Quick Answer
Scaling financing typically progresses from vendor and card credit, to lines of credit, to term loans and SBA financing, and ultimately to commercial banking relationships with covenants and structured facilities.
Key Takeaways
- Different financing tools fit different growth stages.
- Banking relationships become more valuable as the business matures.
- Covenants begin to appear at the commercial-banking stage.
The Stages
Educational frameworks commonly describe four stages: starter trade, working capital, growth capital, and structured commercial facilities.
Frequently Asked Questions
When should a business outgrow card-based financing?
Generally when working capital needs exceed what cards can sustainably finance and when interest costs on revolving balances begin to materially affect margins.