The beauty of a credit account is in theory the customer has paid you before you have to pay the supplier so you can run with a lower amount of working capitol .
Might be...But if you can't get it because you are new business it can be a problem. Basically you got to have more money than what you trying to borrow.
I had my share of problems with creditors. Even though I had CDs in the banks they wouldn't even loan me a 30 day business loan. When I was buying my current home I was turned down for a 90 day purchase loan so ended up having to pay cash for it. Funny later the same darn bank sent me an offer to lower my mortgage payments. So I went to see if they lower it below zero, they couldn't; seriously I did it just to make a point that they lost a lot interest off me
. Then they sending me loan offers, all of which I refused. I figured if I can survive without the initial loans why get one now.
I even had my mother turn me down for a 30 day loan on bid I was working on so I simply drop that bid. Later she asked if I won the bid to which I said no because I didn't bid items out. At that time on that loan she would have made 10% ($300) on loan just for loaning it for less than 30 days. My brother also once refused to loan me a $100 for week. He told me where to go. I got the money loaned to me by a customer instead so he made the interest. Later my brother wanted to borrow some money from me and I got to tell him where to go. He didn't like it.
Early in my life I borrowed money from HFC to buying a VCR which I paid off early and I decide to get another loan for a riding mower purchase. The loan office tried to pull a trick on me by hiding deep in the loan contract a 26% interest rate where my previous loan was only 18%. I returned the loan check the same day. I still purchased the mower with my savings and that when I learn to just pay for things up front and pay myself the interest. I need money more than they do anyways. Basically I learn to live within my means by not getting over extended.
I only got one revolving line credit and that is my Visa which paid off fully monthly. No interest or other fees involved. So what that I might need to make a couple or so payments per month on that $2000 line of credit. At least my credit union has work with me for the last 34 yrs. The only change on my Visa was I upped the amount of revolving credit line from $1000 to $2000. I hardy ever paid interest anymore even as low of income I have. I am now considered a deadbeat by most creditors as I pay no interest to use their money. I like being a deadbeat in this sense.
Business wise this year I am spending a little more than I am making as this Covid-19 has cut my business income in half according to latest income/expense report but that is okay as I will make it back as things start to improve. By then the retail prices would likely gone up and I make even more on the recent purchases. Just got to be careful as some retail prices do go down too. Especially on those items I purchased at retail now that I am using my distributor price files.
One piece of advice about using cards use credit cards instead of the debit cards. The reason is if your credit card(s) is stolen you can get a provisional credit for the false charges as where with a debit card you are on the hook until you can prove the charges are not yours. This can be a real damper for doing things. BTW I had my credit card info stolen 3x in the last 34 yrs, twice in just the last 5 yrs. It is a pain to find out too by having a vendor call you because the card is declined. It one of the reasons I have a self imposed credit limit on credit card it protects both the CU and myself from large loses. Still a pain having to wait a week on a replacement card.
