Starting a business using credit cards

erhan1996

Hello everyone
In the last months i`ve been thinking to open a business but feels like i am not ready financially
(never ) saved a little but not even 10 % for what i need .
Would you think that financing a new business with money from a credit card would help for the start , or i`m gonna bury myself in debt

Placitasgirl

How would you plan to make the minimum payments/interests payment to the credit card? The start-up costs for a business are so easy to underestimate, and if you have so little in savings behind you it will be so very easy to end up in a serious amount of debt in a very short time.

I'm really not sure anyone here would tell you this was something you should even be considering. With less that 10% of your estimated start up costs available I'd say don't even think about it, it sounds like a short cut to a whole heap of stress and trouble. If you are intent on starting a business save hard and cut your outgoings to maximise your savings pot. You don't mention what type of business you're considering but might there be any incentives/grants/enterprise schemes you could apply for?

[Deleted User]

Don't even think about doing it.

Neil_Jones

erhan1996 wrote: »

Hello everyone
In the last months i`ve been thinking to open a business but feels like i am not ready financially
(never ) saved a little but not even 10 % for what i need .
Would you think that financing a new business with money from a credit card would help for the start , or i`m gonna bury myself in debt

Personally I wouldn't go there if you don't even have 10% of the start-up costs. You need realistically to have some clue of where the money you load on the credit card is going to come from to pay it off, bearing in mind in a lot of new businesses they lose money in the first year and sometimes the second - see pretty much any pitch on Dragon's Den for example.

Don't forget getting going is half the challenge, keeping it going is another. The bills won't stop and it is quite expensive these days to run a "traditional" bricks and mortar shop with your expenses - rent, insurance, electricity, gas, water, maintenance, wages, supplies, petty cash stuff - etc. A figure of at least £1200 a month in outgoings alone is about typical for a shop. If you set up as a sole trader (as opposed to a limited company) and your company can't pay its debts, you'll get chased for them instead. Limited companies work in a different way but the end result if they can't afford their debts is liquidation (and possibly chasing you for them if you do something really stupid).

erhan1996

Thx for clearing my mind , i`m having a great idea but still need to inform myself about all the bits and pieces of it
Maybe a good idea would be to launch a kickstarter when i have the design and prototype ready

jonesMUFCforever

Do you already have credit cards or hoping to get them?

Either way as others have posted you need to make at least the minimum payments on the card (no point coming here in years to come saying the interest is crippling you etc) as well as making enough to live on plus any tax liability.

[Deleted User]

You need to get 50% of the amount needed in savings then approach the bank (with a business plan) to try and get a loan for the rest.

Owain_Moneysaver

erhan1996 wrote: »

financing a new business with money from a credit card would help for the start , or i`m gonna bury myself in debt

Borrowing on a credit card is debt, and usually very expensive debt too.

theburningcat

I can't comment on whether it's the right or the wrong thing for you - it depends on the business model etc.

Before you borrow any money, I would recommend getting an outside source of income (e.g. part time job) so you can pay your bills while your business is still starting up. I would also cut back on as much as humanly possible - move back in with your parents, live on baked beans etc.

I would also think carefully about whether it's the sort of business where you'll need to invest a lot before you see any return (e.g. developing a product and getting patents etc). If it is then I would not do it on borrowed money.

But it's quite a common thing to do - because if you have a good credit history, it can be a very cheap way of getting some startup finance. It's also much, much easier than conventional startup finance options.

I started my company with modest savings, a £2400 0% credit card and a £1800 0% overdraft offer and after a couple of years, it's doing very well.