Should you use credit cards to fund your small business?

Donovan Brooks used a credit card to start his business, a financial planning practice that serves millennials. Storyline Financial Planning launched in January 2016, soon after Brooks left his previous job.

“Utilizing the [card] for financing allowed me to launch my business as soon as I left my prior firm,” Brooks says. “It also gave me the flexibility to charge what I needed to at my discretion.”

Brooks used a credit card to launch his business because there wasn’t enough time to save for his initial costs, which included a laptop, a website and membership fees to professional organizations.

(Keep in mind that, while he didn’t have the money on hand at the time, he still had a plan to pay off his balance responsibly and before accruing heavy interest charges.)

So why not simply get a small business loan instead of charging these necessary expenses to a card?

“I initially did some research on traditional small business loans,” explains Brooks, “but in the end, I didn’t want to pay the interest on a loan or go through the loan origination process.”

The card Brooks chose offered a 0% introductory annual percentage rate on purchases and balance transfers for the first 12 months, which allowed him to finance his business start-up costs without paying a fee or interest for borrowing money. After the first year, the APR rose, as is often the case when introductory periods end.

He also says the card offered an initial cash back bonus, which a small business loan would not have provided.

Read the full article here.