The main asset which new business need is the finance or capital, as for without capital one cannot start a business. Hence, the basic criteria for a new business to start off is financing It is an uphill task for entrepreneurs to amass finance as its a fact that about 80% of new business head towards failure merely within its very first operational year.
As a result of an increasing commercial financing crisis and shortage of business fund financing, entrepreneurs resolve to credit card financing which means that loans can be sought out through credit cards.This means that loans are given to entrepreneurs based upon future credit card processing activity. Hence, this can also be termed as credit card loans. In recent times this has proven to be most effective and practical sources of arranging cash ,especially for small business owners as the finance required is not too stupendous and the money is available anytime on presenting the card. For credit card loan there is no collateral required, as well as no application fee is required. There is no UCC1 filing required. So this can be considered as an easy way to obtain cash even in this so called credit-crunch scenario.
It's a well known fact that Len Bosack and Sandy Lerner used personal credit cards to get credit card loan and start Cisco Systems. It is also rumored that Larry Page and Sergey Brin's started up Google and was financed by credit cards to get finance so that they could buy the necessary computers and office equipments. Hence it can be said that today’s leaders too resorted to this way.
In this way if an entrepreneur has around 3-4 credit cards, with a credit limit of around 10,000 $ then he can have access to around 30,000-40,000 $.
But there is a dark side of this too as this is an expensive debt with interest rates of around 20 % which is not recommended , because in such a case, the entrepreneur has amassed his credit lines and he may not get additional credits for either his personal use or in case of any emergency, and the repayment terms too are unfavourable.Moreover, this should be avoided as most of the credit card loan issuers are cutting back on given these loans as they tend to be insecure in these shaky economic times.
Hence, it is advised that entrepreneurs should explore more possible ways to fund their business as compared to credit card loans as there may be more better and efficient ways for arranging cash. Hence an entrepreneur must be well aware of the resources he has and there should be no misleading.
