Some years ago, I cowrote (with venture capital expert Joe Bartlett) the book Raising Capital For Dummies. Although entrepreneurs often raise money to start up their new ventures -- or grow their current ventures -- from a variety of outside sources (angel investors, friends and family, private equity offerings, commercial banks, venture capital firms, and more), about 20 percent turn to a readily available source of cash: themselves.

If you think about it, you've probably got many different sources of liquid assets that you can tap when needed, including personal savings, home equity loans, employee stock ownership plans (ESOPs), 401(k)s, and more. However, one particular kind of self-funding stands out from ALL the other sources of funding, including outside and self-funded: credit cards. In fact, 58 percent of businesses use at least some amount of credit card debt to get started. Some of the reasons cited by business owners for using credit cards include: convenience, wide acceptance, consolidation of monthly billing statements, reward/airline miles, and competitive interest rates.

However, not all is well in credit card land. According to a study by the Ewing Marion Kauffman Foundation (reported in the Los Angeles Times), for every $1,000 in unpaid credit card debt, a start-up business increases the probability it will close by 2.2 percent on average compared with having no such debt. Of course, it's the rare business -- especially a startup or high-growth business -- that doesn't undertake some sort of debt financing. However, when businesses rely too heavily on credit cards -- with their interest rates that often far exceed those offered by regular bank loans -- they can soon find themselves in a "death spiral," where monthly payments crimp cash flow to the point of making a business insolvent.

So, while credit cards are a very popular way to finance startups or to grow existing businesses, you should be careful not to let such financing get out of hand. Credit cards are an easy source of financing, but as the Kauffman study showed, their use can have a direct and negative effect on the survival of your business.