Should You Finance Your E-commerce Business with Credit Card

If you’re thinking about financing your E-commerce business using a credit card, read this post first, because there are some important things you’ll want to consider.

Should You Finance Your E-commerce Business with Credit Card



Getting any business off the ground can become the trial of Sisyphus, but in order to break the vicious circle of labor that doesn’t pay off, you need to become savvy in economic areas that are not particularly enticing.

The lack of concern with all the Kafkaesque matters of banking and finance is perfectly understandable. After all, you are inclined towards more creative entrepreneurial matters in the realm of e-commerce – the product, the mission, and the pipeline are all clearly defined and ready for the launch.

However, finding the financial backing through conventional channels is becoming increasingly hard on the global landscape of Darwinian entrepreneurship, and this is why numerous aspiring e-commerce leaders decide to finance their business through a variety of means – including credit cards.

If you’re thinking about financing your E-commerce business using a credit card, read this post first, because there are some important things you’ll want to consider.

1. Look at the bigger picture first

If you are a wise businessperson, you will look at the bigger picture first.

By assessing the broad circumstances of a particular approach to company funding, you can make an informed decision that will keep your business afloat down the line. When it comes to credit card habits of people worldwide, what is the first piece of information anyone comes across? It is highly probable that you will uncover nearly apocalyptic musings of financial experts and journalists that are still reeling from the long shadow of the global financial crisis that exploded in 2008 and 2009. The fact of the matter is that the proverbial credit card debt is at an all-time high right now and the statistical analysis has shown that it is steadily climbing every year.

This is why so many business owners avoid plastic and, for that matter, any format of debt-generating funding avenues. However, if you have exhausted all other options, this scenario might not be the worst of all possibilities – if you are aware of the potential pitfalls and you respect the limitations.

2. Weigh your options carefully

Before you make a decision to use plastic, you need to evaluate the cost of your business.

What is the starting package that you require?

How much money will go into it?

The answer to these questions needs to be taken into account as you calculate how much you can afford to pay back within a certain time window. If your e-commerce startup can be qualified as a small business, utilizing the powers of a credit card may be a prudent choice, but you should have an informed discussion with your credit card issuer to know specifically when the billing cycle is up and how much time do you have to pay back the amount you have spent.

There are certain upsides to issuing a business credit card. For example, you won’t need to reapply every time you want to fund something with it and there will always be capital at your disposal as long as you avoid hitting your credit limit. Furthermore, the interest you pay on startup-exclusive purchases can be deducted as a business expense. You just have to hold onto your credit card statements for a given tax year as if you are holding on for your dear life. This is why you should absolutely keep any personal expenses off the startup-committed card; otherwise, the tracking might become tricky. Keep in mind that, come tax time, you are the one who is liable for business finances (and ‘misdemeanors’) as the company owner.

3. The preferable conditions

Ideally, a healthy business credit card would be the one that fulfills the conditions for a low introductory interest rate, but you should nevertheless aspire to pay off your debts as quickly and efficiently as possible.

Should you leave a balance on your credit card, you may be facing high-interest rate payments. This can result in the accumulated loan that ‘outruns’ the initial investment, which means that the entire credit card venture has actually been completely counter-productive.

There are several preferable scenarios that go in favor of using a business credit card and the first one is reflected in 0% introductory APR. Without getting tangled up into the minutia of it, this term denotes that you have a potential to finance your e-commerce startup interest-free for the duration of roughly several months to a whole year. The first stipulation is to have a bottom-line credit score, be it personal or business – in the United States, this credit score is 660.

This qualifies you for the 0% introductory APR credit card and this newly issued asset can be a lifesaver of any small business, especially the one that will not go for gargantuan purchases. With this card, you can have a grace period of up to fifteen months before the regular APR kicks in. Just imagine what you can do with your e-commerce business for this duration of time with the conditions such as these. You can get it off the ground and, as a matter of fact, create a healthy infrastructural foundation to launch it one day straight into the stratosphere where it can dwell among the giants of industry.

The second preferable scenario is the flexibility of certain processes that a business credit card gives you if you are in a state of financial emergency. For example, if you need to close a significant and yet financially attainable purchase, using a dedicated credit card can make the transaction possible and easy (especially if you are strapped for cash). On the other hand, if a necessary purchase is pending and you still haven’t been approved for a loan, a credit card can be your last-resort option, though you should always expect a sacrifice in the form of interest.


4. When and why you should avoid it

This has already been mentioned, but it should be reiterated at least one more time – you should resort to using a business credit card if your funding requirements are relatively low. Depending on multiple factors which include credit score, revenue and the age of your e-commerce startup, you can potentially qualify for a loan in hundreds of thousands of dollars, but that this is not a sort of money that spins the wheels of big business. Unless you can make sure that the ballpark sum can finance everything, there are more compelling reasons to avoid using credit cards.

If you can qualify for a legitimate loan, you should not even consider plastic, simply because terms and conditions are much more favorable towards you as an entrepreneur. Primarily, interest rates are lower and repayment terms are significantly better, and this goes even for short-term loans. Furthermore, you should look to start your business small, be inventive, rely on your business field proficiency and entrepreneurial spirit. If significant purchases can be pushed further down the pipeline, do it and use the extended debt-free period to relentlessly search for other funding avenues.


The broad conclusion even a rookie entrepreneur can make after a modicum of research is that business credit cards are a viable method for financing an e-commerce startup. However, you should make sure that you have exhausted every other option and tried any conventional venue of funding before you rely on plastic. Generally speaking, there is an inherent level of risk to business credit cards with far-reaching consequences, and messing up your credit history may be one of the innocuous ones. Solid preparation, thorough research, and business savvy are all prerequisites for plunging into such matters.