Entrepreneurs typically make one or more financially devastating mistakes when financing the launch, operation and/or growth of their businesses. In most cases, they don’t realise that they’re making a mistake.
As an entrepreneur, you’re hardwired to enjoy a greater level of risk than the average person. But do you enjoy the thrill of business and investing so much that you’re willing to risk:
- Being hounded by creditors?
- Declaring bankruptcy?
- Being denied a mortgage?
- Paying more than your fair share of interest on your loans?
- Losing your house?
- Losing your life savings?
If you answered “no” to one or more of these questions, this may be the most important video you’ve watched in a long time.
Because, if you’re like most entrepreneurs, investors, and business owners I’ve met over the past 28 years, you’re in danger of facing all of these horrific problems.
And it’s all because of your business.
You see, entrepreneurs typically make one or more financially devastating mistakes when financing the launch, operation and/or growth of their businesses. In most cases, they don’t realize that they’re making a mistake.
And to tell the truth, even when they do realize they’re making a mistake … they lull themselves into thinking that the consequences will be a minor annoyance.
Until, one day, they can’t qualify for a mortgage. Or they can’t get the to-die-for financing offered on the new car they’re buying. Or they’re hounded by creditors and eventually have to declare bankruptcy.
And it is all because they used their personal finances to fund the launch or expansion of their business. They then use personal credit cards to pay for business expenses. Now I am not saying boot-strapping your own startup is wrong, all I am saying is If you are in business or thinking about starting a business, you can consider business credit from the offset.
Let me explain, most business owner have no idea that they can establish business credit and even fewer know how to how to establish business credit. If owners would take the time necessary to educate themselves about establishing credit they would no longer have to use their personal funds for start up capital or working capital.
They would also be able to use business credit cards which don’t report to their personal credit reports, therefore, not lowering the personal credit scores.
The most important goal of business credit though is to obtain unsecured business lines of credit, which can be done once the business credit profile is set up properly. Once a business obtains unsecured business lines of credit, they then have the working capital they need to start a business or expand their business. The business owner has check book control to use the business lines of credit as they wish. And best of all, the business lines of credit don’t report to the business owner’s personal credit report.
If you have set up your business profile correctly there are a number of banks that will lend to brand new start up business. That is right, brand new start up business with no track record whatsoever. The banks will extend unsecured business lines of credit so they can have the start up capital they need to finance the business of their dreams.
Investigate microlenders and web-based lenders. There are several nonbank lenders on the internet that now offer microloans to entrepreneurs. These loans are typically in the $5,000 to $25,000 range. Some of these sites are excellent sources of capital for those with poor credit and will also report your payments to credit bureaus which can help raise your credit score if you make timely payments. Be sure to shop around and compare rates since each site offers a twist on how they price loans and spread risk to their lenders/investors. These sites include:
- www.count-me-in.org (for women business owners)
For borrowers who don’t have strong credit scores, the interest rates on loans from these sources will tend to be high. For a comparison, the average rate on business loans from relatives and friends is currently at 7.6 percent, according to CircleLending’s Business Private Loan Index, whereas the rate was more than 12 percent at Accion and more than 20 percent at Prosper for individuals with poor credit.
Make no mistake about it; business credit is a MUST for every business owner. Don’t put your personal assets at risk finance or fund your business!
If you want to know more about starting your business by minimizing the risks, and using less cash get my Top Resources Report