For many small businesses – especially those just starting up – it can sometimes be difficult to obtain credit from lenders. You are much more likely to get approved for credit when you don't need it, because that's when you pose less of a risk to the financial institution. That said, there are ways you can build your business credit, putting your company in a more stable financial position and making it more attractive to lenders.

1. Take care of your personal credit

Before you apply for new business credit, it's a good idea to make sure your personal credit is solid. Otherwise, obtaining business credit will be more difficult. Make sure to pay your bills on time and pay back any debt you accrue in a timely fashion. This will positively impact your credit score.

Make sure your credit report is accurate. Look for inaccuracies, evidence of fraud, and outdated late payments. Make sure account types are accurately reported and that settled debt is reflected.1 If you find any issues, contact the appropriate creditors to discuss your concerns and work with them to rectify the errors. Any issues that you come across can negatively impact your personal credit score, which can in turn have an effect on your ability to obtain business credit.

2. Get business credit before you really need it

As previously mentioned, the more you need business credit, the harder it may be to obtain it. For this reason, it's best to apply for it before you really need it. If you are a relatively young business, try applying for a small loan or business credit card. You may be able to obtain a low-limit amount or a credit card secured by a bank account. You can even try certain retail stores that offer business credit accounts. Office supply stores are good places to check.

Nevada State Bank offers revolving business lines of credit that come with the flexibility to draw funds for business purchases as needed. Even repayments are flexible, and credit availability is replenished with each repayment. Such a line of credit can be ideal for purchasing inventory, financing receivables, or addressing working capital needs.

Starting small – when you don't particularly need the credit – can make your company a more attractive customer to banks after you've been established for a longer period of time and have shown that you can make regular payments on your loans, credt lines or credit cards. Then you'll be in a much better position when the time comes when you do need the financial assistance.

3. Use the credit you have for growth

When you're in the early stages of building business credit, take advantage of the credit you've been able to obtain, but do so smartly. Use the credit you have to help grow your business by making responsible purchases, but make sure to pay your debt back in a timely manner. Once you've been able to show a lender that you can responsibly pay them back on an ongoing basis, they will be more likely to raise your credit limit. They may offer to do this on their own, or you can reach out and request a higher limit yourself. Just make sure that you don't rack up the debt afforded by these increased limits and get yourself in a situation where you have borrowed too much.

4. Develop an ongoing relationship with a local lender

Finally, it's wise to establish a relationship with a local lender and develop it over time. You are less likely to face rejection if the lender knows you well, is familiar with your company, and has a history of positive business transactions with you.


1. For more information on what to watch out for on your credit report, view a related Two Cents blog article.


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A