What You’ll Gain From Investing in This Article

• Learn how easy credit builder accounts can benefit your business.
• Leverage these accounts to help build business credit even if you have bad credit.
• Understand how business credit can help your business grow.

A Brief Primer on Small Business Credit

Just like you have personal credit reports and scores, your business can have its own business credit files and business credit scores.  Strong business credit may open up more opportunities for small business loans and financing, business deals and partnerships, better rates on insurance, and access to supplier credit.

You build your business credit profile similar to the way you build personal credit by getting credit accounts with companies that report your payments to business credit bureaus. pay on time and you can build strong credit. Pay on time to help establish a strong business credit profile.

However, one of the challenges with building business credit is that not all companies that offer business financing report positive payments to business credit bureaus. 

If you own a business, you may wonder why you haven’t heard of business credit, or whether your business has a business credit rating. 

Anyone can check business credit, but companies that do aren’t typically required to tell you when they used your business credit report to make a decision about whether to do business with your company. 

Additionally, there’s no requirement that business credit reporting agencies show business owners their credit reports for free, the way there is with personal credit.

This means that business credit remains something of a mystery to many small business owners, even though it can have a significant impact on their business.

What Is a Business Credit Builder Account or Program?

Business credit builder accounts can help you build business credit, and they are often available to startups, as well as business owners with limited or poor personal credit.

One of the challenges with building business credit is that not all companies that offer business financing report positive payments to business credit bureaus. Credit building programs focus on building credit, so they will report to one or more credit bureaus. (With business credit builder programs, that means reporting payment history to commercial credit bureaus.)

Really, any type of account that helps your business build credit can fall under the broad category of business credit builder account. Here are the main types of accounts that help build business credit, starting with the one that’s most closely associated with that term.

Business Credit Builder Loans

With a business credit builder loan, you make regular payments toward a savings account and those payments are reported to business credit bureaus. You’ll make payments toward a specific savings goal and that will determine the amount of credit that is reported to the credit bureaus.

This can be a great way to build credit and savings at the same time but it’s important to make sure you can commit to the required monthly payments. 

Secured Credit Cards 

Secured credit cards work like typical credit cards, but a security deposit is required to open the account. You will have to make regular monthly payments, and at some point you’ll get your deposit back if you manage the account well. 

Business secured cards are usually easy to get even if you have bad credit. The security deposit protects the lender if you default. However, it does require you to make that deposit and that money is not available to you until you get it back, usually when you close the account. 

Business Charge Cards

A business charge card works much like a credit card, except you must pay your balance in full either daily, weekly, or monthly, depending on the terms of the card.  Unlike a secured credit card, you don’t tie up your money with a security deposit. 

Typically this type of account will require you to link your business bank account and payments for any balances you owe will be deducted from your linked bank account. 

Some major card issuers offer cards that don’t require automatic daily or weekly payments, but you’ll usually need good credit to qualify for those cards. If you do, you may also often earn rewards.

Business Tradelines

“Business tradelines” is a term that’s used to describe accounts that report payment history to business credit bureaus. 

One of the most common types of trade lines is vendor accounts, also known as net 30 accounts. These are accounts from vendors or suppliers  that give a small business 30 days to pay for items they’ve purchased such as office supplies or equipment. If the supplier reports to business credit, the account is reported as a tradeline. Vendors rarely check personal credit or require personal guarantees. 

Find easy net-30 accounts here

Will a Business Credit Builder Account Actually Help My Business Situation?

Business accounts that report a positive payment history to business credit bureaus provide the fastest way to build a positive business credit history. Without tradelines, it’s virtually impossible to establish good business credit.

That said, it’s not uncommon for business lenders to require a personal credit check. They may reject an application for business financing if the owner has no credit or low personal credit scores. That’s why it’s also important to build good personal credit.

However, you can establish business credit even if your personal credit is not strong, and work on both at the same time.

One of the main benefits of building good business credit is that any company that checks your credit will see a positive payment history as an indicator of creditworthiness. Good credit means it’s less risky to do business with your company. 

Unfortunately many small businesses don’t succeed, so having a positive credit history can work in your favor. Other factors, like time in business and revenues, are important too if you want to qualify for small business lines of credit or bank loans. 

Types of Small Business Scenarios Best Helped

Here are three common scenarios where building business credit using credit builder accounts, secured credit cards, business charge cards, or tradelines, may help.

1. Established Business With Bad Credit

It’s entirely possible for a well-established business that pays its bills on time to discover it has a low business credit score, simply because it doesn’t have accounts reported to business credit. 

A good business credit score may help the business get better rates on commercial insurance, and land contracts with large companies that check business credit. 

2. Brand New Business With Low Personal Credit Scores

It’s hard for startups to get financing. Two popular sources of financing for brand new businesses are SBA loans and business credit cards. Both typically require a good personal credit. 

Establishing business credit can help provide your business with more financing options and other benefits as it grows. 

3. Business Seeking SBA Loans

Certain types of loans guaranteed by the US Small Business Administration require the lender to check a FICO SBSS score. This score takes into account personal credit of all owners with at least 20% ownership, along with business credit,  to create a blended score. A business is much more likely to have a good FICO SBSS score if the owners have good personal credit and the business has good business credit. 

Best Business Credit Builder Programs

Here are four excellent options for accounts to help you build business credit.

Credit Strong for Business

With CS for Business, you’ll get a 0% interest rate credit builder loan. You’ll make monthly payments for 25 or 50 months, and pay a one-time upfront fee. 100% of every loan payment builds payment history for the company and the cash reserves of the company.

Austin Capital Bank will report a 25- or 50- month bank issued commercial installment loan as a bank-issued financial tradeline account to major business credit bureaus, including Equifax, Experian, PayNet, and SBFE . 

You can cancel at any time without fee or penalty, but if you keep the account you’ll have the full opportunity to build a positive trade line. 

CreditStrong for Business is a product of Austin Capital Bank, Member FDIC. Loan proceeds are locked in an FDIC-insured savings account to secure the credit builder loan until it is repaid. Loan proceeds are unlocked when the loan is closed or repaid in full. 

Nav Prime Card

The Nav Prime Card* is a ​​charge card, with no credit check or security deposit required. With your Nav Prime Card  transactions are reported as a monthly tradeline, so your everyday transactions can build business credit with regular use. You’ll link your checking account for daily autopay, which helps you avoid carrying high debt. 

Exclusive to Nav Prime users, the Nav Prime Card reports as your second tradeline to help improve your business’s financial health profile to unlock better financing options.

The Nav Prime Card is not available in CA, NV, ND, SD. 

eCredable Business

eCredable Business offers two subscription products: Business Lift and Business Lift+. Both are automatically reported as a tradeline to all major business credit bureaus. 

It also gives you the opportunity have bills your business already pays reported to business credit, such as business utilities (power, water, gas, waste, mobile phone, TV services, internet, landline phone), business rent/lease, virtual office, vendors, suppliers, business insurance, and numerous business services to business credit. 

Bank of America Business Advantage Unlimited Cash Rewards Mastercard Secured credit card

You’ll need at least $1000 to open this secured business credit card from Bank of America. However, there is no annual fee, and you can earn rewards: unlimited 1.5% cash back on eligible purchases with no cap. Redeem cash rewards as a credit card statement or as a deposit into your Bank of America checking or savings account. 

There is a foreign transaction fee of 3%. 

Bank of America will automatically review the cardholder’s credit history, and customers who pay on time and meet other qualifications may be able to transition to an unsecured card. Bank of America business credit cards generally report to SBFE.

All information about the Bank of America Business Advantage Unlimited Cash Rewards Mastercard Secured credit card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

Business Edition® Secured Mastercard® Credit Card

You’ll need at least $2200 to open a secured business credit card with First National Bank. It offers credit limits between $2,000 and $100,000, in multiples of $50 but your security deposit must be 110% of your desired credit limit. You will earn interest on your deposit. 

The annual fee is $39.

While it doesn’t offer rewards points or miles, there are some perks such as Mastercard Easy Savings (automatic rebates on certain purchases) and discounts on Quickbooks Online or TurboTax. 

All information about the Business Edition® Secured Mastercard® Credit Card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

How Nav Can Help Your Small Business Build Credit

With Nav Prime, get detailed insights on your business through Detailed Credit Reports with tradeline reporting that can grow your business credit and improve your financial health profile. Nav Prime gives you access to financial management tools that improve your business financial health profile so you can access better funding options.

FAQs

How to build business credit fast?

There’s a lot you can do to start building business credit in 30 days, but it will take time to get a high business credit score. After you’ve set up your business (phone number, address, Employer Identification Number, etc.), focus on opening accounts that report to business credit bureaus. These can include trade credit, a business credit card, and credit builder accounts. 

On time payments are key to building good credit, so set up your systems to make all payments on time or early. Many business owners see improvement in their credit history by consistently using and paying accounts that report to business credit.

How does a new LLC get credit?

You can start building business credit for your LLC as soon as it’s established. The process is the same as what’s outlined earlier: set up your business properly, then get accounts with providers that report to business credit, and pay them on time. 

What credit score is needed for LLC?

Every lender will have its own minimum credit score requirements. While traditional bank loans and premium business credit cards typically require good to excellent personal credit scores (usually 680+ FICO scors), there are many options available regardless of your personal credit standing. 

Vendor accounts, secured credit cards, credit builder programs, merchant cash advances, business cash advances, invoice factoring and crowdfunding often have low or no credit score requirements. These financing options can help you establish business credit while simultaneously working to improve your personal credit score.

Are credit building programs worth it?

Credit building programs can be valuable tools for establishing business credit, particularly for new businesses or those with limited credit history. Programs that report to major business credit bureaus, such as Nav Prime or Credit Strong for Business, can help you establish documented payment history quickly. 

The key is choosing programs that report to multiple business credit bureaus and offer reasonable fees relative to the benefits. 

Can I get a business loan with a 500 credit score?

While a 500 personal credit score will limit your traditional financing options, you still have paths to build business credit and access capital. 

Start with vendor credit or creditbuilder accounts, which often don’t require personal credit checks. As you establish business credit, look into alternative lending options like merchant cash advances or equipment financing, which may place more emphasis on your business revenue than personal credit. 

Meanwhile, work on improving both your personal and business credit scores to qualify for better financing options in the future.

*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. or Thread Bank, 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. FDIC insurance is available for your funds on deposit, up to $250,000 through Blue Ridge Bank, N.A. or Thread Bank, Members FDIC. See Cardholder Terms for additional details.