What True Entrepreneurs Understand about Debt

There used to be a time along the development of documented human history when every single individual lived their lives out in a manner which would have them classified as entrepreneurs by today’s standards, if not self-employed. People worked to provide for their own needs first, even if that meant physically farming the land you own and those that weren’t content with subsistence in this way sought ways to produce more and sell the surplus.

Now, it might not have existed as extensively as it does today, but more people had a much deeper grasp of what debt is and what its originally intended purpose and use was, simply because more people existed in the mould of what an entrepreneur is. Things have changed in recent times though, largely due to industrialisation and the subsequent widespread establishment of corporations and the emergence of the services sector. The deep and insightful understanding of what debt is seems to be limited to the diminished number of entrepreneurs who remain, so too the suits driving the large corporations, particularly those corporations which are in the financial industry.

So debt now generally means two different things to two different groups of people and if you think about it from the point of view of the consumer, it’s something bad and something to be feared. You should be thinking about it from the point of view of an entrepreneur though because entrepreneurs see debt as an asset rather than a liability. Entrepreneurs don’t refer to it as debt, but rather refer to it as credit!

Because they don’t ordinarily have any means through which to build up a credit record that can be used to secure a loan from the traditional lending institutions, entrepreneurs often find themselves having to bootstrap their operations or give away equity in their business if they want funding. With the knowledge the average entrepreneur has, they would stop very short of giving their right arm to be able to loan some money from payday lenders like SwiftMoney and the likes.

This applies even in the case where the said entrepreneur is not necessarily looking to use the money to take advantage of a passing business opportunity or venture, but also applies when they perhaps just need something to tide them over until their next payday. So that is one area in which working class individuals enjoy an advantage over self-employed individuals and entrepreneurs who have no way of putting up their pay stub as surety to secure something like a payday loan.

And we all know about how rigid and somewhat archaic banks are with regards to their lending criteria. It’s basically just a matter of them not even going to consider your case, however strong that case may be for you to get credit, if your circumstances don’t fit in perfectly with their outdated lending parameters.

So for many entrepreneurs, their understanding of what debt/credit is and their understanding of how best to make use of it is in a sense a wasted understanding because they belong to a group of people who have very limited access to any form of credit facilities.

It goes beyond business though because an entrepreneur would have to put in a lot more effort to save up for special occasions such as Christmas, while someone who can present their pay-stub to a lending institution might be able to secure a quick loan to help cover some of their #OccasionalSpending, should they not be able to stick to their savings plan throughout the year as diligently as they may like. Either way, it’s a case of those who enjoy their respective advantage in their relationship with credit/debt not really being in a position to make full use of it, generally speaking of course.