You should set up a line of credit prior to the time you actually need it. Your credit is another tool in your business toolbox – learn to use it well as it can help propel you to the next level. This point is important. It is much easier to obtain credit before you are in a position to really need it.
Many small businesses choose to maintain their business on a pay-as-you-go thinking that no debt is the safe approach, but in order to expand and grow, it may become imperative to have good sound credit to take advantage of opportunities that might be available to you. However, learning to manage debt is an entirely different concern, and each of us will have our own limits. Understanding what yours are is important if you are going to enjoy your trip in creating and growing your business. A line of credit is short term and you should have a scheduled time that the line is satisfied that is reasonable; it is not like a mortgage. A line of credit should be used for product such as inventory. If you are using it to satisfy your payroll week after week, you might be digging a hole you will never get out of. I cannot stress how important it is to control your line of credit – it is a business tool.
-Stephen L. Capper, A-1 Awards
