The Startup Checklist

13Establish and Manage Your Credit Profile

One of the most crucial resources a startup has is the money that it will use to pay for products and services, and invest in its growth . . . not to mention pay the founder a living wage. Unfortunately, the nature of the beast is that startups typically begin with no cash at all, so one of the first orders of business after you've passed the theoretical stage is to find at least a minimal amount of funding. In the next part, we'll discuss equity fund-raising, and how you will put in your own capital, hit up your friends and family, seek out angel investors, and perhaps try to land a venture capitalist. But in this chapter, we'll start with the obvious question “How can I borrow money to fund my startup?”

Answer: You can't. At all. Why? Because banks and other lenders are not in the business of investing or taking risks. They are, instead, in the business of renting money. Just as for a car rental company the number one thing it cares about is getting the car back in one piece at the end of the rental, with banks, the thing they care most about is getting their money back at the end of the loan. Unfortunately, startup businesses are historically very, very bad risks, and a majority of them fail completely. That's why you won't be able to get a loan.

But.

While no one is going to lend you cash money, there is a small to moderate chance that a vendor, supplier, or service might be willing to advance you credit, even if it's only to let ...