: parents, siblings, close friends or relatives.
- Loan from the supplier : You ask for a consignment system or take the goods first, pay after the sale. The principle is that you ask for a tempo item or a reverse payment to the seller.
- Loans from the buyer ( buyer ): You can start a business with a pre order system. For example, message buyers design clothes and pay first and then you have the capital to produce clothes.
- Loans to banks / lending institutions: can be investment loans, business loans, people’s business loans , unsecured loans (KTA), credit cards. Let’s discuss further about using a credit card for business capital.
Credit Card for Business Capital or Business
Many people are forcing credit cards for business capital, because of easy requirements. If you want to apply for people’s business credit (KUR), then you need to complete the legality documents for KTP, KK, NPWP, SIUP (Trade Business License), SKDU (Certificate of Business Domicile), photocopy of the account for the last 6 months. On the other hand there is a price that you have to pay, which is a fairly large credit card interest. Here are the considerations you should think about before using a credit card for business / business capital:
# 1 Credit Application Requirements
Before deciding to use a credit card for business capital, make sure you already understand the terms and conditions that apply. Do not let your intention to be able to generate a number of benefits from using a credit card, it will end up with a number of losses / debts that are not covered later.
# 2 Business Feasibility
Not all businesses can be capitalized using a credit card. You need to conduct a business feasibility test, before deciding to use a credit card for business capital. As an example:
If you are still unsure of your decision to use a credit card for business capital, please leave a question in the comments column. Our financial planner will help explain.
# 3 Schemes Used
- How much interest is your credit card charged?
- How will the bank calculate the time for payment of the card?
- What date is the credit card payment?
- How do you pay credit cards? Can it be through internet banking, must go to an ATM or have to pay through a bank?
Things like this are also very important for you to look at from the start, because just a little wrong, then a number of losses will come to your finances. Regarding this maturity date, you also need to take into account the ability of funds available in your business.
Examples of fatal errors:
- Some of your customers pay every 26th.
- Your credit card bill is paid every 18th.
This condition is a high risk, because you may be experiencing cash flow difficulties (cash flow).
On a credit card, you are only one day late in making a payment, then a number of these bills will be directly charged interest and late fees. For this reason, a healthy cash flow will also be needed to maximize the use of your credit card.
# 4 High Commitment and Discipline
Similar to various other credit facilities that are disbursed by banks, credit cards are also a facility for the amount of debt that you get from them. It is very important for you to always remember this well, so that you can use the credit card facilities that you have on target.
If you have decided to use your credit card as business capital, then make sure you have a strong commitment to avoid various other uses that are consumptive, such as shopping and various other needs outside of the business you are running. By carrying out this discipline and commitment, the use of credit cards will be directed and not messy. You will also find it easier to allocate some of your business funds / income to pay a number of bills that are specifically used as business capital.
Credit Cards Are Basically Not Made For Business Capital
Basically, the effectiveness or failure of the use of credit cards as business capital will greatly depend on how you manage the credit card. If it turns out that you are able to do it with full calculation and also the right consideration, then this can bring good and maximum benefits in the business that you will run.
Although using credit card debt as business capital is a common thing, this is still worth considering again by looking at a few points above.
Have you ever experienced problems, use credit cards for business capital?