Using Debt to Leverage Your Company, with Shelton Marchman (Part 1)

by Amanda Abella  - June 16, 2020

Shelton Marchman, author of “Give Me Credit for Trying”, has been a business credit expert for two decades. Listen in as we chat about how to use debt to leverage your business correctly.


Consumer debt and business debt are two different worlds. You don’t want consumer debt as this type of debt isn’t useful. You definitely want to pay down consumer debt and get yourself out of that unfortunate situation.

When you want to start building wealth, your views on credit need to change. If you’re going to wait on cash or plan to have cash on hand for everything, it’s going to take you a lifetime to get results. As Shelton brings up in this article, he doesn’t know of one business that’s never had to leverage credit. When you use your credit, remember to learn to use it properly.

Shelton’s going to break down what business owners need, and how you can get your company in line to qualify for up to a hundred thousand dollars in business credit. Why would a business owner want to use credit? What are the pros of using credit? Why is this something that you would even want to use? Additionally, find out why there’s so much confusion about lending in the first place that causes people to screw themselves over.

Right now, no one’s lending to anyone who comes off the pile and says they need money. Everyone needs money, and banks aren’t going to lend it to you because you need it.


Entrepreneurship and Debt

Shelton’s advice for entrepreneurs is to go into debt. “I don’t know a single person who has successfully navigated entrepreneurship without taking out some debt. Honestly, if you make less than $200,000 personally, I don’t know how you would navigate your entire life without having some debt. Whether it’s a car, a home loan, or something like that, you know, some people think it’s all cash. Debt is a tool. You don’t want to be paying for that vacation you took to Cancun for the next five years. However, if you’re buying something, that’s going to help you to build credit, then that is a good move.”


Common Misbeliefs About Debt

We’re not taught anything about finances until we are thrust into it. We aren’t taught how to manage our money in school. I didn’t see my first cable bill until I moved into my first apartment in college. The only education we get concerning money is to go out and look for it if you need money.

One of the significant shifts I had to make was to be “OK” with company debt. When you gather a debt, your mindset needs to shift to thinking more long term. You now need to make decisions in the long run, not just like the next two weeks or the next month. For me, it was only finally finishing the booking systems.


Sell, Get a Business Loan and Scale

You’ve got to learn how to sell to get to the point that banks will give you a business loan. Many people are frustrated by banks that say they lend to small businesses; they won’t provide them with money to scale.

Shelton’s view on scaling, “You have to be highly intelligent about how you scale your business. If someone tells you they’re not going to lend to you based on what you perceive to be your level prime example. I know a guy who has four restaurants. Now, he started with a hot dog cart in front of a Lowe’s built to a second hot dog cart, third and forth from there, he went and borrowed money based on what his hot dog cart money was that got him into his first restaurant. ”

“If you’re not already at a restaurant level if you’re still at the hot dog cart level, go and ask for hot dog cart money, and they may loan it to you or scale back with your cash until you are at the level where you can get the restaurant. As long as you have receipts and you have a paper trail of money coming in, they’ll eventually lend to you.” You can’t go to the bank first and ask for a hundred thousand dollars because you have a business plan. Many businesses have burned through the first round of money.


When You Should Create a Business Plan

If you’re four years in the business and you come looking for $5,000, they’re not going to ask you for a business plan at that point. But if you are starting and you’re looking for money, I say you’re better off getting an investor than you are trying to go to a bank loan because most financial institutions won’t give you credit if you’re a new business. They have economic safety parameters that are ancient compared to the new markets. There are people viably making millions of dollars, drop-shipping – they don’t have a product that they sell. Their inventory is precisely what they’re selling immediately. So a bank wouldn’t give them money at the start. In this case, a business plan might help you to get investors. Long term, you’re better off just keeping solid financials.


Resources that are mentioned or add value to this episode:

Final Steps to Setting Up Your Business Credit, with Shelton Marchman (Part 2)

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