How to best maximize your use of credit

By: Matt Putra

How are you utilizing your credit? Money should be used in specific ways, depending on the type.

Here’s how I suggest using your credit card (and other types)…


Credit cards

Use your CC on things that should provide a return within 30 days.

✅ ad spend

✅ shipping to customers

❌ inventory

❌ equipment

❌ payroll


Lines of credit

Use your LOC on things that will provide a return within 6 months.

✅ inventory

✅ inbound inventory shipping

✅ product samples

❌ payroll

❌ equipment

❌ taxes

❌ dividends


Term loans

Things paid for with a term loan should provide a return within the maturity of the loan (1-5 yrs)

✅ equipment

✅ inventory

✅ computers

✅ certain growth activities where you can be reasonably certain of a return (trade show, etc)

❌ taxes

❌ real estate

❌ dividends

❓payroll (my opinion is that some hires can be financed if they are demonstrably correlated to a return like biz dev staff, where you already understand key metrics and returns)


Long term debt

Again, match returns with maturities with the useful life of the things purchased

✅ equipment

✅ real estate

❌ payroll

❌ taxes

❓ dividends/draws (I think there are some cases where you can take money out of your business using long-term debt. Be careful here. I’d suggest that you use the money to get a personal return. Not travel or luxuries).


Profits or Retained Earnings

You can use profit for whatever you want (basically) but here is a suggested priority list

1️⃣ taxes

2️⃣ operating expenses (subscriptions, etc)

3️⃣ dividends/owner income

4️⃣ hiring growth roles or roles necessary for revenue (fulfillment, etc)

5️⃣ hiring roles that will allow YOU to do growth activities

6️⃣ hiring roles that will make your life easier

7️⃣ luxury expenses (cars, etc)


Some people might have different priorities and since it’s their profit, they can do whatever they like!


Raised capital

If you raised money, you would have committed to the use of funds during your pitching activities. Use the money the way you said you would.