"10 Best" Reasons Why EVERY Startup Should ALWAYS Apply for Credit BEFORE it's Needed

Startups are full of unexpected opportunities and expenses. As a Founder, you are responsible to be prepared for all of it. This is why I recommend that all startups should ALWAYS apply for credit lines/credit cards BEFORE they intend to 'use them or need them.

1. Maintain Control: By applying for credit before it's needed, startups can maintain control of their finances and avoid being forced into unfavorable terms by vendors or giving up equity to investors. Also, applying for credit before it's needed gives you time to shop around for the best terms and interest rates.

2. Avoid High-Interest Rates: Applying for credit in advance of its need is FREE and can help startups secure lower interest rates, as lenders may view you as less of a risk. There are now a host of lenders targeting startups - see more options below.

3. Smart Financial Stability: A credit line or credit card in place can help show potential investors, clients, and partners that your startup is financially smart, stable, and responsible.

4. Peace of Mind: The 10 minutes that it takes to complete a free online application for your new business credit card creates a sense of empowerment as you are preparing for the future. Applying for credit in advance can help avoid delays in funding as the approval process can take time.

Applying for credit before it's needed, startups can maintain control of their finances and avoid being forced into unfavorable terms by vendors or giving up equity to investors.

5. Build Credit History; Business vs. Personal: Establishing your business credit history (vs. your personal credit history) is important for obtaining favorable terms on future loans, credit lines, and leases. Also, by applying for credit before it's needed, startups can build relationships with lenders and improve their chances of getting favorable terms on future loans.

6. Competitive Advantage: Having a credit line or credit card in place allows startups to quickly take advantage of new opportunities, such as discounted inventory or equipment. Your competition may not have this option.

7. Smooth Cash Flow: A new business credit line or credit card can help smooth out cash flow, especially for businesses that have seasonal or fluctuating revenue.

8. Bridge The Gap: A business credit line or credit card can help bridge funding gaps between payments and invoices, or when waiting for a loan to be approved. With a credit line or credit card in place, startups can avoid missed payments that can hurt their credit score.

9. Prepare for emergencies: Smart people prepare for the unexpected. A business credit line or credit card can be a valuable resource in case of emergencies, such as equipment failure or unexpected expenses.

10. Increase purchasing power: Having access to a credit line or credit card can increase a startup's purchasing power and help it acquire necessary equipment or inventory.

Credit Cards and Lines of Credit for Startups:

• TOP PICK: Best Card with $0 Annual Fee & Lower Interest for New and Growing Startups - Fast approval, very low interest, and automated expense management
• Best Business Credit Points Cards - from the Points Guy
• Best Business Credit Card with $0 Annual Fee & Lower Interest - from NerdWallet