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To Your Credit

Prove your trustworthiness to vendors.

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This story appears in the March 2007 issue of Entrepreneur. Subscribe »

Question: I opened a children's clothing store and am amazed by how many companies require cash upfront before they will ship me product. My personal credit has always been good, but when it comes to my business, that doesn't seem to count. Any advice?

Answer: Don't take it personally. Getting vendors to extend credit is one of the toughest challenges startup businesses face. Because startups typically have limited, unpredictable or even negative cash flow, vendors generally don't want to risk shipping products or providing services to customers who may not be able to pay--or who may even file for bankruptcy and close their doors. Although a business owner with strong personal credit can easily obtain a credit card for his or her company, credit card fees are often hefty, and suppliers may not accept credit cards for large purchases.

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