by Tammy Stoner

Created on: May 20, 2007   Last Updated: January 17, 2009

Finding funds to begin a new business, can be accomplished through creative use of credit cards. Funding a new business applying credit cards can be accomplished with careful planning, discipline, and creativity. Most new businesses, do not survive two years, and given this fact, care and discipline must be pursued, to allow the business to survive, and to prevent you from being buried in credit card debt.

Any business that is to survive depends upon cash flow. You must be able to generate enough cash from the business, to manage inventory or payroll, or any unexpected expenses related to operating your new business. When you are just starting out, a customer base has not been developed, and meeting expenses monthly can be challenging. Carefully applying credit cards can provide an answer.

If you chose to borrow the money on credit cards, remember it is borrowed money, and it will need to be paid back. Some credit card companies offer 0 percent interest loans. These are introductory rates established by credit card companies to obtain your business. After 6 months, the interest rate will most likely escalate to much higher rates, so take care to pay them on time, and to pay attention to the fine print, notifying you when the rate will change, and under what circumstances.

Carefully evaluate credit card interest rates, and, switch credit cards prior to the end of the term in which the 0% interest is offered, to another credit card offering 0 percent interest. Just transfer the balance to the new card. Keep repeating the process. This should allow you the ability to gather funds for beginning your business for the first year, at no interest.

Take care when financing a business using credit cards. If you don't pay the card on time, you may find you are faced with extraordinarily high interest rates such as 24%, not to mention late payment charges that can amount to $39.00 for each late payment. However if you do pay this debt back in a timely manner, you will discover a very creative method of finding cash to continue operating, until the business can support itself.

Borrow the money on credit cards for items that will go up in value. Suppose you own a retail store, and you know that every Christmas sales will be higher than the rest of the year. If you need inventory to maximize sales during this time period, by all means apply the credit cards, to purchase inventory in November. By the time the debt is due, you will have generated enough cash to pay back the debt.

Every wealthy business owner has learned to apply other peoples money, to create wealth. This is due to the power of leverage. If you need 10,000.00, and use a credit card to finance the debt, and expect to earn 20,000.00 from the 10,000.00, then you will be able to gain access to 10,000.00 on the interest charged, and will have maximized leverage. If you took the 10,000.00 out of your own pocket, and applied it to earn 20,000.00 then you have not maximized the return on the 10,000.00. You doubled the money, but it cost half of the total to do it. If you borrowed the money, it cost nearly nothing(outside of interest) to generate 20,000.00. The return on the initial investment applying credit cards is much higher, than not applying them.

Due to the power of leverage, personal creativity and discipline, financing a new business can be accomplished with credit cards. Take care in doing this, as this is not "free" money, and does need to be paid back.

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