Trade Lines of Credit
Here’s another hint.
The SBA reports it as the single largest source of small business lending in America today.
Still not sure what it is?
It’s called trade lines of credit also known as ‘vendor credit’ or ‘supplier credit’.
Did you know that trade credit is the second largest source of capital for Wal-Mart? It’s used trade credit as its largest source of capital than even its bank borrowings!
Even though your business may not be a Wal-Mart it’s pretty exciting that you have the same opportunity to acquire this type of credit for your company as well.
Trade lines of credit basically works like a charge card meaning that the balance must be paid in full on or prior to the due date and usually the terms range from net 30 to net 60 days.
It not only helps your company build a positive payment history but also provides thousands of dollars in products and services it needs up front while allowing your business to defer the payments for later.
This helps you conserve cash flow for more critical short term expenditures your business may have. The flexible payment terms also allows your business plenty of time to pay the invoice when it comes due.
But one of the biggest mistakes is assuming that every supplier you have credit with reports your payment history to the business credit bureaus.
Currently there are over 500,000 vendors who extend trade lines of credit to businesses but less than 6,000 report your payment experience to your company’s credit files.
So it’s important to use suppliers that will in fact report your timely payments to your company credit reports.
Another major benefit to using this type of credit source is in its approval guidelines. Many suppliers will pull a business credit report and base their approval solely on the credit worthiness of your business and may not require a personal credit check or guarantee.
This makes obtaining trade lines of credit much easier and more convenient compared to credit cards or loans. A prime example of one of these types of vendors is a company called Quill.
Quill offers a net 30 account and reports to Dun and Bradstreet. Best of all they report your payment history every 30 days. For small orders you can get approved if your business has a listing on the 411 directories and a working website. New businesses can start out with smaller limits that will increase when you pay on time every month.
As you can see trade credit is a premier source of lending that your business can take advantage of today without having to put your personal credit or personal assets at risk.
Looking for suppliers that offer trade lines of credit? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to trade lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>
About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.