The business credit lifecycle

Every business is unique, but many share common needs and characteristics. Many of those are based on where they stand in the lifecycle of the business as it evolves from an idea into a mature company. Matching this progression of business stages is a “credit lifecycle” of the most common credit needs, credit-building strategies, and credit products.

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Published: April 08, 2013


This earliest stage is focused on planning. You may not yet seek financing at all: perhaps you’re operating on savings, or simply moonlighting from another job until you’re ready to launch. However, this is a critical time for your credit planning, especially as you build out your:

  • Business plan

  • Funding strategy


Securing funding as your venture gets off the ground is a critical startup priority. Because lenders prefer entrepreneurs with some “skin in the game,” a substantial investment of your own money sends a message that you’re committed to making the business succeed. Likely sources of startup funding include:

  • Personal and family assets

  • Business credit cards

  • Outside investors

  • Microlenders


As your business grows, your financing needs change. While you don’t want to overstretch your resources, you do need to be able to take advantage of opportunities as they arise. Make sure your funding keeps up with your growth and offers the flexibility to act quickly when you choose. Possible funding sources at this stage are:

  • Business line of credit

  • Equipment and vehicle financing

  • Business loan

  • SBA 7(a) loan


A mature business never stands still. While your focus at this stage may be on staying ahead of the competition and improving performance, givesome thought to your financing as well. Are your existing loans and other debt still appropriate for your business needs? Are you making the most of any business equity? Strategic funding decisions might include:

  • Consolidating debt

  • Refinancing equity

  • Opening an equity line of credit or loan


A major expansion can take your business to new places. Because few businesses can spare enough cash to expand, it may also call for new financing resources to fund new product lines, locations, or acquisitions. Monitor your cash flow and margins carefully to help maximize your access to:

  • Business real estate financing

  • Business term loans

  • SBA 7(a) and 504 loans

  • Equipment and vehicle financing


As you begin to think about your endgame, financing may not be a high priority. But whether you’re planning to sell the business or keep it in the family, you want to enhance its value and stability. Make sure any significant debt is optimized for the long term. At this stage you may want to:

  • Consolidate debt

  • Refinance equity

5 tips on applying for financing 

Whatever stage you’ve reached, when you apply for financing the process will be much the same. Here are some best practices for getting the funds you need. 

  1. Get your financial house in order. Check your credit scores and correct any issues before you apply.
  2.  Gather essential business records, including tax returns and financial statements. For an SBA loan you’ll also need a formal business plan.
  3. Define your goals specifically. Where are you going as a business? What will you do with the money? How much do you need? Ask for a specific amount that matches your strategy — not what you think you can borrow. 
  4. Be realistic, especially about your strengths and weaknesses. Loan officers will be evaluating your business thoroughly. Make sure you’re upfront and proactive in communicating any challenges or opportunities for your business.
  5. Understand your options and the process. For example, loan decisions below $100,000 may be made based on credit scores and basic information, while larger amounts will trigger a detailed review of your finances.
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