Capital is the lifeblood of a business and every entrepreneur needs to have a plan for obtaining it. The problem often found is that most entrepreneurs don’t start thinking about obtaining capital until they need it, which is typically too late! Regardless of the stage your company is in, you need to have a plan for how you will fund its growth.
As you plan your business funding needs, consider multiple lending sources. The most obvious source is a bank, but that doesn’t mean that banks are the only capital source. You should have a portfolio of business capital that is a mix of bank loans, lines of credit, business credit, credit cards, and so forth.
One alternative financing source is business credit (also referred to as trade credit). Business Credit is an area of financing that every entrepreneur needs to be aware of and focus time in establishing. Without spending dedicated time and resources to building the company’s business credit the entrepreneur is missing out on the single largest source of lending in the world.
In addition, by building business credit a company is establishing a presence with the business credit bureaus, like Experian, which help in obtaining credit in the future from banks and other lenders who report their data.
Lastly, it is critical to build business credit the right way. many people want it to happen overnight and not plan for it and in doing so, you can apply for credit in the wrong places and get flagged in the credit markets. Applying for credit using the shotgun method will hurt your company rather than help it establish positive credit profiles with the business credit bureaus.