Building and Using Business Credit
To help entrepreneurs discover how to best use credit to fund their businesses, we asked start-up founders and CEOs for their best insights. From leveraging revolving credit lines during seasonal swings to paying for essential tools and subscriptions, there are several ways that businesses owners have used credit to fuel their businesses.
Here are 10 ways to use credit to fuel and fund your business:
- Leverage Revolving Credit Line for Seasonal Swings
- Improve New Product Developments
- Use Cashback Rewards to Reward Employees
- Get into a Different Market
- Improve the Working Environment
- Purchase and Maintain Equipment
- Credit Cards Make Bookkeeping Easier
- Backup Business Funding
- Solves the Hassle of Paperwork
- Pay for Essential Tools and Subscriptions
Leverage Revolving Credit Line for Seasonal Swings
Our business model is very seasonal, revolving around students’ schedules and static exam dates. As a result, we see massive seasonal shifts in cash inflow and outflow. To accommodate these volatile cash movements, we leverage a revolving line of credit to finance operations during peak times, followed by account receivable collections in the following weeks to pay the line back down. Having a revolving line of credit enables us to get quick access to larger amounts of capital to sustain operations during breakneck periods, followed by the ability to pay it down quickly without incurring fees or penalties. For small businesses with seasonality which cause swings in cash flow, it’s a powerful tool.
-John Ross, Test Prep Insight
Improve New Product Developments
Knowing that you have a line of credit as a safety net allows you to innovate on new product offerings to help grow your business. At Curricula, we launch new products all the time, including offering our cyber security awareness training for free, because we know innovation like this will only continue to propel our growth.
-Nick Santora, Curricula
Use Cashback Rewards to Reward Employees
If your business has an EIN, you likely qualify for a business credit card. Business credit cards are great at covering expenses, including office supplies and business lunches. You can also earn cashback rewards for your business. Paying your bills on time will help raise your business credit score, allowing you to acquire more credit later down the road to cover company cell phone bills or travel expenses. We love the cashback rewards our business cards receive. We can use them to pay off the balance, spend on additional expenses, or buy our employees a small gift to show our appreciation and boost their morale.
-Chris Gadek, AdQuick
Get into a Different Market
If there's a market you're interested in moving into, then you can use credit to help break into it. It can take significant time and money to conduct market and product research. Credit helps make it a bit easier. You can hire consultants who will do the early legwork for you and then use your credit to finance your initial moves into the market.
-Eric Blumenthal, Zoe Print
Improve the Working Environment
As a coworking space, we're constantly striving to keep our environment as clean, up-to-date, and innovative as possible. We have a variety of spaces for clients to use, both traditional and non-traditional. So, we're constantly using credit to fund the improvements in different workspaces within the 150,000 square feet we have available. This allows us to see what works, and what doesn't and make changes accordingly.
-Kyle McIntosh, MAC6
Purchase and Maintain Equipment
During hectic seasons, we may need help ensuring we have enough equipment. We also need to keep what we have up and running. Our clients rely on us, and we rely on credit to purchase new equipment to serve them. We also utilize our credit line to fund maintenance since it's usually much cheaper than buying new vehicles.
-S. White, Novus Maintenance
Credit Cards Make Bookkeeping Easier
You can use your credit card to do business online with ease and make smooth and faster transactions with contractors, vendors, and suppliers. Most cards come with online record-keeping tools that you can use to manage your accounts, which certainly makes bookkeeping easier. The year-end account summary can be used to track, manage, and categorize your business expenses. This will come in handy even if you use an outside professional to navigate your audit and pay your taxes. It also makes employee spending easier to monitor.
-Kris Lippi, I Sold My House
Backup Business Funding
Set your credit as backup funding in your lowest cash flow times to sustain business operations. Stock raw supplies and equipment you’ll be needing during peak seasons. Good credit will provide you with more flexible funding options for your business. By using your credit as a backup business funding solution, you won’t risk touching your personal savings or taking a high-interest loan.
-Tim Hill, Social Status
Solves the Hassle of Paperwork
Credit cards are fast approved and don't require the hassle of paperwork and going to the bank every other day. If you are looking for a faster way to fund your business, it's better to use credit. Not only is it speedy and paperless, but it comes with rewards and discounts on travel. This adds an additional benefit if you travel for work because you will also be saving and earning rewards.
-Meera Watts, Siddhi Yoga International Pte. Ltd.
Pay for Essential Tools and Subscriptions
My business relies on various online tools and digital subscriptions for day-to-day tasks and to provide a comprehensive service to clients. These include collaboration apps, analytic tools, web development software, and many more—all of which are critical to my business’s continued operation.
This is why I choose to pay for these tools with credit, as I can make scheduled and automatic payments that ensure zero interruptions to our work processes. It also means I enjoy various benefits, such as points that I can exchange for rewards and the opportunity to build up my creditworthiness.
-John DiBella, NetLocal Digital Marketing
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.