For many small business owners, the holidays offer the most important sales opportunities of the year.
The percentage of small businesses that attribute at least 50% of annual sales to the holiday period has nearly doubled since 2023, according to Constant Contact’s Small Business Now report.
While 66% of US consumers surveyed say they plan to spend the same as last year, 72% believe the economy may reduce their holiday budgets, according to Microsoft Advertising research for the 2025 holiday season. This means it’s more important than ever for many business owners to prepare financially for 2025 holiday shopping.
The importance of good business credit during the holiday season
The holidays are a key time for Myrlande “Mimi” Desances, the owner of MY’s Fresh Smoothies and Spices and Nav member.
Her business specializes in helping busy individuals maintain a healthy lifestyle by providing convenient and nutritious alternatives to conventional snacks and beverages.
“[The holiday season] helps to generate more sales and create brand awareness."
— Mimi Desances
She gains new customers as people search for gifts and “focus on wellness for their New Year resolutions.” She also uses the season to engage with her community through events and partnerships that she says “enhance customer loyalty and create lasting connections.”
The holiday season can put significant strain on business finances. Increased demand often requires larger inventory purchases, additional staff, and ramped-up marketing efforts.
At the same time, extended payment terms for customers can create cash flow gaps.
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Ways good business credit can help during the holidays
A strong business credit rating can provide several advantages that are particularly valuable during this critical but uncertain season:
1. Access to better financing
With good credit, businesses may be able to secure small business loans or lines of credit with more favorable terms, such as longer payment terms or lower interest rates. This can be crucial for purchasing additional inventory or hiring temporary staff to meet increased demand.
2. Improved supplier relationships
Supplier credit is an important tool for cash flow for many small businesses. With payment terms (such as net-30 terms), a business can buy supplies and pay for them later. Vendors may offer better payment terms or larger credit limits to businesses that are considered creditworthy, allowing for greater flexibility in managing cash flow.
3. Enhanced credibility
A solid business credit profile can improve a company’s reputation with strategic partners, lenders and suppliers, which is especially important during the competitive holiday season.
4. Greater financial flexibility
Strong credit provides more options for managing unexpected expenses or taking advantage of sudden opportunities that may arise during the holiday rush. Need more inventory quickly? Want to set up a new payment processing account? Good credit may help.
A good credit rating can offer peace of mind, and may help ensure your credit history won’t be a hurdle if you need to apply for a small business loan or other financing.
Steps to prepare your business credit for the holiday season
If your business doesn’t yet have a business credit history, first explore steps you can take to establish it over time. Once you’ve established business credit, here’s how to help keep it strong:
Review your business credit reports
The first step in building business credit is understanding where you stand. Get your business credit reports from major commercial credit bureaus such as Experian, Equifax, and Dun & Bradstreet. With Nav Prime, you can access your business credit profiles from the three major commercial credit bureaus in one dashboard.
Review these reports carefully for any errors or inaccuracies. If you find errors, dispute them promptly with the relevant credit bureau.
Pay down debt
Reducing your credit utilization ratio — the relationship between your available credit limit and your balance — may have a positive impact on your business credit score. Focus on paying down existing debts, especially revolving accounts with high interest rates.
Build a positive payment history
Payment history is a crucial factor used to calculate business credit scores. On-time payments are key to improving credit, whether you’re talking about personal credit scores or business credit scores. Paying on time can be one of the best ways to build and keep good credit.
Since the holidays can be hectic, don’t let payments slip through the cracks. Consider setting up automatic payments to avoid late payments. Paying invoices early may help improve certain business credit scores, such as the grade based on the Dun & Bradstreet (D&B) PAYDEX® score, which takes on-time and early payments into consideration.
Apply for new credit strategically
Think about whether it makes sense to get a new line of credit well before the holiday season. That way, if you need quick access to credit, it will already be available.
Get a business credit card
Getting a new small business credit card may also be a good idea. Most business credit cards may help establish business credit when paid on time — and many offer rewards.
If you need to finance purchases over the holidays, a 0% intro APR business credit card may allow you to do that without incurring finance charges, as long as you pay on time and pay off the balance before the introductory period expires.
Most small business credit cards are available to startups as well as established businesses. However, a personal guarantee is often required, meaning you agree to personally repay the debt if your business can’t. Be sure to understand the terms before applying.
Monitor your credit regularly
Keep a close eye on your business credit reports and scores throughout the holiday season. Regular credit monitoring can help you catch any potential issues early and allow you to address them promptly. Consider using a credit monitoring service to simplify this process.
Maintaining good credit during the busy holiday season and beyond
It’s almost cruel that the holidays fall at the end of the year, when many businesses also need to complete their bookkeeping and get ready for tax time.
Here are some strategies to help maintain good credit during this often hectic time:
1. Manage cash flow carefully
Although this sounds obvious, it’s often easier said than done. Try to make time to run cash flow projections before the holidays to anticipate potential tight spots. Look for ways to improve cash flow. For example, consider offering early payment discounts to customers who pay quickly.
Keep in mind that you may have bills you want to pay before year-end for tax deduction purposes. Review your budget to make sure you can afford to do that.
2. Be careful with credit
Credit can help your business weather the cash flow challenges of the season. But it can also mean your business ends the year with debt — and that can get expensive. It’s recommended to keep balances low on revolving credit accounts when possible.
Mimi found this out the hard way.
“One mistake my business made when I first started was underestimating the total expenses involved in holiday promotions and inventory purchases,” she says, “which led to overspending and accumulating more debt than anticipated, making it challenging to repay after the holiday rush is over.”
3. Communicate with creditors
If you have a good track record with suppliers, ask whether they can extend longer payment terms during the holidays. Instead of net-30 terms, for example, you may want to ask for net-45 payment terms.
If you anticipate any payment issues due to unexpected cash flow problems, be proactive in communicating with your creditors. Some may be willing to work with you.
4. Continue credit monitoring
Yes, you’ll have a million things to do, but don’t get distracted from keeping an eye on your credit. The last thing you want is an identity thief to take advantage of your good credit during the holidays.
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The bottom line: Building a solid business credit rating before the holidays
Mimi is looking forward to the holiday season again this year, but this time she’s planning more carefully.
“To prepare for the holidays from a credit perspective, I am assessing my cash flow and planning to apply for a business credit card or line of credit to manage increased expenses effectively,” she explains.
“Additionally, I am creating a detailed budget that outlines projected costs for inventory, staffing, and marketing, ensuring that I can make informed decisions about my business credit usage. I will also monitor all expenses closely to avoid overspending and develop a clear repayment plan to maintain financial health after the holiday season.
“This strategic approach will help my business capitalize on holiday opportunities while managing credit responsibly.”
You may want to do the same. It’s not too early (or too late) to get your business credit and finances in shape for this year’s holiday season.
Nav can help. Nav provides one of the most comprehensive views of business and personal credit available in one dashboard, along with tools to help small business owners improve their financial health and reach their business financial goals.
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Gerri Detweiler
Education Consultant, Nav
Gerri Detweiler, a financing and credit expert, has been featured in 4,500+ news stories and answered 10,000+ credit and lending questions online. In addition to Nav, her articles have appeared on Forbes, MarketWatch, and Startup Nation. She is the author or co-author of six books, including Finance Your Own Business, and she has also testified before Congress on consumer credit legislation.