Using Credit Cards to Fund a Start-Up
Q: I have a six-month old startup and am currenltly running out of the cash I raised when I started the business. Should I apply for a bank line of credit or start placing expenses on my corporate credit card?
A: In normal markets, it's usually better to tap a credit line or seek a small-business loan when going into debt to fund a business, because the interest rates you pay or invariably cheaper than the ones on a credit card. But this isn't a normal market, and you may find two problems: your bank might not offer credit at all in this environment, or the interest rate may be prohibitively expensive.
If you can get a good rate and a loan, do it. If not, use the credit card, but use it sparingly and pay it off quickly. And keep an eye out for other sources of capital (venture capital, angel funding, friends and family) that can buy equity and can enjoy some of the payoff when you succeed.