Last night, while speaking about getting funding to a group of entrepreneurs at a mastermind event, a young guy came up to me and I could see that he was clearly bothered about something.
He nervously waited around, fidgeting the entire time until eventually, everyone else had left. I knew there was, what he thought, an awkward question coming. Don’t worry—I’m not claiming to be psychic or anything. I’ve just seen this often enough to notice the pattern. It’s second nature at this point.
So what was his question?
“How can I buy the kind of business I want to run when lenders only seem to be looking for tech unicorns?”
You could see the frustration in his eyes, clear as day. He genuinely believed that lenders only fund sexy tech start ups because that’s all he ever saw.
It’s easy to see how someone might get that impression. After all, anytime you log into social media or turn on the news, you see stories about some young wiz kid who just landed a $50 million dollar seed round for his new app that appears to serve no real purpose. The reality is that unlike the media, lenders generally don’t care how exciting your business is—they only care whether you can repay your debt to them.
Now, it’s worth noting that some industries are seen less favorably than others, and the name of your company can have an impact on your ability to get business funding, but aside from the crypto and cannabis industries, funding is readily available if you know where to look.
You see, when it comes to business credit, most people have an outdated perspective. If I asked you where you could get funding for your business, you would probably say your local bank or even the Small Business Administration, but there is an alternative most never consider because they don’t know it’s an option—and that is business credit cards.
Often, when I tell people this, I get pushback because they don’t realize that you can use business credit cards for anything except crypto or cannabis. That includes things like payroll, equipment, and even real estate, for example. There are very specific rules about how you have to do this though, and coloring even a little bit outside the lines here can get your credit line terminated and could even land you in legal trouble.
Getting and using business credit, however, can be counterintuitive because it operates very differently than personal credit.
If you don’t already have credit in your business name, the only thing lenders have to evaluate your creditworthiness by is your personal credit score. Keep in mind—you WILL have to sign a personal guarantee, but if you manage your business credit effectively, you can reach a point where you won’t always need to sign one. This typically takes a few years of consistent effort.
As we go into 2025 with a weak and declining economy, access to business credit will be a powerful advantage to not only carry you through the lean times, but also set you up to capitalize on the once in a lifetime opportunities that tend to come up in a slow economy.
And the best part is you don’t need to have an exciting company. You just need to know how to get and leverage business credit cards properly.