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You may be familiar with the Kevin Smith. He is the writer and director of such movies as Clerks, Dogma, and Jay and Silent Bob, to name a few. You may be asking yourself why I am mentioning Kevin Smith in an article regarding funding a new business by use of credit cards. I am mentioning him because his movie Clerks was funded primarily with credit cards. Fortunately, his gamble paid off because he is now a successful figure in the film industry. However, it is important to note that even though Kevin Smith took this gamble and ultimately "hit the jackpot," you should seriously consider the repercussions of using your credit cards to fund your business ventures.

It is true that credit cards can offer you quick cash and big loans with minimal paperwork. However, if your business venture does not become profitable, you will have a large amount of debt and no money with which to pay it back. As a result, you may end up having to file for bankruptcy and thus, your credit score and credit report will both be severely damaged. However, this result is not limited to credit cards. If you default on a bank loan, the same consequences could and probably would occur. If such is the case, why does it matter if you use credit cards or a bank loan to fund your business?

You do not need to fear the credit card debt if your company fails because regardless of the type of loan used to fund the business, the result is the same. The worries will start when and if your business is successful. I can almost guarantee that a credit card interest rate will be higher than a bank loan interest rate. Additionally, because the credit card limits may be lower than the amount of a single bank loan, you will have to borrow against many credit cards. Therefore, if your business succeeds as a result of your credit card borrowings, you are rewarded with high interest rates and payments spread over a number of different credit cards.

As shown by the real life example above, it is possible to achieve success from credit card funding. However, as also shown above, a successful result can also lead to some heavy debt woes. Therefore, consider your options before deciding to participate in this enormous gamble.

Learn more about this author, Marco Angioni II.
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