Small Business Reading Room

Monday, July 18, 2005

Credit Card Tips for Small Businesses

What do small businesses and college students have in common? Credit card debt.

According to an article in The News Journal, increasingly small businesses are turning to credit cards, whether its to help them keep track of their expenses or because they don't think they can get a small business loan. Unfortunately, some of these small businesses are finding themselves more and more in credit card debt.

According to Barbara Necarsulmer, associate state director of the Delaware Small Business Development Center, "Small-business owners often get into debt trouble because they underestimate how much money it will cost to run the business and they overestimate how quickly the business will become profitable. The credit card is a tempting way to handle an unanticipated shortfall."

So, what steps do they recommend to combat the credit card debt?

  • One of their first suggestions is to shop around for the best deal. In today's world, a credit card is almost a necessity. And because of this, there are a number of credit card companies to choose from. This means lower interest rates and rewards programs.
  • Research and plan accordingly. As mentioned above, entrepreneurs are often incorrect in their first financial estimates. Small-business owners should research their industry and find out how much it will cost to run their business. Then, they need to find the resources to cover the costs, whether its from a small business loan or savings.
  • Research the availability of loans in your area. Many entrepreneurs don't think that a loan is an option for them. However, this is not the case. There are loans available through a number of resources. In Delaware for example, one could call the U.S. Small Business Administration's Delaware District Office at 302-573-6294. Or, First State Community Loan Fund at 302-652-6774.

Credit card debt is no way to start your business. Take it from someone still struggling to get out of the credit card debt racked up in college...



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