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All the experts are arguing about whether the economy is growing or slumping, whether we’re in a recession or whether everything is fine. Meanwhile, small businesses are struggling to get credit in what is clearly, for them, a tight credit market.

While many factors contribute to this problem, the housing collapse is tightening credit. Banks are being more cautious about who they award credit to, and dropping many credit programs that previously offered more liberal approval and terms to small businesses. In particular, business lines of credit are disappearing quickly, even for small businesses with good credit and the ability to repay a line of credit.

Many businesses are turning to other lenders and credit sources to finance their businesses. One of these credit vehicles is trade credit—opening a line of credit or a credit card with a vendor, whether it be an office supply company or a computer manufacturer. This credit is based on your business credit profile, so it’s important to take the time to create a business credit profile. Using trade credit can help you build this profile so you can get more credit, of all types.

Merchant cash advances are another financing option for businesses with solid credit card sales. While the costs can be high, these advances allow the merchant to take out a loan and repay it through credit card receipts. When a customer buys with a credit card, the lender is paid a portion of that sale, so you pay off the loan as you go.

Equipment and software leasing may be another option for financing our businesses. By leasing big-ticket items rather than paying up front, you can keep your cash free for other business functions, while getting the equipment you need.

You might also want to consider accounts receivable (A/R) factoring, which allows you to sell your receivables, the money owed to you by other businesses. When the accounts are paid to you, the lender gets paid. Merchant cash advances are in fact a type of A/R factoring, but are limited to credit card receivables.

There are several ways that you can get what you need to run your business without taking out a bank loan. Granted, not all of these methods give you cash in hand (trade credit and leasing, for example), but if you can avoid paying cash for what you need, you can often free up cash for other purposes.

When you take advantage of other lending options to get the operating capital you need for your company, you also build your credit profile and increase the likelihood of getting a bank loan for your business. It’s really a cycle of borrowing, proving you have the ability to repay, and being able to borrow more, on better terms, from other lenders, in the future. Like anything else, you will find that the more credit you use, the more credit you will get.

When your business needs capital or equipment, consider trade credit, leasing and receivable financing to meet your needs if you are unable to get traditional loans.

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