Despite all the talk of venture capital, angel investors, business loans and the like, the fact is about one-third of startup funding comes from credit cards.
Plastic is the most popular source of outside financing to get businesses off the ground reports Entrepreneur.
So it’s important for startups to consider the effects of the federal Credit Card Act of 2009, even though the bill did not apply to small-business credit cards. The new regulations on consumer credit will have profound effects on how entrepreneurs finance their startups.
As a result of the Credit Card Act, credit companies are mailing bills earlier (21 days before the due date rather than 14 days, as required before). In addition, notifications of changes to fees, penalties and terms must be sent in advance, rather than retroactively (giving consumers the ability to opt out before the change takes effect).
The rest of the new rules are set to go into effect in February, including regulations on interest-rate increases and disclosure rules that more clearly spell out the cost of financing using credit cards.
Photo by LotusHead.