When To Borrow Money

JALAPENO TOM

When and how did you decide to borrow money for your business? Have any of you not borrowed and built your own OCRA account over the years instead and then become your own bank?

hauoli63

We've done both ... we've borrowed on our own personal line of credit if we were a little short for payroll or supply bills and we've also built up a business savings account to draw off of when short. Much prefer the savings to draw on!

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~~ Lisa ~~

www.chantillyplumbing.com

Grumpy

I have a credit card I use for floating minor material purchases. That's all the borrowed money I have, other than about $100k worth of credit with various suppliers. It's all 30 days net with the suppliers.

One of my accountants keeps encouraging me to borrow $50k for float to get us through the humps. For example right now my recieveables is very high, and I have alot of unfinished work due to weather issues... but the payroll has to be made this Friday and the subs need to be paid.

I prefer to get my money the old fashioned way and earn it. I told my accountant that we should struggle for one more year before seeking any borrowed money. I said it will accomplish two things, first it will weather us as a company experiencing the hard knocks. Also it will allow me to TRY and save that "float" instead of borrowing that float. Saving $50k isn't an easy task, which is also another reason I am trying to do it... I like a good challenge.

cdac

I totally agree with your reasoning for not borrowing, as I have built myself up this way, and it will provide better peace of mind, sanity and dicipline for you in the long run. However, I don't assume to know how you handle your accts payayables, but what works for me is, I run everything, and I mean everything on my credit card (which has a large line of credit) All my expences are consolidated to 1 monthly statement which I just pay in full every month, this does 3 things for me:

• all expences on 1 statement(K.I.S.S.)

• a PSYCOTIC amount of miles for endless vacationing

• perfect credit rating with unstoppable buying power

takes dicipline, and it's not for everyone, but I couldn't do it any other way now.