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Can't find financing for your new venture? Credit cards come to the rescue

THREE DOG BAKERY founders Dan Dye and Mark Beckloff didn't have to sit up, roll over, or beg for start-up and operating cash, so why should you? In 1989 the partners fed their fledgling dog-treat enterprise with credit-card cash advances, charging into what has since become the fastest-growing form of small-business financing. In fact, so popular is this easy, handy, fits-in-your-wallet credit-card debt that it now accounts for 33.5 percent of all small-business financing, according to a 1997 survey conducted by Arthur Andersen's Enterprise Group and National Small Business United (NSBU). The report also found that use of credit cards has nearly doubled during the past five years, while traditional sources of capital, such as commercial-bank loans, has &dined.

IT'S JUST SO EASY. Aside from offering would-be entrepreneurs who have few links to high finance an astounding opportunity, credit cards can also be lifesavers for existing businesses. After all, a cash-flow crisis can lurk around any corner. At a recent gathering of successful young entrepreneurs, one of them unfolded, accordion style, a case containing no fewer than 25 pieces of plastic, boasting, "I have a quarter million dollars right here, if I need it." And let's not forget the Three Dog Bakery gang; they've become poster boys for American Express, their ads gracing the pages of business magazines across the country. Despite high interest rates, credit-card financing is on the rise, and its beneficiaries are learning how to stack the deck in their favor.

DEAL YOURSELF IN. Dye and Beckloff fueled their start-up with four personal credit cards they obtained during their days of full-time employment, plus an American Express corporate card they received in the bakery's earliest days. Typically carrying a balance of $3,000 per card, they charged everything from cash advances for payroll to dog-food ingredients. Keeping credit cards on file with their vendors eliminated COD charges, expedited deliveries, and stretched cash flow. And by charging supplies at the beginning of their billing cycle, they gave themselves more time to hold on to their cash.

# posted by Medical Information : 2:00 AM