TechWag

This is one of those things you want to think about again.

We are seeing that companies that offer credit cards that are mortgage backed, like GM, Country Wide, Capital One and others default APY’s are ranging in the 27 to 31 percent range. At a credit limit of 20,000 dollars at 30% your interest payment alone would be 500 dollars a month, add to that the 3% you need to pay off if you max the card, you are looking at monthly payments around 550 to 600 dollars a month.

In an already cash strapped middle class or innovative class, this might be enough to push you over th edge.

Stay away from products that offer to let you use your house as an ATM machine as well. This will just be a quick way to being foreclosed, especially if you can not afford the monthly additional payments.

There are other ways of getting your product off the ground, and time to look at the alternatives from grants, to government backed loans at a much lower APY, the SBA (Small Business Administration) working with the bigger banks like BOA are offering prime + 4.5% (at time of writing here). This is a much better deal that working with a credit card at 30% you can go as low as 10 to 12%. At 12% your monthly interest payment is around 200 dollars a month, for a 20,000 loan.

Net savings? Some 300 dollars a month in interest payments alone. Or 3,600 dollars a year, while not a major savings, it is at least a savings that is bankable.

And might be enough of a savings to keep your company from going off the edge.

With things getting weird in the financing industry, time to put away the credit card, and start looking at alternative ways of funding your business. Credit cards are easy, but the money comes at a major premium, and one that you may not be able to afford.

Tags: funding, education, technology //