For small business owners, it has been a tough few years in terms of getting loans to help start, conduct or grow their business. As the economy putters along, however, there are some alternative sources of funding to traditional business loans. The following articles present different ways to finance business operations, their pitfalls and steps to help build business credit.
- When The Going Gets Tough, The Tough Allow Trade Credit (Fast Company). Using trade credit can help small business weather the rough economy, build credit, retain customers as well as acquire new ones. But small business owners must know how to use trade credit wisely and if it is the right source of funding for their particular business.
- Is Barter Right for Your Small Business? (Forbes). When you are low in cash but still need to find resources to conduct your business, using the age-old barter system may be an unusual but beneficial “survival strategy.” The barter system, which is the” mutual exchange of good and/or services” can help your business survive during times of recession, but it has its own unique challenges including knowing who you will barter with, and agreeing on “relative value” of the exchange.
- Advantages and Drawbacks of Doing Business with Credit Cards [broken link removed] (Credit Land). Using Business credit cards may be an alternative source of funding for small business owners. However, owners must be aware of both the advantages (such as tracking business expenditures) and downsides (such as high interest rates) of doing business with credit cards.
- Business Cards Lack Many Protections (Forbes). Business credit cards have higher limits than consumer credit cards and they can also offer rewards programs. But many business credit cards don’t have the same protection as consumer credit cards do and can change card terms at any time. Before you decide to use business credit cards for a source of capital, you need to know what are the risks, hazards and pitfalls that are associated with credit card use.
- Five Ways to Build Business Credit (Entrepreneur.com). Finding alternative funding sources can be a lifesaver for many small businesses. But, if you do decide to go the traditional route and seek bank loans, put your best foot forward with these 5 tips on building your business credit – be aware of your personal credit rating, apply for some credit even when you may not need it, use your credit to build credit history, and consider alternative source of funding that can build your credit.
- Start Building Business Credit and Avoid These Top 4 Personal Credit Risks (Money-Update). When looking to use credit cards as a source of funding, business owners should open them under their business name in order to build business credit and avoid personal financial risk. 4 reasons to avoid using personal credit – it can potentially damage a business owner’s personal credit history in case of payment defaults, business owners can become liable for any unpaid debts, the use of personal credit for operational use can make owner’s business credit appear unreliable, normal actions on a business profile may seem have negative effects on personal credit.
[CC photo by mag3737]