Five years ago, Andrea Angelica Varela started his business selling candles and decorations with Partiality multilevel signature. First was to earn extra income, then as full-time job. From the outset, the enterprising sought to separate the equity of your business, so he used one of his credit cards and current expenditure, as the super of the month, tuition for their children or cable-television and other staff also exclusively to fund the payment of purchase orders and inventory.
But in so far as increased sales and net sales grew charge, Andrea was losing control. After a year, with its bank debt had reached $ 100,000 plus $ 6.000 monthly interest amount was not given the financial settlement had.
Luis Pazos, head of the National Commission for the Protection and Defense of Users of Financial Services (Conduce) believes that a plastic can become the principal and often only, source of funding for a small business. But if not used correctly or not know certain rules are respected, can be a double edged sword.
According to the official, the key to using the bench to your advantage is thoroughly familiar with your ability to pay to be able to repay the total card charges as long as credit.
¨ if you plan your calendars for payment within your means, you can finance your unpaid interest up to 50 days ¨ says.
Juan Pablo Zorrilla, founding partner of the credit repair resolve your debt, agreed that before starting to sign, the first thing is to study the flow of your business to see if you can cover the full amount of credit on the court date. For this, answer these questions: Is my negative numbers are sufficient to repay the loan I am applying? And will my sales cycle is coupled with the funding of 50 days which gives me the card? If the answer to both questions is positive. Is subject to use this financial instrument in your business?
The president of the Conduce also recommended a stress test the business, to compare the return of your sales with your ability to pay. Part of a negative scenario in which your income is the lowest or the market is unfavorable, so you know how much debt you can pay in similar conditions and help you save a ¨ mattress ¨. In this way, you’ll have a healthy company that is propped up with liabilities.
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