Starting out with a business out of scratch is quite difficult. This is especially true if you intend to penetrate a highly competitive and oversaturated market, such as food retail or publishing. It is not uncommon for small businesses to struggle and eventually fold, in an industry where there are so many variables to consider in order to make it successfully. Sometimes even big businesses feel the pressure, and are left with no other choice than to downsize, if they hope of to least salvage what is left of the company which suffered a major financial setback. Some are forced to require their employees to partake in the sacrifice, through longer work hours with less pay, or a reduced value of employee stock shares.

Since bankruptcy is severely avoided by most businesses, as it destroys credit and is practically a devastation of morale, owners often consider borrowing funds in order to sustain the business, at least until things get better. For small and starting businesses this money usually comes straight out of the owner�s pocket. Since he has the largest investment on the venture and consequently has the possibility of the highest loss, he will do whatever he can to avoid, if not delay that loss. The owner sources the funds for the business from his own savings account. This lent money will be considered as a business loan, and, as soon as the business takes off, it will have to repay the amount in full as revenues come in. But personal funds can only go so far. If the business continues to borrow from the owner, the situation can reach the point when the owner�s funds are finally tapped out.

In order to avoid bankruptcy, the business should consider other financing options, besides the one previously mentioned. Term loans are a viable alternative; although this kind of loan has an imposed amount limit, this could be used as an advantage, since the business will be forced to work within a certain budget, thereby enabling it to operate realistically in the process. But there are drawbacks to this loan: high interest rates and taxes.

A business credit card is one of the more pleasant options for this scenario. If the business is relatively a new one it can apply for a very affordable card if (they know where to look), saving up a considerable amount in the long run. It can also take advantage of numerous rewards which card companies are currently offering, in order to offset the amount which they have to pay on interest.