Get Your Business Funded: Creative Methods for Getting the Money You Need

Trade Credit

Obviously, Goldstein did not open Discount City just by getting some supplier loans. He also was able to establish a great deal of trade credit (sometimes known as vendor financing). While trade credit is not cash per se, it is nonetheless one of the largest sources of in-kind capital in the world. It is a basic building block for any business looking to grow and/or establish a business credit profile.

Establishing trade credit offers several benefits to your business. First is that it allows you to buy the materials you need to run your business and stock your shelves. Second, it helps to create a financial profile for your company. In addition, trade credit is often cheaper than using credit cards or other borrowed money.

Establishing trade credit. Like regular personal credit, the more business trade credit you establish, the more that will become available to you, and at better terms. You begin by starting small. Look to establish credit first with:

• The phone company
• Office supply stores
• Other small suppliers

What you are looking to do is establish an “on account” or “open account” arrangement that allows you to buy on credit. If you are able to pay the amount off in full every month, your positive business credit profile will grow quickly.

There are also a few bank-related ways to build trade credit:

• First, open a business credit card with a small credit line and again, try to pay it off in full every month.
• Open a business savings account at your bank and ...