Tag Archives: SBA loan

In the US many people use personal credit cards to finance their business transactions. Business people are eager to use credit card accounts because their higher credit limits enable the business to access more cash toward business objectives.

An owner can avoid investing their own money while setting up a business by opting to use a credit card to tap into extra funds. But they should be cautious and exercise discipline to pay back the full monthly charge amounts otherwise face an insurmountable level of debt for the young enterprise.

Here are a few other risks involved with using credit cards that you should be aware of:

Accumulated debt: When using credit cards for business transaction, the owner risks spending money they may otherwise avoid if relying solely on cash. Therefore it’s advisable to track all your expenses and be aware of which ones were spent from credit accounts. Limit them to what you believe you will be able to repay in the next 30 days. If you will dedicate subsequent income receipts to be applied toward paying off your credit charges, then you avoid accumulating long term debt.

Fraud and Theft: Identity theft and credit card fraud are two serious risks associated with credit card usage, so be careful as to who you provide your account information to. Also be aware of the charges you make and confirm that your monthly statements do not contain others Charles that you did not make. Don’t pay for charges you did not make, which you are not legally responsible, but rather report them immediately to the lender.

Never disclose your credit card PIN number to anyone – it’s designed only to be used either at an ATM, through the telephone keypad or online.

Avoid prepaid credit cards (if you qualify): Apply for a regular credit card to avoid the risk of loss from misplacing or theft of a prepaid card. You can cancel a regular account card with a maximum $50 loss, but the prepaid account balance will be irretrievably lost.  

Credit History: Avoid the adverse consequences to your credit history by paying all bills, especially credit card accounts on time or even ahead of schedule. Be aware that some low-interest accounts have a zero tolerance for your payments being received even being one day past the due date. Schedule it and all bills to arrive safely ahead of time to build and protect a good credit rating.    

High interest rate: Late payments, poor credit histories and using the accounts for “cash advances” rather than purchases raise the interest rate charged by lenders. Payoff these sums as quickly as possible to lower borrowing cost and work toward performing better on your credit accounts to improve your score.

Christina Jones is a contributing writer to many financial publications and has written several articles on debt relief programs and Chapter 7 and 13c bankruptcy. Her expertise is in debt finance.

Charles H. Green is Executive Director of Small Business Finance Institute that educates business owners about finance. He is the author of The SBA Loan Book, 3^rd Edition (Adams Media).        

Charles H. Green is a financing expert in small business especially SBA 7(a) and 504 loans. He wrote bestseller The SBA Loan Book and is former president of Sunrise Bank of Atlanta. In Atlanta, Green chairs the Fulton County Arts Council, Georgia’s largest arts funder.

Read more at Charles H. Green

Charles H. Green is a financing expert in small business especially SBA 7(a) and 504 loans. He wrote bestseller The SBA Loan Book and is former president of Sunrise Bank of Atlanta. In Atlanta, Green chairs the Fulton County Arts Council, Georgia’s largest arts funder.

Read more at Charles H. Green

In the today’s globalized world, ease of movement has never been greater, and it is sometimes difficult for persons of different origins to communicate effectively. America has always had a multicultural social fabric, with the historic swelling ranks of immigrants growing our population since the very founding of the 13 colonies.  

Today our cultural mix continues to be a blur of a faces with many different features. Distinguishing Burmese from Vietnamese, Austrian from German, or Nigerian from Ghanaian can be challenging for the average American without practiced interaction.

But in business we share the common goal to succeed with a profit.

Our economy is open for business across all ethnicities, cultural, and religious, if not be common sense than by law. From remote, rural hamlets to high-density urban cities, these cross-culture experiences are becoming business as usual.

Still, sometimes doing business with persons from other cultures can result in misinterpretations of words and actions, making it hard for one ethnic group to become comfortable doing business with another. These differences certainly permeate the lending environment. Both borrower and lender must be sensitive to such differences; they must invest extra time developing a business relationship to establish confidence in each other.

Overcoming the barriers of doing business with someone of a different background is a two-way street. Sometimes each side will have to talk out questions and guard against quick judgments based on native assumptions.

Certain social or ethnic differences may result in a miscommunication of intentions or response. Careful, deliberate and frank conversations can sometimes be very useful to avoid our tendency to presume a natural sense of protocol, which may be absent from the social practices of other cultures.

Lenders have to be assured that prospective borrowers have the ability to perform well enough to generate profits to repay their financing. They will ensure that the borrower has a vested interest in the operation with their own money, and that there is always a secondary source of repayment from which they can ultimately get out of a deal.

But no matter how well these factors add up, if the lender cannot get comfortable assessing the borrower’s intention to repay the loan, their commitment to honoring their promises, or their basic integrity, that lender will pass on the deal.

Character sometimes has to be adjudged with factors beyond a credit report, lack of a criminal record, and a good loan application. The lender has to spend the time listening, watching, and gathering impressions about how this applicant will operate under pressure. How strong will the borrower’s intentions remain if things don’t go well for the business? Will they work hard to settle their obligations, or throw in the towel and walk away?

Character is the most important factor in a credit decision and can never definitively defined or described until after the credit relationship is over.

Judgment day may be anti-climactic, since a large number of decisions are going to be made in the process; many by the business, many by the lender, and many through compromise. Diligence and purpose must be the focus of your efforts for every decision leading ultimately for the money to run your business.

An important attribute to hold onto through these processes is the perspective of your purpose, and the limitations of your business. It is all about money, but money is still only money.

The process of finding business capital is a sales challenge. You establish needs, find prospects, qualify, and try to close. It is one of dozens of challenges any small business faces every day, but it is not the only one. And solving the money problem does not solely insure success.

Money is the currency in which you operate, but there is a greater challenge in establishing a way to making it flow regularly through your business. Money doesn’t end the list of challenges.

You need to establish some limits as to what your business agree to do, agree not to do, and what it will pay for the financing it is seeking. If your lender asks too much, more than your self-established limit, walk away from the deal.

Remind yourself why you established that limit, and keep looking.