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Thoughts on business credit?
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Thoughts on business credit?

VPSSoldiersVPSSoldiers Member, Provider

Just curious on you'alls thoughts on a business credit card to help expand your business.

Connor | VPS Soldiers | Plans starting at $3.50/mo

Comments

  • JonchunJonchun Member, Provider

    Why not?

  • @VPSSoldiers said:
    Just curious on you'alls thoughts on a business credit card to help expand your business.

    Depends. If you have an air-tight opportunity, yes. For example, you are dominating in an area and you see an opening in an other one, but your one-time costs to expand are relatively huge. Credit makes sense in that case, because you have a proven model and a clearly defined opportunity. Without those 2 things, I wouldn't take any credit.

  • VPSSoldiersVPSSoldiers Member, Provider

    Jonchun said: Why not?

    I'm personally not a huge fan of credit (but I haven't used it wisely in the past, and its caught up to me) but I also know it has its place...

    @deadbeef said:
    Depends. If you have an air-tight opportunity, yes. For example, you are dominating in an area and you see an opening in an other one, but your one-time costs to expand are relatively huge. Credit makes sense in that case, because you have a proven model and a clearly defined opportunity. Without those 2 things, I wouldn't take any credit.

    More along the lines of a new business with minimal ROI trying to expand just enough to increase ROI (though wouldn't increase for about 6 months after the credit card balance is paid off). It wouldn't be for a recurring fee but rather the initial equipment purchase.

    Connor | VPS Soldiers | Plans starting at $3.50/mo

  • @VPSSoldiers said:
    More along the lines of a new business with minimal ROI trying to expand just enough to increase ROI (though wouldn't increase for about 6 months after the credit card balance is paid off). It wouldn't be for a recurring fee but rather the initial equipment purchase.

    I wouldn't do it, but then again, I'm risk averse. Don't know how credit works in your country, but here you get to have to sign to personal liability for the company loan (unless you're an anonymous [read: big] corp).

  • @VPSSoldiers I would perhaps get a personal credit card rather than business, at 0% for 24 months and then use that... depending on your personal circumstances they are more than happy to give a £2 - 3K limit.

    AboveClouds • UK Company • UK Datacentre • UK Customer Support

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  • VPSSoldiersVPSSoldiers Member, Provider

    @Jacob said:
    VPSSoldiers I would perhaps get a personal credit card rather than business, at 0% for 24 months and then use that... depending on your personal circumstances they are more than happy to give a £2 - 3K limit.

    Rule #1 never mix personal and business accounts.

    Connor | VPS Soldiers | Plans starting at $3.50/mo

  • JacobJacob Member
    edited October 2015

    @VPSSoldiers Well, that entirely depends if you're looking for longterm or short term credit.

    Many businesses won't be able to get credit, or even lease agreements for that matter.

    It's your choice which avenue you venture towards.

    AboveClouds • UK Company • UK Datacentre • UK Customer Support

    High Performance Pure SSD Cloud Hosting with a personal touch

  • I assume you have an accountant because you've said not to mix personal and business accounts.

    Definitely ask him before you take a loan and don't listen to forum hosts and people.

    VPSSoldiers said: Rule #1 never mix personal and business accounts.

    Go give Vultr(referral) a try. | GNU/Linux http://debian.org

  • VirMachVirMach Member, Provider, Top Provider
    edited October 2015

    As @deadbeef said, only if you have an opportunity. Don't just think maxing out a business credit credit card will help you magically expand.

    However, a business credit card is great to have; you can always put your business expenses on it every month and then use the revenue to pay it off every month - gives you more time as well. Get a few percent cash back, helps you keep track of expenses better, and it can help in case you have a bad month.

    Thanked by 1deadbeef
  • VPSSoldiersVPSSoldiers Member, Provider

    I have talked to an accountant (not about this exactly), but I also know that if you end up mixing business / personal you loose some of the protection that a LLC (and I would assume other license types) provides you. E.g. if I were to be mixing my accounts now and I got sued with the whole trademark violation thing it could come back on my personal finances as well as the business finances.

    Connor | VPS Soldiers | Plans starting at $3.50/mo

  • 4n0nx4n0nx Member
    edited October 2015

    It's very likely a bad idea to use a credit card for credit. The interest rate may be much higher than a regular loan..

    Also, these days you get no risk, free venture capital by victims on kickstarter like sites

    Thanked by 1raptorpeanutbuttr

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  • StealthyHostingStealthyHosting Member, Provider

    A good rewards credit card can be great for doing business. Always manage your balance properly and know how much interest you are going to be charged. Never use your business card for personal expenses. We have an AMEX business card that we use for almost all purchases and our datacenter lease. Nothing is better than a few % cashback on hundreds of thousands of dollars :)

    Brian Kearney, Stealthy Hosting/Server Stadium Seattle, WA [AS23033] Skype: StealthyHosting
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  • Jacob said: even lease agreements for that matter

    ???

  • We have a Business credit card. It's very handy for internet purchases and recurring billing. I would never use it for credit purposes though, I always pay my balance fully.

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  • jhjh Member
    edited October 2015

    If it's to expand your business, then a credit card is not the right thing in my opinion. Certainly in the UK, your credit card limit is usually a small % of your income (personal or business) and good deals are harder to find for business cards. Borrowing £3k or so at 15% (just pulling out seemingly average numbers) probably won't do much for a business worth borrowing anything for.

    That said, I'll echo @Jacob's thought that sometimes a personal card makes more sense, e.g. if I buy something on eBay because it's miles cheaper than buying it elsewhere, I can't claim the tax back anyway so I might as well own it personally and get some cashback at the same time. You need to keep a distinction though - in the UK, using a personal card for business means that if HMRC wants to check something, they have reasonable grounds to trawl through your personal finances as well..

  • LicensecartLicensecart Member
    edited October 2015

    It's really good if you can do it however you have to realise, that you need protection and that doesn't come cheap, in the UK we have the Financial Conduct Authority who authorise and regulate credit. That way if the client doesn't pay the credit owed you have the power to get debt collectors and take legal action in court (and the client doesn't have a leg really to stand on). It does vary per country but I wouldn't offer it unless you have that sort of security else someone can get whatever put on their credit and boom get over $1,000 etc and you won't get a cent.

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