- 5 Reasons to Apply for Unsecured Credit Cards Instead of a Loan When Starting a Business

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5 Reasons to Apply for Unsecured Credit Cards Instead of a Loan When Starting a Business

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Finding the money your business needs isn’t always an easy endeavor, especially when you are just starting out.  It’s possible to find the capital your business requires, but it canbe tricky when you don’t know what’s available or don’t realize how accepting a line of credit will affect your finances.

You have to discover the differences between your financing options and try not to learn it the hard way.  While secured lines of credit are a feasible choice for some people, there are plenty of good reasons why unsecured credit cards are a much better way to go.  When all is accounted for, unsecured business lines of credit actually work to your advantage in several ways that secured loans do not.

  1. Higher Credit Limits Are Available

The task of funding big business projects such as major expansions and updates can be daunting, and a substantial loan can help with that.  Still, applying for that kind of money might lead to a number of denials which could harm your credit.  Unsecured credit cards are easy to attain and can provide you with the money you need without putting a tight cap on how much you can get.  Credit limits on unsecured credit cards can be  quite a bit higher and more flexible when compared to secured credit cards and loans.  This is great news for business owners who need to find enough money for big projects that could possibly go over budget.

Credit Cards And Dollars In Cash

  1. More Flexible Repayment Structures

Operating a business can be tough, especially when unexpected events take place.  Loans are designed to give you access to quick cash, but the payment plans can be somewhat restrictive and off-putting.  On the up side, unsecured credit cards typically allow businesses to pay their dues under much more flexible terms.  In general, there are three ways to pay as long as your account remains current:

Flexible payment plans are perfect for businesses because they protect assets from unpredictable market fluctuations. Under the right circumstances, a business can even get an unsecured credit card with a 0% introductory APR.  When used properly, that incentive only furthers the quickness and ease of repayment.

  1. Extra Bonuses and Incentives for Responsible Card Holders

Speaking of favorable circumstances, unsecured business lines of credit usually come with a number of valuable bonuses that secured options simply cannot offer.  For example, things like store discounts, travel perks, and cash back on various purchases are the norm when using unsecured credit cards issued by a reputable source.  Card holders tend to receive impressively low interest rates and sometimes get increased credit limits after 5 or 6 months of on-time payments. In other words, you pretty much get paid to use your unsecured credit cards wisely.

  1. Continual Improvement of Your Credit Profile

As you may or may not already know, having a couple of open revolving credit lines plays an important role in your overall credit rating.  Although getting a loan for your business and paying your dues on time will show up positively on your credit report, revolving credit lines look better.  On top of that, revolving credit continually updates and therefor improves your credit rating much faster.


When your business is just starting out, every little boost can help.  Taking out a loan for your business is a reasonable option, but why wouldn’t you get an unsecured credit card instead and increase your creditworthiness by doing so?  Simply put, unsecured business lines of credit provide you with that sort of opportunity, while secured options merely provide you with money.

  1. No Collateral Is Ever Needed

One of the best parts about using unsecured credit cards for your new business is the fact that you will never need to make a personal promise to get your money.  Putting up enough collateral to satisfy a lender can be tough when you have a young credit history.  That is why unsecured financing options are so much more realistic when starting a new business.

Unlike secured loans, unsecured business lines of credit are specifically designed so that you do not have to make a deposit or a down payment to get a large sum of money for your business.  You don’t even need a cosigner in most cases.  New businesses with average credit scores of only about 680 can actually get unsecured funding with relatively low interest rates without ever having to put up any collateral at all.  In fact, through the only thing you need is a few pieces of supporting documentation to complete the entire process from start to finish.


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