As a blogger, I work with a lot of different brands, including many small businesses. Usually, I do what I can to promote them and inform my readers. Today, I am turning the tables and writing an informative article for small businesses. I sincerely hope this helps my regular readers and fellow bloggers as well, as my goal is to help others, in any way I can. After all, my primary goal is to help others (mostly because I’m hoping karma will come back around and reward me with a good life, painless death, and priority seating in heaven).
I have a good friend who owns a small business. Fortunately, her company has experienced a lot of growth over the past few years. Unfortunately, that expansion comes with increased costs (e.g. purchasing higher volumes, holding more inventory, increased travel expenses). Although she had a good relationship with her bank, they evaluated her credit based on her sales from last year without taking into consideration the fact that her sales have doubled each year for the past three years and is on track to do the same this year. With no investors to turn to and the bank unwilling to take her growth into consideration, what other options did she have to obtain the funds she needed to sustain her growth? This is a dilemma faced by many small businesses.
Thankfully, small businesses have alternatives to national, regional, or community banks. One option is to use personal credit cards or to establish business credit cards. Personal credit cards might carry a high credit limit (depending on the holder’s credit history and other income). However, using a personal credit intertwines one’s credit history with the business so that if the business fails, your credit goes down with it. Establishing a business credit card will alleviate this problem and can also help establish a credit history for the business. Another option is to apply for loans online. When comparing online loans, one should be careful to compare interest rates and terms.