Building a Small Business Credit Profile

Posted By Kalamata Capital LLC || 27-May-2016

As large financial institutions tighten their small business lending requirements, it is important for business owners to understand how to build a strong credit profile.

Benefits of Building Credit for a Small Business

Creating a small business’ credit profile is necessary to secure the best terms of financing. A strong credit rating will qualify a business for lower interest rates, higher credit limits, and longer term lengths when being evaluated by lenders.

Commercial lessors and insurance agencies also run credit reports on their applicants. A strong credit profile can qualify a business for lower insurance costs and favorable rental conditions.

Credit Rating Agencies

Creditors commonly check credit reports with major rating agencies when making lending decisions. Business owners should protect their rating with major agencies such as D&B, Experian, Equifax, and Paydex score by making sure all information is accurately reported.

Steps to Get Started

The first step for a small business to build a credit profile is to separate the businesses identity from the owner’s personal credit. Here are a few ways to get started:

  • Incorporate the business by registering as an LLC or Corporation
  • Create a commercial bank account
  • Pay bills under the business name
  • Apply for a business credit card
  • Use credit responsibly and be wary of over leveraging your corporate debt
  • Avoid using personal credit facilities to pay business expenses


By dissociating a small businesses credit from the owner’s personal credit, the business builds its own track record and payment history. Consequently, having a positive track record will strengthen the businesses credit profile and improve its score with credit rating agencies. As a result, the business will find easier access to financing, which will free up cash flow and allow owners to focus on growing the business.

Interested in discussing financing options? Get in touch with a Kalamata financing specialist by applying online or calling (844) 551-7511.

Categories: Small Business, Tips