Cons of Using a Personal Credit Line for your Business

Cons of Using a Personal Credit Line for your Business

This is why many people turn to a personal credit line to fill in the gaps which form in their business cash flow.

While there are several benefits to using a personal credit line for meeting business expenses, it is not always the wisest option as it does have some relative cons.

When used inappropriately, a personal credit line can be damaging, and the unfortunate fact is that some people do use it improperly. Rather than using the money in their personal line of credit account when they face an occasional shortfall, some business people use it to pay for a foreign vacation they cannot afford. With a LOC, you have to be extremely careful with regards to how and when to use it, or else, you may end up with high-interest debt.

Besides, you should tread carefully when mixing your personal credit funds into your business kitty. It can lead to issues when filing taxes, particularly if you were casual about keeping business expenses and your personal expenses separate.

Besides, it is more expensive than conventional secured loans. It is an unsecured line of credit. For this reason, lenders cannot easily take hold of your assets when you default on the loan, so they will charge you more interest than what they would for secured loans.

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