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Is Establishing Business Credit Still Necessary?

Online merchants inherently wear many hats each and every day. From having to manage inventory and track orders to growing new sales channels, there’s a lot to do!

Since the start of the recession in 2008, the media has drawn great attention to the diminishing number of banks offering loans to small businesses. This has deterred many business owners from even attempting to obtain funds to grow. However, establishing credit remains important, particularly if you have plans to ramp up your business. Here are just a few of the reasons why.

Growth Potential
What will you do if you receive a larger than expected order? Will you have the funds necessary to buy the inventory you need or pay for the help you require to fulfill it? Having credit to get you through such a situation could literally make or break your business. Having credit on hand can give you peace of mind that you will have what it takes when you need it.

Protection against a Slowdown
Just as you need to be prepared for a sudden sales boost, you also need to be ready for when there’s a sales lull. Business credit can be used to keep you afloat through a slow period so that you’re still there when the economic picture improves.

Staying Competitive
The old adage that it takes money to make money still holds true. Having funds to use for taking advantage of a supplier’s sale or to be more aggressive with marketing initiatives can sometimes make all the difference to a business. By having the credit you need for promising business opportunities that present themselves, you can maximize your potential for success.

Saving Money
Vendors like to work with businesses that pay cash. In fact, many will offer discounts for doing so. If you are sourcing raw materials or even reselling goods, you’ll have more leverage with your vendors if you have cash on hand. This translates into savings for you and more cash in your pocket!

Providing a Safeguard in Case of a Business Failure
You can’t afford to risk your own personal credit. But, if you’re using personal credit cards to fund your business or are drawing from home equity or personal loans to do so, your credit can be damaged if your business fails. By using business credit when you need funds, you at least won’t have to worry about damaging your own personal credit.

Like with personal credit, you need to be proactive about obtaining and protecting your business credit. Credit can be an important component of your business’s future success, so it simply makes sense to find a partner for obtaining funds that you can count on. Kabbage has served tens of thousands of small businesses to get them the money needed to grow. 80% of businesses that apply get funding. To learn more about how Kabbage can help your business grow click here


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Reader Comments  (18)

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I Eat Cabbage | November 30th 2012 at 1354289497

Reading weekly blogs and daily news line filters, etc., it seems that many broke merchants are down and desperate willing to settle for just one nibble of a sale on sites that promises everything but the ordinary.

One should first seriously ask themselves:

Do you really want to put yourself into a financial bind borrowing for a site that you know "very well" has no current buyer potential?

Not only would you be stuck in a barn with no traffic, a DUE BILL would be the only thing awaiting you on that due date.

Think twice what your true options are in order to make the best "lucrative decision" you will have to live with!
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Top Merchant   | November 30th 2012 at 1354293893

Kabbage seems to have helped a lot of online merchants who are looking to grow, you can't do it with cash alone, but it certainly helps!
Addoway, Inc
Addoway, Inc | November 30th 2012 at 1354296449

Definitely can appreciate your opinion, but the Kabbage post was for members selling anyone online and not just here. Doesn't matter if you sell on Addoway, eBay, Bonanza, Etsy etc. Addoway wants members to be successful no matter where they sell. We are not trying to be an alternative, but rather a compliment to sellers, giving them an opportunity to open up their channels to other outlets and increase their success. Kabbage offers an inredible solution to help sellers increase their odds of success by infusing their business with capital to make those investments that will give them an edge that before they would have no chance at having.

Sellers should look into all options and this is why we provided this for sellers. Thank for taking the time to shed some light on what you believe. We are an open platform and glad everyone shares their feelings.
Addoway, Inc
Addoway, Inc | November 30th 2012 at 1354296487 - in reply to Top Merchant

Yes they definitely have helped many merchants. When we go to conferences we always meet members who are jump starting their business with them. Thanks for commenting.
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Corrine's Clothing   | November 30th 2012 at 1354333914

One of my friends I met at the ecommerce convention 2 years ago used them and told me she was able to buy more items than normal when discounted because she had some extra cash. She also made sure to add an incremental % in her sales to offset any interest etc. I have been thinking about it and might take it up in the new year. Just found Addoway last month and finally got my first sale last week and now 2 this week.
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Gerald's Bridals | December 1st 2012 at 1354397087

Good blog post - very informative and appreciate it. Not sure if I can do this just yet, but if things keep moving along like they are...maybe just maybe I will be applying. Thank you
ALEXLITTLETHINGS | December 17th 2012 at 1355754984

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Ayuni Gifts of the World | January 1st 2013 at 1357109612

Yes, why don't they take Addoway sales into account? Since Addoway is a legitimate alternative to other online platforms.. they really need to look at a sellers profile here as well!
Addoway, Inc
Addoway, Inc | May 22nd 2013 at 1369267579 - in reply to ALEXLITTLETHINGS

You can use them for your items on eBay if you prefer. We aren't setup with them, but you could use it on Addoway even though it's not an option
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shibu   | September 10th 2017 at 1505070207

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