Business Startup Credit Cards

This research was recently published in a report titled Silicon Beach: A study of the Australian Startup Ecosystem and co-authored by Deloitte Private, Pollenizer, From Little Things and the Startup Genome Project.

It focused on tech startups in Australia and found funding from investors was rare, while only 39% of companies had applied for the myriad grants available to them.

Co-author of the report and Partner at Deloitte Private, Joshua Tanchel, said there were constraints in Australia that made it hard to launch and expand startups.

“We’re seeing lots of people now starting their own businesses, but the startup ecosystem is relatively young,” he said.

But if investors and grants are unlikely, where does the money come from? Here we take a look at both the financial options and the broader small business environment to give you a better idea of how to approach things.

Getting Money For Your Business

While the ideal way to start a business is with investors or grants that can support you in the early stages, resource hubs like thinkBIG Magazine point out that there are other – more common – avenues when you are just starting out.

Among these business-funding sources are your personal savings and loans, including credit cards (check out our favourite business credit cards).

As thinkBIG Magazine outlines, most people use assets such as their home to offset major loans, but cards can also play a role.

“A vending machine operator client of ours used (a) credit card strategy to successfully fund his start up business from scratch. He recently sold the business for $1.6m after 5 years in operation. Not bad considering he started out with no money and just a credit card.”

The example above highlights how a card can be used in the initial stages of a business, but it is important to consider both the nature of that business (ie one that will make money from day one) and the size of it.

Simply put, the smaller the business, the more likely credit cards will be involved. And there are more and more small businesses in Australia than ever before.

Research from Bankwest last year put the number of people running part-time businesses in Australia at the highest point in a decade, with people 60 and over and those aged 15-19 the most likely to run their own businesses on the side.

Ian Corfield, former Chief Executive of Bankwest Business, identified two likely reasons for the rise on part-time business development.

“This growth in numbers may be attributed to people looking for the security of being employed, rather than being the employer, even if only on a part-time basis,” he said.

“Or (it) could possibly be an indication that people are seeking out part-time opportunities in order to generate income after experiencing reduced hours at their existing employer.”

Tips For Using Your Credit Card For Business

Regardless of the reasons for starting your business, it is important to remember a few things if you do end up using a credit card.

For starters, is your current credit card the right option? As Moneysmart points out “the kind of card you should get depends on how you want to pay off your debt” – and that could be different for your startup than your personal use.

The process, thankfully, is almost exactly the same whether you use a card for business or personal reasons.

If you think it could be months before you are able to pay off a card used for your business, for instance, the a low rate option might be the best thing to consider.

On the other hand, if your work requires a lot of travel, perhaps a frequent flyer card will earn you enough points to lead to other savings that offset the typically higher interest rates.

In some cases, you may even want to apply for a dedicated business card through your bank, or discuss other funding options that may be available to you.

While the data above shows that getting money for your business can be hard to start with, looking at every option and making informed decisions will help put you on the right path from the very start.