Mark Twain said, “A bank was a place from which to get money if you could prove that you absolutely don’t need it!”
That’s why the best time to get loans, credit cards, or to extend lines of credit, is absolutely when you don’t need it. And for many designers, that time is now.
For many, business is going pretty well. The economy is robust, and the deep scars of 2008 are in the rear view mirror.
But for how long? What if…that big client cancels, or the market turns soft? What if you have that one unexpected problem or even a law suit? What if a key employee leaves you in the lurch and you need a bit of a safety net to recover?
For my money, it just makes sense to have some extra cash and credit, even if you never have to touch it. I do this myself. About every 4-5 years, when my credit rating is high and my cash flow is stable, I load up on credit options and have even explored some new options like Marcus, the personal lending arm of Goldman Sachs.
I’m happy to park $25,000 – $50,000 in my bank account in return for a $600 monthly payment for 48 months. Or better yet, a $60,000 line of credit for a few hundred dollars a year.
Before making a significant investment, I always ask myself this question: “What would I do if money were no object?” The answer to that is most often the right answer, and if I have plenty of cash and credit available, then at least for that decision, money will not be an option.
With the new advent of peer-to-peer lenders and other sites like Marcus and Sofi, you’re able to check your loan opportunities without dinging your credit rating. Whether to finance your business with debt is, in my view, a different discussion than to at least have that option when you need it. The time to do that, is before you need it!