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How to Build Business Credit for a Small Business

How to Build Business Credit for a Small Business

Many entrepreneurs regard their businesses as personal extensions, a natural reaction since each business is born from an idea and grown through skill and diligence. However, for owners, blurring lines between personal and business finances can be a costly error affecting both themselves and their enterprises.

Setting up business credit safeguards against specific financial and tax risks by clearly delineating the separation between your personal identity and that of your business as independent legal entities. Here is how you can build business credit for your small business.

Opt for Lenders that Report to Commercial Credit Agencies

Applying for a loan can affect your business’s credit score, especially if you’re diligent with your repayments. Understand that not all lending entities communicate with commercial credit reporting agencies.

For loans acquired from banks or digital business lending platforms, it’s common for your payment records to be documented and shared. In contrast, those offering merchant cash advances often do not follow this practice.

When in the process of loan shopping, it’s beneficial to inquire with your prospective lenders about their policy on reporting to commercial credit bureaus. Assess their answer in light of other aspects like the loan’s interest rate, to ensure you make a choice that aligns well with your business objectives.

Obtain an EIN

An Employer Identification Number (EIN), also known as a federal tax identification number, is essentially a business’s counterpart to an individual’s Social Security number. This number is required for federal tax submissions and initiating a bank account in the corporation or LLC legal name.

In adherence to IRS protocols, many businesses also mandate that their suppliers provide an EIN to facilitate the compensation process for provided services. Check out this article from Tradeline Reviews to learn how Coast Tradelines provides businesses with EINs and other essential services to jumpstart their credit-building journey.

Utilize a Business Credit Card

Securing a company-issued credit card is a typical approach to build business credit. If you’re already banking with an institution, this relationship might simplify obtaining a business credit card without needing a personal guarantee. Ensure the account is registered purely for business transactions.

Research and compare business credit cards to identify ones with favorable terms, including whether a personal guarantee is needed. Evaluate the benefits and rewards programs to see how they can benefit your business, and think about whether providing your employees with cards could facilitate more straightforward expense management.

Keep Developing Connections with Suppliers

As you develop your business, make it a priority to forge and strengthen connections with suppliers, and set up agreements for procuring supplies and various business essentials. Establishing good credit involves timely or advance payments to suppliers that report to credit bureaus.

However, note that not all suppliers report to these agencies, and those that do may not report to the same ones. Reflect on your business’s specific requirements, then research which suppliers in your field report to credit bureaus.

Make Payments Early and Frequently

Paying your bills promptly and in full is crucial for establishing credit. This action confirms your ability to responsibly manage and repay debts. By settling bills before their due date, you might even accelerate the development of your business credit rating.

Fundamentally, credit is a contractual promise to a lender that you will reimburse them in the future for goods, services, or funds (as with credit cards) that you utilize immediately. You must honor your payment obligations as soon as bills are issued. Adhering to this simple principle is at the heart of building a solid credit foundation.


A robust business credit score can enable your enterprise to access lower insurance rates, secure contracts with other companies, and obtain loans and lines of credit under better interest rates and repayment conditions. To enhance and develop their business credit scores, companies can initiate trade credit arrangements with vendors, settle bills ahead of schedule, and maintain low credit utilization ratios.

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