Should Startup Ventures Use Credit Cards For Funding?

growthHave a startup company or know someone that does? Or maybe you’re thinking about starting up an entrepreneurial venture? Well, you may want to think twice before you plan on whipping out your platinum cards to cover startup expenses. That is, if you can’t pay your bill off in full at the end of the month.

According to a 2009 study done by the Kauffman Foundation, they say that taking on credit card debt is a significant contributor to reasons of why a company may fail. According to their findings, for every one thousand in debt the company or founders take on to fund it, the odds of failure increase by 2.2%. The majority of the startups in the study had no employees, it was the founder(s) that ran everything.

However with VC and angel capital in short supply due to the economy, it’s understandable why people are using their charge cards to finance their dreams. The founders of Google are rumored to have funded their venture in the early days with credit cards, but remember, there were a thousand dot-bomb failures for every Google-like success story.

Compare business credit card offers

Written August 2009

The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

The VC market is probably the one hit hard the most in this economy. There is no money left.

I used my American Express to start up my internet venture.

How else are we supposed to get funding?