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What you need to know about funding a small business partly on credit

Oct. 26, 2022
5 mins
A woman crosses her arms smiling at her business

When starting your small business, sorting out how much money you need to get started can be stressful. It’s essential to weigh all your funding options, including funding your small business partially on credit.

There are advantages and disadvantages to funding your company on your business credit card, so you must choose what is best for you and your business.

Learn more about how much money you need to save if you should fund your company on your credit card, and which option works for you — business or personal credit cards.

How much money do you need to save to start your business?

When starting a business, you need to know how much money it will take to set off on the right path. There are many types of costs to consider when it comes to starting and running a business, including:

  • Fixed costs: rent, payroll, taxes, legal services, software, utilities
  • Variable costs: permits and licences, logo design, website design, down payments on rental property

Depending on what type of business you're creating and the location of your business, your start-up costs will vary, but could reach into the tens of thousands of dollars.

To help keep track of all your start-up costs, keeping a budget and a close eye on all your expenses is important. Some expense tracking software allows you to monitor your financials while providing your lenders with easy-to-read and professional-looking financial reports.

Because there are so many factors to consider when planning out how much money you need to get started on your venture, it’s crucial to consider different methods of funding your dream. These include small business loans, grants, crowdfunding, and paying for it on your credit card.

Partially funding a small business on credit

While it’s not recommended to fund your small business entirely on your credit card, it can be a good idea to pay for some of your start-up costs using this method. Things you'll want to fund on your credit card are low-cost expenses that you can comfortably pay off by the time your monthly statement comes due, like office supplies, uniforms, and initial inventory costs.

Personal credit cards vs. business credit cards

Applying for a business credit card when starting your business isn’t mandatory, and you’re free to use your personal credit to handle all your business costs. But there are many benefits to using a business credit card, which is essential to your financial reporting.


  • Convenience: Using a credit card is a more convenient way to make purchases online. With the rise in e-commerce transactions, purchasing items you need for your business will be a breeze with a credit card. It also allows you to make important purchases when you're low on funds.
  • More accessible than getting a loan: Being approved for a loan can be challenging when you're starting your company. You don't have company credit, and it's hard to showcase your business's profitability because you haven't started making real money yet. Using a credit card may be an easier way to gain access to cash to help fund some of your more minor business expenses.
  • Building company credit: Using a business credit card will help you build your company's credit and make it easier for you to get approved for a loan in the future. Building your company credit can help you secure funds you might need for growth.
  • Better terms: Did you know you can negotiate the terms of your credit card? While you probably won't get a break on the principal, you can speak to the credit card company and inquire about getting a better interest rate.
  • Rewards: Many credit cards offer perks, like travel miles, cash back or other rewards. You can use these rewards to fund business trips or purchase products you might need to run your business.


  • High-interest rates: With credit cards comes high interest rates, usually in the range of 19.99% to 22.99%. While business credit cards tend to have lower interest rates than personal credit cards, they still have a higher rate than most business loans.
  • Lose track of spending: It's easy to charge everything to your credit card without realizing how much money you are spending each month. This is especially true when you have multiple users on the same credit card account.

No matter how you decide to fund your business, make sure you’re not blindsided by your financial obligations along the way. No entrepreneur wants to wind up in a situation where they’re unable to manage their monthly debt payments. Consider all your funding options and consult with a professional to ensure you’re successful at both managing your business and your budget.

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Jennifer D'Agostino

Jennifer is a content marketer at QuickBooks Canada, one of the country’s leading software for all your small business needs.

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