Starting your own business can be a significant life decision, especially if you’re a first-time entrepreneur chasing your dreams. It’s a decision that involves many great challenges, and one of the biggest ones is securing the money you need to get that business off the ground. Some rely on borrowing from friends and family, while others may prefer going to a financial institution like a bank or a lender to get their business loan. Each businessperson is different, and some may prefer to be entirely self-reliant. They may prefer to fund the pursuit of their dreams all on their own instead of borrowing from other people and taking out expensive loans.

One way to do this is to use a form of credit that you may already have: your own credit cards! Here are a few reasons how your credit cards can help get your business off the ground so you can build your ideas and chase your dream.

Credit Cards Are Easier to Get and Use

Applying for a business loan comes with its own challenges, especially if the business is new and if you’re a first-time entrepreneur. Lenders want to see that your business is viable, and they do that by looking either at a strong business plan or at your good track record. On top of that, they would require you to provide some form of collateral to secure the loan. As a new entrepreneur trying to finance a new business, you may not have some or all of these things yet.

Credit cards offer a way to work around this issue, providing you with the financing you need.

One attractive reason to use credit cards to finance your business is the convenience they provide. If you already have a credit card or two that you can use straight away, you don’t have to worry about any applications. If not, getting one is much simpler than applying for a loan. Better yet, there’s usually very little paperwork involved with applying for a credit card, and you don’t need to provide collateral to secure it. Since the process of applying for a credit card is quite simple, you’ll be able to focus more of your energy and attention on your business ideas.

Autonomy and Ease

When you finance a business without relying on outside investors, you also retain most of your decision-making power. Sometimes, investors will give you their money with strings attached, conditions like wanting to be more involved in your business decision-making. This can make things quite difficult since you’ll be trying to build your business while also pleasing those who invested in it.

When you make use of the financial power you have with credit cards to fund your own business, the decisions you make remain entirely under your control. You’ll be able to do what you want for your business, precisely the way you want to. After all, one of the main reasons people start their businesses is so they can build their dreams exactly the way they want to.

Streamlining Your Finances

For a busy entrepreneur trying to get a business started, credit cards can be a great way to streamline your finances in the early stages. Not only do you need to keep track of all the money that your business spends, but you’ll also need to make sure that your money never runs out so that the business can continue operating.

Firstly, you need to have clear and easy ways to account for every Ringgit that you spend. Figuring out how to do your own accounting or hiring an accountant could be tough to do in the early days of a business, but a credit card can help simplify that process. With online banking, you may find that it’s easier these days to track all your business expenses online. Thanks to your credit card statements, you’ll have a clear paper trail of where all your money goes every month.

More importantly, the reality of business is that all companies have good months and bad months. When experiencing a lousy month with low revenues, entrepreneurs can rely on their credit cards to keep their short-term bills paid. Bridging any financial gaps this way helps you continue operating your company, at least until it’s standing on its own two feet and can pay for itself. Plus, you’ll be able to avoid making late payments which could damage your company’s reputation with its partners and suppliers.

Maximizing Rewards and Benefits

Another positive side effect of channeling your payments through those cards is being able to maximize the rewards and benefits that you get from them. Card issuers can be very competitive, and they’re continually trying to win you over with newer and better benefits. These benefits can be in the form of discounts, rewards, loyalty points, travel benefits and much more! With all those business transactions going through your credit card, your rewards will pile up faster than they would’ve with only your personal spending.

Additionally, using your credit card actively and practicing good payment habits will also improve your overall credit score. Better credit scores will help you in the future when approaching lenders for other financings. They’ll be able to see that you’re creditworthy and that you can be trusted to pay them back.

A Word of Caution

There are a lot of benefits to using a credit card as a tool to finance your new business venture. However, as with any other form of credit, it’s essential to be very responsible with the financial power that it gives you.

You must remember that when you’re using your credit card for business purposes, it’s your personal credit score that’s on the line. If your credit score is affected negatively, you’ll have a tougher time applying for more credit in the future. A lower credit score will end up being a significant problem if you were trying to get a mortgage to buy a home or if you needed a car loan.

When it comes to anything involving your credit score, you should be well-informed about the state of your credit. It’s always a good idea for you to find out what your credit score is and to understand what factors affect it. Doing this is easy! All you have to do is get a MyCTOS Score report to get an overview of your credit health. From there, you’ll be able to understand what factors have affected your credit score so far, such as your past payment behavior and trade reference records. Understanding these factors will help you make better decisions, especially before you start using your credit card to finance your own business.