Page 112 - The Magic of Tiny Business
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Chapter Six Tiny Business Is Lean Business
according to the stated terms—so that you can establish
good credit. Prompt and systematic payments and keep-
ing your balances in line with your overall assets are what
make you a good credit risk.
I’m personally not a big fan of loans, SBA loans
included, because they can hamper your cash flow. Some-
times, however, you cannot get a credit line until a bank
has seen you manage a loan. Therefore, it is essential to
build excellent credit with loans and credit cards. Do this
before you need the money—before you are in a hole.
A credit line is now my preferred financial product
because it is flexible. Unlike loans, you can adjust the
repayment, borrowing and repaying according to the ebb
and flow of the business. Once you are able to get a credit
line, take a conservative approach. Only borrow what’s
needed for payables in the next one or two weeks and then
repay as soon as you can. This shows the credit line being
used again and again and demonstrates credit worthiness.
Once you build a good credit rating, you can get access to
more cash with different products.
Credit and loans can be a lifesaver and a business
opportunity when used appropriately. But never think of
this cash as your own. It’s not.
“If you owe money, ultimately, it
owns you until it is paid off.
”
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