In business, there are a few key factors that determine whether an enterprise might fail or not. One of these is access to funding. Because so many things in the business world cost money (hiring staff, buying inventory, paying bills), having liquidity is invaluable. This is why startups have funding rounds and why small operations take out loans for expansion.
When it comes to loans, however, there are upsides and downsides. Yes, the business in question might get the money they need but they also have to deal with interest rates on the loans. In the event that they default, they lose their collateral altogether and their creditworthiness will also be affected.
The good news is that a new system of giving business owners access to resources is emerging that doesn’t require any interest and keeps the creditworthiness of the business owners intact. This, of course, is the mutual credit system.
All About Mutual Credit
The need for resources is not unique to any single business but is common among them all. The concept of mutual credit means that several businesses agree to essentially trade the resources they have available to each other. Take the ReSource Protocol, a blockchain-based platform that facilitates the mutual credit system among businesses.
Using the ReSource Protocol, businesses can list the unused resources at their disposal, be it expertise, inventory, labour, and so on. This creates an interest-free line of credit for them that they can then use to access the resources they need from other businesses. In this barter-style system, neither has to pay any interest on loans.
