Amidst a business credit drought, more small businesses are relying on credit cards for everything from capital investment to putting gas in the delivery van. Using personal credit cards for these purposes is a bad idea. But business owners may not realize that even company credit cards are personally guaranteed--late payments on such a card could affect a business owner's personal credit score. A business credit card also has fewer consumer protections than a personal credit card.
As small-business cards have pretty thoroughly replaced lines of credit, company owners have become painfully aware of revolving balances that grow as interest rates rise and of the fact that lenders are quite capable of raising rates and reducing credit limits--at any time and for any reason.
A more sensible alternative might be a credit union business loan. Credit unions have not been exposed to the same losses as other financial institutions, enabling them to up their business lending by 36% in the first six months of this year.
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