What is the worst thing that could happen to small business owners who use credit cards as a source of financing?

Question

A) They might have to get a second credit card to pay for additional expenses.
B) They might need to significantly increase their revenues.
C) They might pay fines for using personal cards for business purchases.
D) They might spend more than they can afford to pay back.
E) They might need to ask for an increase in their credit limit.

Answer 1

D
Explanation: D) Credit cards can be a good source of funds if the business owner can afford to pay off the balance every month. If this is not possible, then applying for an additional credit card is likely to compound the problem, increasing the amount of money that the business owner cannot afford to repay. There is no official entity that would assess a fine for making business purchases on a personal credit card, although such a practice might make business record-keeping more difficult. The worst thing that can happen to a person who uses credit cards as a source of financing is not being able to pay the money back.