Can I Fund a Startup With My Credit Card?

It goes without saying that, for startups, getting business operations up and running can have some major financial hurdles. Before starting your company you must consider how to fund business operations, whether that be funding your startup through credit cards, venture firms, or angel investors. Then think about whether to makes sense to seek venture capital, or wait until you have something worth investing in to show for it.

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However, venture capital and angel investing comes with strings attached. You don’t want to misstep when it’s time to pay the piper. Failing to succeed could cost you an important relationship, partnership, and business credibility.

Is it a good idea to fund your startup on credit cards?

For these reasons and others, some entrepreneurs might consider credit cards as a way to draw money for a business in its earliest stages. Is this a good move? The answer may not be as clear as you think.

The naysayers: Funding your startup on your credit card is bad for personal credit and liability

How much does it cost to start a business? U.S. Small Business Administration suggests the average micro-business costs in the ballpark of $3,000, and home businesses cost between $2,000 and $5,000. If the Kauffman Firm survey is to be believed, costs could be much higher with the average business costing around $30,000 to get operations off the ground. However, experts say that racking up potentially tens of thousands of dollars in credit card debt isn’t a strategy for success.

According to Inc. Magazine, for example, funding your business with a personal or business credit card leaves you on the hook for the balance should something go wrong. There’s no way around liability you take on when you fund a business with a credit card.

Moreover, Inc. also reminds us credit cards only work if your funding costs are relatively low. That is, most entrepreneurs won’t get approved for a high enough credit line to fund a $50,000 business. If you are looking to fund a larger operation, it could take multiple lines of revolving credit. This strategy could jeopardize your personal credit score. If you max out all of your credit cards to start a business, it will negatively impact your credit utilization ratio and your personal credit.

Additionally, using a personal line of credit to fund your business can also be problematic. Entrepreneur Magazine says keeping separate accounts for personal and business transactions “should encourage you not to commingle” funds.

Team “just do it:” Funding your startup on a credit card is fast, efficient and flexible.

It’s a fact that you can successfully use a credit card to start your business. Just ask Aaron Pitman of, who told personal finance writer, Kimberly Palmer, “We had a really limited budget, and the only way to scale up quickly was through a credit card.” With that knowledge in mind, in what ways could be using credit be of benefit to a budding entrepreneur with a new business idea?

An article by Forbes Magazine outlines a myriad of ways why business owners might consider launching their business with credit instead of other traditional funding methods, these include:

  1. Fast Money: When you’ve got to get your business off the ground, sometimes time is of the essence. If you need money and you need it fast, the quickest way to get access to funds is via revolving credit.
  2. 0% APR Cards: A big perk of using credit is the right card can make it good as cash. You should consider funding your business with a card that has an excellent 0% APR offer and paying off your balance during the welcome period.
  3. Unsecured credit line: Most credit cards, especially those designed for with business purposes in mind, are unsecured. That means you don’t have to offer up collateral in the form of a deposit to get the card when combined with a good welcome APR offer, entrepreneurs can treat a credit card like a cash advance that gets the job done.
  4. Payment flexibility: Compared to other financing methods, like installment loans, credit card payments are pretty flexible. You are never typically asked to pay the balance in full, and payment installments are only due once per month.

Is funding your startup with a credit card right for you?

If you’ve made it this far, hopefully, you feel as though you are left with more answers than questions. If you are still asking yourself, “is credit card funding right for my business?” Take some advice from Aaron Pitman, the entrepreneur we mentioned above:

“Make sure you have a proper business model in place before you get in too deep. You could end up liable for a lot of money. And make sure you get your points.” By points, of course, he’s referring to rewards points. Credit cards can be an easy and beneficial way to fund a business, but not without some pretty serious risks. Before you use credit cards to fund your startup, make sure you consider both the good and the bad.

Susan French is a writer, contributor and content marketer who publishes her own blog, Marketing and Murder. Susan’s greatest successes include a fruitful 10+ year career in marketing and outside sales, as well as a master’s degree in a liberal arts field and just being Mom to her young daughter. 

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  • Originally published January 16, 2019, updated April 26, 2023