I was a banker before I succumbed to the entrepreneurial calling. I recall asking a loan applicant why he wanted to borrow money from us when his balance sheet was rich with cash. He're's what he told me: "I've learned it's best to use your credit; your cash is always good. I've kept that little gem with me and frequently used the advice myself.
Truth is, most business owners rarely find themselves being courted by bankers. They're only interested in you when you don't need them.
You'd also think it would be easier to raise a small amount of money than it would a large sum, but that's not really true. It takes just as much paperwork for a lender to document a $1,000 loan as it does a $100,000 loan, so there really aren't many places where you can rent small amounts of money.
The easiest way to round up a small amount of money is to borrow on credit cards. And it's often the cheapest alternative as well, since many issuers have very low teaser rates (0-4%). Just be sure you either pay the balance before the rate changes (usually in a 3-6 months) or pay it off with another low rate credit card.
If you have decent credit you can get a load of credit cards without all the pains a banker would put you through for a small business loan. Fill out one short form and you’ve got your money. Best of all, there's no collateral required. And, if you pay your bills on time, you’ll be building a good credit history that will help you when it comes time to apply for a larger loan.
Just be sure to apply for the cards BEFORE you get into a cash crunch -- while your credit is good.
Sage Wisdom About Borrowing Money For Your Small Business - To learn more about this author, visit Kate Lister's Website.
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