It is often the mistakes and hard lessons learned that force us to fight harder for each accomplishment. Therefore, you may have to know the disadvantages of taking out an advance on your business credit cards to find better options for your business to triumph.
So much in business is trial and error. For example, you may initially believe that taking out an advance on your business cards is a good idea. Then you try it and learn that there are too many disadvantages for this practice. Save yourself the time and stress by discovering why it’s a bad idea and finding alternative sources of instant business financing.
What is an Advance on Your Business Credit Cards?
You probably use your business credit card for purchases like supplies, fuel for your vehicles and advertising costs. Still, it’s also possible to use it for other purposes, like a business cash advance. An advance on your business credit cards is essentially using the card to get cash. It’s borrowing against your credit to improve your cash flow.
This is unlike using a debit card, where you are taking money from funds already in your account. You must repay the money to your credit card company if you take an advance on your business credit cards.
In addition, there is usually a transaction fee. You will also be subject to a higher annual percentage rate and limits on how much you can get.
What You Should Do Instead of Taking out an Advance on Your Business Credit Cards
The credit cards used by most companies are actually personal credit cards with your company’s name underneath your name. However, you are personally liable for these credit cards and credit agencies receive reports on all balances. Therefore, if you’ve got a large cash advance out on your credit cards then your personal credit score will go down considerably.
Any type of equipment financing or business bank loan you apply for you will cost you more or will not be approved at all if you don’t have a high credit score. It is much better to get a line of credit from a company like Financing Solutions (www.financingsolutionsnow.com) because they don’t report to credit agencies unless you are in default.
In addition, if you have to close down your business under normal business conditions (for example, not closed down due to fraud or other similar circumstances), Financing Solutions will not hold you personally liable for the balance.
Disadvantages of Small Business Ownership and What You Can Do about Them
Time commitment – most small business owners admit they work harder now than they did when working for someone else. On the contrary, if you start a business doing something you love, it doesn’t really seem like work.
Unfavorable duties – you will undoubtedly have to be a jack-of-all-trades in your business. This can keep you bogged down in mundane tasks. Spend your day focusing only on those initiatives that help you grow and delegate the rest.
Financial risk – sometimes, your business may not even generate enough cash for you to live on. This can lead you to deplete your savings and run the risk of bankruptcy. Instead, get fast business funding from Financing Solutions.