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Apr 23, 2009 -- Small biz should tap credit lines -- before the bank shuts them
Almost 30 million Americans are entrepreneurs or small business owners. That's one of the secret ingredients of our long-term financial power as a nation.
Most small businesses live by credit lines that are usually available from the largest banks and often tied into credit cards. Right now, however, the odds of tapping into the power of plastic are much tougher because of turmoil in the banking business.
You've heard the calls from individuals in this respect. But think about what it means to a business that is depending on this line of credit as a lifeline.
Clark despises debt for lifestyle, but he doesn't mind entrepreneurs taking on debt as an investment in a business venture. Small business long ago switched from trying to obtain lines of credit at a bank to getting what they need on a credit card.
No surprise there; credit was so widely available that entrepreneurs decided to go the path of least resistance.
So here's a special message if you are a business owner and there's money that you need for cash flow. Clark wants you take a cash advance from your available lines today. That ensures you get the money before the bank has a chance to cut the line.
Do a cash flow analysis on your business and make sure you have the funds you need to continue operation!
Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.
I have been on the "processing" side of the CC industry for 10 years. Setting the rates the merchants pay for all things non-cash. There are many programs and companies that offer a higher "DISCOUNT RATE", (what the merchant pays to accept credit/debit cards) it is not an interest rate, on the amount of the sale, as repayment for the "loan". This has nothing to do with the issuing bank. Ask your currrent merchant services provider if they offer this. Best of luck to ALL biz owners:)
Small Biz Debt
Michelle, heres a difference between debt to start a business and putting pizzas on credit cards, so to go into debt to start a business is not uncommon. However, if your personal credit is shot, it won't be easy to find any one to lend you money for your business.
Brian, you are harsh. Most small businesses take a minimum of three years before they turn a profit. That means most small businesses start out in the red, and have to borrow to improve their services. Advertising for example, is a huge expense. Unless you let people know you're out there, they can't become clients.
All businesses start small. Some take off right away, others take time.
CASH ADVANCE FOR BUISNESS FOKES
Dude, you have got to be kidding! As a new buis. owner, I would suggest not to get in debt. But,just heard how some credit card co. are jacking up the interest rates; cause their so in debt. Here's something else; ask for a lower lease by owner, or find another location (there out there, many places are vacant waiting for you to pay something) stay out of debt, do anything else you can. Cash is king I know, but patience is a virtue. wait!!!!
dopey idea
to pay the exhorbitant upfront fees and usurious interest on credit card advances that may not even be absolutely necessary is probably the most idiotic idea ever to come out of the mouth of clark. How about finding a real paying part time job that pays $$ to make ends meet until a business is profitable? But of course, that would take disipline and in today's american that surely is in short supply.
Starting new business
What if we just started a new business? Can we get credit cards via the company now? Our personal credit is shot due to 8 mos of unemployment. The business has hit the ground running, but we need a couple more months to recoup our loses and it would help if we could bring on one more employee.
SB Loans
I disagree with the last response. Lines of credit, or access to cash via credit cards, are vital for some businesses. There are some things we can't just blow off or put on hold. For example, my business insurance is due May 1st, and I just had to pay taxes, and business is slow right now. In order to stay in business, I have to pay for my insurance, and I will need a cash advance to do that. Since my business is in pet care, I need to be insured. I will pay the loan down whrn there is more cash flow.
The old saying "You have to spend money to make money" is often true, especially for small business owners.
Dumb advice for businesses, Clark
Most business lines of credit are callable, with 60 or 90 days notice. Drawing down a chunk of cash would only result is some hefty fees and interest, and then the bank could call in the loan anyway.
