Business Startup Financing and Personal Lines of Credit

What is Startup Business Financing

Business startup funding or Personal lines of credit which is also known as credit card stacking. The way it works is allows the user to use multiple cash credit cards and credit lines to finance your business or obtain the funding they are looking for to make a big purchase or set funds aside for a rainy day.  In order to maximize the funding amount based on the clients credit file the company will use a variety of resources including obtaining fundings from various sources at the same time. Because many of these sources are cash credit cards this is called credit card stacking. Lenders don’t call credit card stacking by its name because most people have a negative perception about credit cards. Instead, you might see it referred to as an “unsecured business credit line for startups” or “Personal Lines of Credit”.


It is important that you use a professional experienced who can determine the best route for you to obtain the most amount of money at the best rates and terms.The primary advantage is that lenders know which credit cards and lines you’re most likely to qualify for based on your personal credit score, business industry, and other factors. There are over 1,000 credit cards available in the US, and it could take months to research and compare each of them. Utilizing a professional who has insider knowledge about all of the major credit card companies and banks, and they use that knowledge to help you get the highest credit limits and lowest rates possible.

The other reason for going through a professional is to protect your credit score. Every time you apply for a credit card, the bank that issues the card pulls your credit, which can harm your credit score. A professional knows which credit reporting bureaus are used by which banks and submit applications strategically in a way that minimizes damage to your credit score. By reducing the number of inquiries on each credit report, will also increase the credit limits for which you can qualify.

What happens behind the scenes

1.get pre-qualified based on your personal credit history, type of business, business and personal income, and business credit history.

2-Based on those same factors, the company determines which business and personal credit cards you would qualify for that have the highest credit limits and lowest rates.

3-The professional submits applications for those credit cards on your behalf. Depending on how much financing you need, the lender may submit 10-15 applications on your behalf.

4-You receive the cards that you qualify for and can use them as your business credit line. You will get a monthly statement for each credit card and must make a minimum payment for each. You’re welcome to make more than the minimum monthly payment, and any unpaid balance will accrue interest.

Pros and Cons

A lot of entrepreneurs are skeptical about using credit cards to fund their businesses. However,  startups and low-revenue businesses don’t have a lot of financing options.  With minimal options this type of financing has not only become popular for entrepreneurs but also for those looking to make a big purchase and for commissioned sales people who experience big fluctuations in income. 

Using personal funds, such as retirement accounts or home equity, is high-risk. Banks prefer large deals with well-established companies that have a proven track record. Credit cards and personal credit lines gives access to unsecured capital at a reasonable cost and on a fast turnaround (typically, 30 days or less).

Another advantage of this type of financing is that it serves as a safety net. You don’t have to use the funds unless and until you need money, and you don’t have to pay interest on unused funds. As you pay down what you borrow, your amount of available credit increases. You can’t get this same level of convenience with a traditional business loan.

On the downside, it is hard to qualify for credit card financing. You need a great personal credit history 680 FICO or better. If you miss several payments or your business revenues significantly decline, lenders can freeze access to credit without warning. In addition, when you stack multiple credit cards, you have to keep track of multiple credit card statements so you don’t miss any payments.

Will I Qualify?

Credit cards and personal lines are an unsecured form of financing. This is risky for the lender because if you can’t pay back what you borrow, there are no collateral or business assets that can be used to recover the money (the lender does have the right to go after your personal assets because you must personally guarantee repayment, but this is harder to do than reclaiming collateral).

Consequently, most lenders offer credit card stacking only to borrowers with excellent personal credit.  Ideally, you should have a credit score of at least 680. The stronger your credit, the better your rates and the larger your credit line will be.

Your credit quality is just as important as your numeric credit score. You may have a good score, but if you’ve regularly been late on credit card payments in the past, banks may hesitate to approve you for a credit card.

If you don’t have good credit, one tip is to find a personal guarantor (business partner, family member, or friend) who has strong credit. This person promises to pay back the loan if you cannot. If you have a personal guarantor, their credit history will be checked instead of yours.

If you do not reach the requirements but your goal is to start a business or buy a boat or invest in real estate the best time to start getting yourself set up to reach the lending parameters is today. If you believe in your goals then you will spend the time to prepare to do whatever it takes to reach them. If you are starting a business having sufficient funds is imperative to carry you through the startup period and providing enough cushion in case of emergencies. Quick note, part of your business plan should be to start working to build your business credit as soon as possible.


The primary costs of credit card stacking are the interest rate and annual fees:

  • The interest rate– Credit card and lines APRs range from 5-24 % 

  • Annual fees– These are often waived during the first year but range from about $50-150 per year after that.

For the first 6-21 months, you will most likely pay a low or 0 % promotional interest rate. This depends on which cards make up your credit line, but most cards will offer some kind of introductory interest rate. If you draw on your credit line and pay back what you borrow in full within the promotional period, it’s like borrowing interest-free.

Once the promotional period ends, any unpaid balances will be charged the regular APR. For example, say you make $3000 in purchases during a 0 % APR period, the regular APR on the card is 15 %, and you pay off $2300 during the promo period. Once the promo ends, you will owe $700 (the unpaid balance) plus $105 (the interest on the balance).

When paying off balances on multiple credit cards and lines, it helps to have a strategy. One good option is to make the minimum monthly payment, and if you have money left over, put it towards the credit card with the highest interest rate.

Some cards charge annual fees. However, this is often waived for the first year. For rewards earning cards, the fee is typically balanced out by points/cash back you can earn by using the card.

There’s one additional fee for credit card stacking:

  • Servicing fee charged by the provider, which typically amounts to 8-15 % of your credit line.

Bottom Line

It’s possible for a startup or low-revenue business to get thousands of dollars in unsecured funding. It’s only open to those with great credit, however. It’s a good idea to add credit cards to your arsenal of options when searching for business financing.

If you are interested in obtaining financing for your startup or a personal line of credit or looking for the right Accounting partner, please contact us at Remember at Ebizmore you will Learn More, Do More and Earn More.


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No Income No Asset Personal Lines of Credit


Startup, New Businesses or Personal Use

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