Personal Loans and Credit Cards: A Powerful Duo For Your Business

If you have a marvellous business idea and want to move ahead with your business model, a budget plays a critical role in leading your business to skyrocket success with massive gains in market share. Accounting may be the least favourite part of running a business, yet it is foolish for a businessman to be ignorant about it. Learn how to leverage on a personal loan and your credit cards to grow your business.

How much capital does it take to start a business?   

This is the first question all want-to-be-entrepreneurs will ask before they actually start their business. The answer to this question depends entirely on the type of business you are looking to build. Hence, it is important for you to list down all your expenses and create a budget as detailed as possible to estimate the funds you need to start (and run) your business.

We have compiled a range of capital needed for the more common types of businesses with key data from various sources such as,, and EatDrinkMy. The capital required includes raw material expenses, costs of equipment involved, rental fee of shops or stall (if applicable), and other operational costs you may incur during the setup of your business.

Business type Estimated Initial Capital (RM)
Pasar Malam Stall (night market) RM300 – RM1500

E-commerce (sale of products online)

RM500 – RM2000 (depending on product)
Hawker Stall RM2000- RM5000
Local restaurant RM60,000 – RM100,000
Café RM500,000 – RM600,000

According to NBC Blog, you should aim to have working capital for at least three years to sustain your business long enough to break even or make profits.

Take note that the larger your business size, the more funds you need as reserves to ensure the continuous operation of the business. If you are looking to open a restaurant, the estimation of initial start-up expenses are RM200,000 while monthly operating costs are RM3000.

Just to ensure that your business can run for the first year, you need to gather funds that can last the business for at least six months before it can start registering positive cash flow to support operating costs and in turn, creates working capital to keep it going.

That means you need a total of RM218,000 to start your business at the initial stage. There are several ways you can gather these funds: through friends and family as angel investors, your own savings, or find a business partner.

However, if you do not have wealthy family or friends as angel investors or ‘first bucket of money’ to start your business, you need to consider the option of using financial products to close the gap. First bucket of money refers to the total savings from your working days that can be used to start your business, buy a property, or travel, according to the Chinese perspective.

As easy as it may sound, it takes a basic understanding of finances and accounting to properly handle these financial products, and if you are good enough, they will be your best tools to assist your business in growing substantially.

Many have the skewed perception that using credit cards or personal loans are too expensive to finance a business, while some are wondering which one to choose when it comes to funding their business. The fact is, your business can grow further with the right products (including both at the same time)! You just need to know how and when to use them.

Know your options

Before opting for either a personal loan or a credit card, let’s ask this question: why not both?

However, from a corporate perspective, you have to be mindful to not burden your business with too much liability by keeping its debt service ratio at a level of 0.5 and below. This means your debts repayment should not exceed more than half of company’s income on a monthly basis.


Most of the personal loans in the market allow you to borrow up to RM150,000, depending on your income level. For example, Alliance Bank CashFirst Personal Loan offers the best in market rate, starting from a flat 3.99%.

However, if you have a healthy credit record in the system as a good paymaster, banks are more willing to offer these products at lower rates. Remember to negotiate with the providers if this option is available for you.

If you have a partner for your business, be mutually transparent with each other and put the loan under both names. Alternatively, you can split into two loans with your partner and gather the funds after the successful loan’s approval.

Tip: Banks are likely to offer better loan rates and/or higher approval chances for businesses that have a healthy track record of at least two to three years.

Leverage on a credit card’s features

Using a credit card to deal with some of the light to medium sized operating expenses is actually ideal, where you can get the best value from the corporate finance activities and probably save more than you imagine!

Here are the smart ways to use your credit cards for your business:

  1. Save costs with cash back and reward points

With attractive cash back, rebates rates, and rewards points, you can save up to 10% to 15% from your monthly transactions on raw materials and utilities payment. Or you can accumulate rewards points to remunerate yourself with gifts such as shopping vouchers.

With a Standard Chartered JustOne Platinum MasterCard, you can enjoy up to RM1,000 per annum through its cash back rates up to 15%.

By automating your business’ utility payment such as electricity, water, the internet, and property insurance, you have a better chance to be eligible for higher cash back rates rather than relying on your personal spending.

Retail Spend per month (RM) Auto bill payments, online purchase and petrol Other Categories Cashback Cap (RM)
1,000 – 1,499.99 5% 0.20% 12
1,500 – 2,499.99 10% 0.20% 28
2500 and above 15% 0.20% 85

Or you can choose to apply for CitiBusiness Credit Card if your business has at least three years of operating track record. This product allows you to have a higher credit limit, flexible financing, and better rewards points compared to personal credit card.

Tip: Keep your personal and business spending separate to ensure your business account is transparent and clear from any potential confusion.

  1. Avoid over-stretching your cash flow with a 0% Installment Plan


There are times when you want to purchase materials or tools with a larger amount of money but you want to keep your existing capital for operating cash flow. Apart from credit terms with suppliers, you can use your credit cards to buy these items under a 0% instalment plan depending on the card issuer.

Most banks are now offering their customers to enjoy a 0% installment plan on most retailers and distributors up to 6, 12 and 24 months of the repayment period. This works wonders if you do not wish to overstretch your business cash flow or have difficulties negotiating for credit terms from suppliers.

Tip: For the suppliers or merchants that do not offer a 0% installment plan, you can choose cash advance via your credit cards (depending on your limits) to finance procurement activities. Look out for banks that offer monthly repayment plan charged with low-interest rates and fixed cash advance fees such as Maybank Ezy Cash Plan.

  1. Minimise your business cost with a balance transfer

A balance transfer feature allows you to transfer your current outstanding credit card debt to a new credit card which offers either a lower or even a 0% interest rate. The idea is for you to consolidate all of your credit card debt into one credit card that offers you a much lower interest rate.

This feature is very useful for you to leverage on paying lower interest rates for your accumulated debts, resulting in lower costs for your business. With a number of attractive balance transfer plans out there, you can easily switch your existing corporate credit card debts to another one and take off some of those burdens as high as 18% interest rates per annum.

As a conclusion, if you are looking to close the gap of your initial funding for your startups, a personal loan is the obvious choice. When your business is already operational, a credit card is a great tool to help you to derive the best value on transactions too! Just keep in mind which product offers the lowest cost to ensure your business’ profitability.

Apart from understanding the accounting, having your own business also requires you to have good marketing, human resources, IT, and business strategy skills. If you can’t do this on you own, get good partners or hire great talents with these skills to help you out!