04 16 2015

Do Not Use Credit Cards to Finance Business Expansion

04 16 2015

Don’t Use Credit Cards To Fund Expansion

When everything comes together and your small business is in the midst of growth, everything seems to be looking up. But sometimes even your business cloud nine needs to be propped up by a small business loan.

But as always, small business owners have to stay grounded in the day-to-day operation of their business, and expenditures to fuel and sustain growth are a hard reality. Many times, getting the financing to start their small business is challenge enough for many owners, let alone securing the funds for their growth. In such times, many may take the strategy of using credit cards – widely available and promoted – to cover their costs.

However, this carries many risks owners should be aware of, because unless your business is incorporated and you are personally removed, maxing out credit cards has many pitfalls:

  • Damage to personal credit score: Credit utilization rate is one of the most important factors that determines a credit score as measured by major reporting bureaus. It determines about 30 percent of your score. So when an owner needs to max out cards because of operational expenses, credit utilization rate is wildly skewed and can lead to negative impacts on credit score.
  • Triggering of penalties: Maxing a card is risky because if a single payment on a maxed card is defaulted on as a result of reaching the limit, the credit card issuer is able to kick in the penalty rate. This penalty rate could raise your interest rate to its highest possible level under the terms of the agreement, usually 30 percent.
  • Poor financial habits: While it may prove useful in the moment, relying on credit cards to cover expenses forms bad spending habits in small business owners. Racking up bills and statements can dig a deep hole of debt, further increasing the risk of default and perpetually falling behind. A high credit utilization rate may also reflect poorly in the view of traditional lenders.

Where working capital can help

In the case of small business owners who do not know where to turn for financing, alternative lending options stand above others. For instance, working capital loans are designed to help business owners run operations on a day-to-day basis while demanding minimal commitment and allowing for far greater flexibility in cash flow and repayment terms.

National Funding’s own working capital loans can provide up to $250,000 to an owner in as little as 24 hours with no collateral needed through a simple online application.

Find Out How Much Funding You Qualify For

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Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

 

Text Messaging:

By providing my wireless phone number to National Funding, Inc., I agree and acknowledge that National Funding, Inc. may send text and multimedia messages to my wireless phone number for any purpose. I agree that these text or multimedia messages may be regarding the products and/or services that I have previously purchased and products and/or services that National Funding, Inc. may market to me. I acknowledge that this consent may be removed at my request but that until such consent is revoked, I may receive text or multimedia messages from National Funding, Inc to my wireless phone number.

  
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121. Funding amount and credit approval is subject to a full credit profile review.