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Although self-financing paying a business's start-up cost from personal savings or other personally owned cash resources was traditionally the primary source of capital for new businesses, that no longer is the case. According to a study on small business financing conducted by National Small Business United, only 19 percent of entrepreneurs were self-financed (defined for the purposes of the study as including the use of personal funds and home equity loans).

The most common source of capital for small businesses? Credit cards. Approximately 50 percent of small-business owners surveyed said that they had used credit cards within the previous 12 months to finance expenses, while only 43 percent of small-business owners said that they had used bank loans within the previous 12 months to finance expenses.

According to the National Small Business United study, the most popular business uses for credit cards include the following:

Travel and entertainment expenses: 69 percent
Day-to-day expenses: 64 percent
Large capital outlays: 46 percent
Inventory/items for resale: 34 percent

If you have access to credit cards, they can be an excellent source of capital for your business. When starting up a new venture, consider setting up one or two personal cards that will be used only for the new business. This keeps the records straight, it's easy to do, and the limits will be high as long as you still have a job when you apply for the cards. Pick cards with low introductory rates preferably for at least six months.

And while some cards Visa, MasterCard, and the like have preset spending limits, others, such as certain cards offered by American Express, do not. If you've ever hit a spending limit while in the middle of a business trip to Europe, you can appreciate the sheer beauty of a card with no preset limit.

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