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Unlocking Business Credit: The Key to Small Business Growth

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In today’s competitive market, having a great idea and a solid business plan is not enough to make a small business successful.

June 27, 2023
Author: NCH

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 A 2022 survey from the Nevada Small Business Development Center (SBDC) says that lack of funding is one of the major challenges a small business faces. Respondents say they find it difficult to grow their businesses due to having limited capital to work with. 

Luckily for small business owners, business credit can make securing financing easier. 

Business credit lets you borrow money and build great relationships with suppliers and lenders. A good score means you no longer have to worry about getting the funding you need to grow your small business.

If you want to learn how business credit can help your small business succeed, you’ve come to the right place. In this blog, we’ll explain everything you need to know about business credit and how it works. We’ll show you how it can help small business owners like you succeed. 

What is Business Credit?

Business credit estimates the ability of a business to repay a loan or credit line. Your score is determined based on your payment history, debts, and credit use. However, there are instances where reporting agencies use general information about your business to calculate your score. 

This is similar to personal credit, which measures how responsible you are with your debt. The only difference is that business credit scores are scaled based on a range of 0 to 100. 

You can start your business credit in various ways. However, most businesses use the following options to build their credit:

  • Business Credit Card
  • Line of Credit
  • Term Loan
  • Vendor Loan Credit
  • Service Credit

How Business Credit Reports Works

Knowing how business credit reports are crucial, regardless of your goals. It doesn’t matter if you’re starting out or planning to improve your score. Understanding how these reporting agencies build their credit reports will help you create a strategy that fits your needs and goals.

Whenever you open a new account with a vendor or a lender, they create a credit report that they submit to one of the three major credit reporting agencies:

  • Experian
  • Equifax
  • Dun & Bradstreet

Each bureau creates its reports in various ways. For instance, Dun & Bradstreet includes a PAYDEX score in their reports which measures your payment history. Meanwhile, Equifax adds a business failure score in their reports which predicts the likelihood of a business failing.

If you want a report from Equifax or Experian, we recommend looking for lenders or vendors that submit to them. On the other hand, you need to register your business directly with Dun & Bradstreet to get a DUNS number that will serve as your credit report. 

Why It Matters to Small Business Growth

Securing financing has been a big challenge for small businesses for years. Even past surveys have said that many struggle with growing their ventures because they lack funding, with some resorting to using their personal credit lines to secure loans for their business. 

Unfortunately, this approach isn’t sustainable for a myriad of reasons. For instance, most personal credit cards have small limits that aren’t enough for a growing business. It also doesn’t help them keep their personal finances separate from their business.


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Aside from this, there are plenty of other reasons why having business credit is vital to the growth of a small business

Builds Credibility

If you want to attract investors in the future, you need to build a strong business credit. A good credit score indicates that your business is in good shape and is financially stable. It’s a useful tool for establishing your small business as a reliable and trustworthy company. 

Recruiting & Retaining Talent

It isn’t easy to hire great talents when you don’t have a lot of funding. However, with the help of business credit, you can offer competitive wages and comprehensive benefits. 

In addition to this, you can use your credit cards to invest in culture building. Purchase gift cards and give them to your employees as a reward for their efforts. 

Easier Access to Financing

When you have a strong business credit score, you’ll have a much easier time getting loans in the future. You no longer have to sign personal guarantees that make you liable for your company’s debts. 

Additionally, a good score can help you get lower interest rates. Vendors value clients with good payment histories. They want to turn them into loyal customers, offering them lower interest rates and more flexible payment options. 

Separates Your Personal Finances

There’s a reason why small business owners need to separate their personal finances from their venture. Not only does it help you file your taxes accurately, but it also protects your personal credit score. 

If you regularly make big purchases for your business using your personal credit card, your utilization ratio will increase, which can negatively impact your score.

Opportunities For Growth

Now that you can access more funding, you can invest in new equipment and technology. This can help you expand your operations and take your small business to the next level.

Grow Your Small Business Today

Undeniably, business credit has a huge impact on the growth of small businesses. It can empower you to make new investments, create more opportunities, and set you up for long-term success.

Don’t let the complexities of business credit stop your venture from growing. Contact NCH today and let us help you. To learn more about our services, visit our website here

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.

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