The Right Way to Use Credit Cards for Franchise Funding

When you’re ready to scale your franchise development, you may wonder what your funding options are. With banks and traditional funding sources more strict, your options may seem slim. In the past the only options were non-traditional lending like merchant cash advance. Thankfully, there’s a much better way to fuel your dreams and cover short-term overhead without high interest rates.

A Powerful, Flexible Financial Tool

Contrary to popular belief, credit cards can be a viable option to funding your franchise growth. In fact, they offer a host of benefits that you simply won’t find with traditional loan products:

  • Predictable, stable repayment schedule; no penalty for paying it off completely.
  • The flexibility to borrow as little or as much as you need, when you need it, unlike fixed-amount loans.
  • Buyer protection for business materials and goods bought outside the franchise supply chain.
  • Clear bill delineation / accounting for purchases, proof of purchase for rebates and returns
  • Some small business credit cards offer bonuses like cash back, airline miles, identity theft protection, discounts with B2B companies and more.

Should I Use Credit Cards for Franchise Funding?

Chances are, if you’re looking for information on this type of non-traditional resource, you’ve already experienced some frustrations with the usual “go to” resources for small businesses. The truth is that you deserve funding and the chance to improve and grow your franchise however you can. Credit cards give you that opportunity, all while putting you in better control of your borrowed money. They keep accounting tools and reports at your fingertips via statements, and no matter what industry your franchise belongs to, the online billing and statement capabilities of modern business credit cards are excellent for multi-partner franchises where transparency is key.

The Right Way to Use Business Credit Cards

While they share a common term, credit cards are not carte blanche. The best way to use credit is for expected, routine business needs with stable costs- common supplies, utility payments, rent – and not auxiliary items that amount to a gamble for growth, like an expensive new sign that you don’t really need right now. Stick to the here-and-now and concentrate on improving financial stability; once you achieve that, use your newfound profits for auxiliary purchases. Structure your credit card payments as you would a traditional loan, or rent on your storefront – remember, you’re not just paying off business bills, you’re also building positive credit history that can be used to secure a traditional loan – and lower interest rates – at a later time. If you are in a business partnership, always discuss what the credit card can and can’t be used for, and where charges will be posted, so you don’t need to worry about financial fallout from poor communication.

Which Business Credit Card is Right For Me?

Before deciding on the right small business credit card for your company, shop around to see what your options are. Take advantage of benefits like signing bonuses, zero interest for periods of time, cashback awards and other incentives offered by various credit card companies. Ask about maintenance costs like annual fees, and determine if your interest rate will be fixed or variable, as well as what you’ll need to nudge that number down: a good payment history over a certain period of time, a certain balance held, or another positive use of your credit. Consider personalization options to add a layer of security as well; some cards offer business logo imprints on the card itself, or even a small picture of the bearer for identification. Other helpful features might include a linked smartphone app, simplified paper billing or alert systems that will notify you if, for example, your business partner has paid for a shipment of supplies so you can prepare storage space ahead of time.

If you are confused about your options, or worry about picking the wrong credit card for your needs, it’s completely understandable. You’re already under financial stress from your business and you just want to make the right choice. The good news is that there are ample resources available to help guide you through the business credit card application process, including funding specialists that will take a holistic view of your business and your goals, and find you a credit card match that will help you when you need it: right now.

Jordan Washington started with Sprout Financial in its infancy, and has helped shape the company that it has become.  Now as Operations Manager, she is in charge of shaping internal work flow procedures and ensuring those procedures create the most positive experience for clients.

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