How to Build Business Credit to Qualify for a Small Business Loan

Building business credit is an essential part of establishing a small business. By building strong credit, you can qualify for loans, lower interest rates, and improve your company’s financial standing. However, many business owners may not know how to begin building business credit or why it is essential. This article will explore the steps to take to build business credit and how it can help you qualify for a small business loan.


Step 1: Establish Your Business as a Separate Entity


The first step in building business credit is to separate your business from your personal finances. This means creating a separate business entity, such as an LLC or corporation. By doing this, you are creating a distinct legal and financial identity for your business that can help protect your personal assets in the event of legal action or bankruptcy.


Step 2: Obtain a Federal Tax Identification Number


The next step is to obtain a federal tax identification number (TIN) from the Internal Revenue Service (IRS). This number is also known as an Employer Identification Number (EIN) and is used to identify your business for tax purposes. You will need to provide this number when opening bank accounts or applying for loans.


Step 3: Open a Business Bank Account


Opening a business bank account is crucial for establishing business credit. Having a separate account for your business transactions helps keep your finances organized and shows lenders that you are serious about your business’s financial standing. Be sure to choose a bank that reports to business credit bureaus to help establish your credit.

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Step 4: Establish Trade Credit


Trade credit is when a supplier allows you to purchase goods or services on credit and pay them back at a later date. By establishing trade credit, you can build a positive payment history and show lenders that you can manage credit responsibly. Be sure to choose suppliers that report to business credit bureaus to ensure that your good payment history is being reported.


Step 5: Apply for a Business Credit Card


A business credit card is an excellent tool for building business credit. Similar to a personal credit card, a business credit card allows you to make purchases on credit and pay them back at a later date. By using a business credit card responsibly and paying on time, you can establish a positive payment history and improve your credit score.


Step 6: Monitor Your Credit Report


Just like personal credit, it is important to monitor your business credit report regularly. By doing so, you can catch errors or inaccuracies and correct them before they affect your credit score. Additionally, monitoring your credit report can help you stay on top of your credit utilization and payment history.




Building business credit takes time and effort, but it is an essential part of establishing a small business. By following the steps above and staying on top of your credit, you can improve your chances of qualifying for a small business loan and secure the financing you need to grow your business. Remember to be patient and consistent, and your efforts will pay off in the long run.

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Moby Capital has been helping thousands of businesses just like yours to secure small business loans for over 10 years. We have sourced over $1 Billion in funding for small businesses and we have the expertise to make the loan process as fast and easy as possible. Contact us today to learn how we can help get money in your pocket.


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