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Have you ever wondered if it is possible to finance a business project with credit cards? Actually, it is. Though financing business operation with personal credit cards is a very risky procedure, with some creativity, it can be achieved with success. Nevertheless, you can never be careful enough.

The idea is that credit cards can help you obtain de necessary funds to complete the raising of the start-up capital before the company starts having a positive cash flow. This period of time is essential as it is a critical time for any business. It is the equivalent of the first days of life of a person, it is always better to watch every detail closely then.

Temporary Solution

It is however imperative to understand than neither Master or Visa Credit Cards have been designed for this purpose and thus they don't provide a suitable solution for business financing on a long term basis. And though they can provide an acceptable replacement if no other choice is available they are only a temporary solution.

The use of credit cards for financing a business should be replaced as soon as possible for traditional financial options like loans or lines of credit or new financing programs like leasing arrangements. Once the company has started earning enough money to cover the costs of production and other expenses, credit card financing should cease immediately.

Financing Purposes

There are two situations in which credit card financing is a good alternative for emergency cash flow problems. The first situation is when you need to purchase assets that are necessary for production like telephones, copier, computers, printers, scanners, monitors, security systems, or any other piece of equipment you can think of. Since these products are usually purchased with credit cards, it doesn't hurt at all to do so with your personal card as long as you can afford the resulting monthly payments.

Future revenue is essential to embark in this kind of purchases. As long as you have certainty that you'll be able to generate enough income to pay yourself back in the near future, it is not that risky to use your credit card to purchase those goods, however, it is not the same to purchase personal equipment, than company's equipment which mainly requires a lot more cash.

The second situation where credit cards are usable are working capital or cash-flow needs. Since some banks may extend a grace period on the principal balance, you may have enough time to make the company repay you before the balance is due definitively and you have to start repaying the debt you incurred on behalf of the company.

In any case, you can design a plan to pay for the minimum payments during a period of time with 0% promotional period credit cards. You need to transfer the balance to the next card before the period is over so you can avoid interest payments. If you ran out of 0% APR promotional periods you need to transfer the balance to a low interest rate card and continue making minimum payments till the company can take charge of the debt by repaying you or obtaining a traditional loan or business line of credit.

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