Business startups are clearly popular with 4.4 million opened in the U.S. during 2020, a 24 percent increase over 2019, according to the Peterson Institute for International Economics. That is remarkable, given the impacts of a global pandemic and a major economic downturn. Yet, one of the challenges for entrepreneurs in startup funding.
Why Do Entrepreneurs Start Businesses
The primary reasons that entrepreneurs start businesses are the appeal of owning their entity and seeking the satisfaction of creating something from the ground up. Most startup owners have some passion that they want to fulfill. And they want the flexibility of being their boss. Last of all, interestingly, is the desire to make money.
Advantages and Disadvantages of Startup Funding with Credit Cards
For some entrepreneurs, the only way to get startup funding is to use credit cards. The advantages of using credit cards include:
• No collateral is needed. So, you don’t have to pledge equipment or mortgage your home.
• No loss of control or sharing of equity. If investors are involved, they will want a share of equity, a voice in decision-making, and a say in the direction of the enterprise. This way, you retain full control.
• Accounting is made easier. Expense tracking is facilitated by the monthly credit card statements. And you can control credit card use among your employees.
• You can likely find a 0% interest credit card for part or all of your first year.
The disadvantages include:
• The credit limits may not be high enough to provide all the startup funding that you need.
• You may risk overextending your ability to pay off the card.
• It merges personal and business debt as well as personal and business credit.
The keys to startup funding success include creating a charge card usage plan and committing to short-term debt.
Seek Expert Funding Assistance to Achieve Your Goals
Contact Aspen Capital Solutions, based in Atlanta, GA for customized financial solutions to meet your needs. We provide a wide range of financial products with financial expertise you can trust.