Leverage Credit for Business Growth in 2024

Leverage Credit for Business Growth in 2024

Leverage Credit for Business Growth in 2024

How does credit impact your small business, and how can you use it to your advantage? Here’s a step-by-step guide to leveraging credit to grow your business. 

But first, why should you care?

Business Credit as a Strategic Growth Lever

Creditworthiness matters. Whether you’re looking for business financing, or in the running for a major contract, strong business credit can help your business achieve those goals.

The Old “Use Money To Make Money” Adage

It’s understandable that many business owners want to avoid debt at all costs. But having access to financing can help your business in many ways, whether that’s weathering a cash crunch or taking advantage of an opportunity, such as acquiring real estate to expand, buying inventory at a deep discount, or upgrading equipment. 

Step One: Check Personal Credit

When you’re a small business owner, credit matters. 

Your goal ultimately is to move away from personal credit and to obtain financing without personal credit checks or personal guarantees. But initially at least, as you grow your business a number of lenders will check your personal credit and rely on that, at least in part (and sometimes fully) before making a decision.

Some examples of the types of lenders that require a personal credit check:

  • Personal credit card issuers and many business credit card issuers.
  • Traditional bank loans often require a personal credit check, especially for newer or smaller businesses. 
  • SBA loans generally require a personal credit check for all owners with at least 20% ownership.
  • Microloans, which are small loans available through a variety of sources including Community Development Financial Institutions.
  • Cash flow loans typically analyze the cash flow into your business and offer funding based on your historic cash flow. Those often check personal credit scores though their minimum credit score requirements are on the low side. 

Not all of these lenders require excellent credit. 

Some lenders will allow FICO scores as low as 500. But many lenders require good or excellent credit, which means credit scores of at least 650 and often higher. 

Step Two: Check Your Business Credit

Your business can have its own credit reports and scores. Establishing business credit requires getting accounts with lenders and vendors that report to business credit agencies. The accounts they report are referred to as “tradelines.” Not all companies report to business credit agencies, so you may have to be more proactive than you are with your personal credit.

Some examples where business credit may be checked include:

Vendors and trade credit suppliers

You may get supplies from a supplier, you may work with a vendor, and if you work out terms with them you can get what you need and pay for it later often in net-30, or net-60, or net-90 terms which just means the invoice is due in 30 days, 60 days or 90 days.

SBA loans

Some of the most popular loans that are guaranteed by the Small Business Administration do require a credit check that looks at both business and personal credit. We’ll explain that in just a moment.

Online lenders

Some online lenders check business credit. 

Large businesses

If you want to do business with some of the big companies like Walmart or Target, you’ll need a D-U-N-S number which is an identifying number for Dun & Bradstreet, one of the major business credit bureaus. They may check your PAYDEX for Dun & Bradstreet, which is their version of a business credit score that’s very popular. You’ll want to build business credit before you need it so you can take advantage of those opportunities when they arise.

Nav conducted a survey of business owners nationwide and found that business owners who understood their business credit were 41% more likely to get approved for a business loan. 

Good business credit is a competitive advantage and you’ll want to have that competitive advantage.


There’s a FICO score that’s been developed specifically for small business. It’s used to evaluate certain types of SBA loans in the popular 7(a) program, and it also can be used by banks or credit unions, or other traditional financial lenders evaluating small business applications.

Here’s how this works. The FICO SBSS score can include data from your business credit reports, the personal credit of you as the business owner, and it can use both sets of information to calculate a FICO SBSS score. That score ranges from 0 to 300 with 300 representing the lowest risk, or the best credit score you can get. 

With a stellar personal credit score, and no business credit, you may still get a good score, but it’s a lot easier to get a high FICO SBSS score if you have established both business and strong personal credit.

Step Three: Know Your Revenues

If you’re thinking about financing now or in the future, know your revenues. There are a variety of lenders that will look at the revenue coming into your business. 

They can analyze in different ways. They might look at:

  • Minimum annual revenue
  • Average monthly revenue
  • The mix of revenue sources 

In other words, there are different ways they can analyze it.

Some examples of loans and lenders that often take revenue into account include:

  • Bank loans. Banks often prefer to lend to businesses that have steady revenue.
  • Term loans. A fixed amount of money lent for a specific period of time, these loans can come from banks or credit unions, as well as online lenders. 
  • Lines of credit. Here you get approved to borrow up to a credit limit. As you pay it back, that line becomes available again. 
  • Business cash advances. This revenue-based financing analyzes the cash flow of the business to advance funds against future revenues. 
  • Invoice financing. Here you get an advance against invoices owed by other companies, or even government agencies. 

Monitoring your cash flow and revenue can help you understand your businesses’ financial situation and help position your business for financing. 

Step 4: Separate Business and Personal Finances

Make sure that you have a business bank account. Many lenders require business bank statements to verify revenues. 

Mixing business and personal finances is not a good idea if you want to build a lasting business. If you commingle your business and personal finances, it’s going to be difficult to understand how your business is doing financially. It will also make it easier at tax time, so it’s easier to understand which purchases are business purchases, and may be tax deductible. 

Step 5:  Establish Accounts That Report to Business Credit

Accounts that report are called tradelines. While it’s not hard to get tradelines, not all companies report. You can pay your bills on time and discover you don’t have a good business credit score, simply because those accounts do not appear on your credit report. 

Net-30 accounts

One of the main ways to get started is with vendor accounts. Here you get credit from suppliers to purchase items your business needs like shipping supplies, janitorial supplies, or office supplies on terms. If you get net-30 terms, for example, the balance is due in 30 days. If the vendor reports your account to commercial credit agencies, that tradeline can help you establish business credit.

Most suppliers don’t check personal credit. This means you may be able to build business credit even if your personal credit isn’t strong. 


Other tradelines include accounts like Nav Prime* that report to business credit. 

Business credit cards

If you’re using a personal credit card or if you’re using a debit card for your business, consider getting a business credit card. Most small business credit cards and business charge cards report to business credit bureaus. Pay on time and build an excellent business credit rating. 

If you are an entrepreneur starting a new business, keep in mind that most business credit cards are available to startups. You can start a business today and qualify for some business credit cards tomorrow. 

Most issuers will review your personal credit scores, and income from all sources, not just the business. 

There are business credit cards available if you have bad credit. 

Most business credit cards— not all but most— do not appear on personal credit reports unless you default. 

Here you’ll find information on how business credit cards affect personal credit

Step 6: Pay On Time

Once you do get tradelines, business loans or other accounts that report payment history, pay on time. Payment history is very granular with business credit— much more so than business credit. If you pay just a couple of days late on a business credit account that shows up in your credit, it could show up as a late payment. 

Business credit reports as DBT or “days beyond terms.” If you have an account with net-30 terms and you pay on day 32, the account will be reported as 2 DBT. 

If you’re building business credit, I would highly recommend you set up a system so that those bills get paid right away, so you’re paying early and you don’t have to worry about any late payment or any possible negative information on your business credit.

Step 7: Fix Mistakes

Mistakes on business credit are not uncommon. 

Many My theory is the reason that is is because business owners don’t check their business credit. It doesn’t matter whether it’s your personal credit or your business credit, ultimately, you and I are the only ones who can look at our credit reports and say, “that’s not my account,” or, “I wasn’t late,” or, “I forgot about that.” Ultimately, we’re the ones who can ensure accuracy in our credit reports, so we need to be checking our business and personal credit on a regular basis to make sure the information is accurate, complete and up-to-date.

Step 8: Monitor Your Credit

Business identity theft is an ongoing threat to business owners. Anyone can be a victim of business identity theft: I was.  

If you’re not checking your business credit profile on a regular basis, you may not be aware of  potential problems. 

Monitoring your business and personal credit not only helps you stay on top of your credit; it can also help you spot fraudulent activity early and intervene before it is too late.

Leverage Credit = Leverage Debt: Know What You Are Getting in To

You don’t have to take on debt to build credit. You can utilize net-30 accounts or other tradelines, or use business credit cards or business charge cards and pay in full. Either way, you can avoid debt while building credit. 

When you do borrow, though, you want to make sure you understand how it fits with your financial goals. Make sure the repayment terms won’t jeopardize your cash flow, understand how interest rates affect your ROI, and don’t be afraid to ask questions. 

Getting Started

Let’s talk about resources to help you jump start the process. 

Nav can help you monitor your business and personal credit history, including the type of data lenders care about. 

With Nav Prime, you’ll also establish a tradeline to help you build business credit. 

You’ll also find business financing options from numerous partners. Whether you’re looking for short-term financing, or a small business loan for a major purchase or expansion, Nav can help. 

*Nav Technologies, Inc. is a financial technology company and not a bank. Banking services provided by Blue Ridge Bank, N.A., and Thread Bank, Members FDIC. The Nav Visa® Business Debit Card is issued by Blue Ridge Bank, N.A., and the Nav Prime Charge Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa cards are accepted. Your funds are FDIC-insured up to $250,000 through Blue Ridge Bank, N.A., Member FDIC.

This article was originally written on November 14, 2018 and updated on February 27, 2024.

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