How to Get Credit as a New Business
The Reality of Credit for New Businesses
Every lender evaluates risk, and a new business with zero credit history, zero revenue track record, and zero years of operation is the highest-risk borrower on the spectrum. This does not mean credit is unavailable. It means the types of credit available to you are different from what an established business can access, and the terms are designed to match the risk level.
Most new business owners make the mistake of applying for the credit products they ultimately want, like a $50,000 unsecured line of credit or an SBA loan, before their business has any track record. These applications get denied, the denials show up as inquiries on their credit reports, and the frustration leads them to believe business credit is inaccessible. The reality is that business credit is built in stages, and each stage unlocks the next. A business that follows the sequence correctly can go from zero credit to qualifying for traditional bank financing in 12 to 18 months.
Credit Products Available From Day One
Net-30 Vendor Accounts
Net-30 vendor accounts are the first credit products every new business should apply for. These are trade credit accounts with suppliers that let you purchase products now and pay within 30 days. The approval process for starter vendors typically requires only your EIN, a business bank account, and a phone number listed under your business name. No business credit history is needed because these vendors are designed to serve new businesses.
Starter vendors like Uline, Quill, and Grainger approve most new businesses within a few days. Initial credit limits are modest, usually $100 to $1,000, but they grow with your purchase and payment history. The critical value of these accounts is not the credit limit but the fact that they report your payment activity to business credit bureaus. Three vendor accounts with positive payment data generate your first PAYDEX score, which is the foundation for every subsequent credit product.
Secured Business Credit Cards
A secured business credit card requires a cash deposit that becomes your credit limit. Deposit $1,000, get a $1,000 credit limit. Because the deposit eliminates the bank's risk, approval requirements are minimal. Most secured business cards approve applicants with any personal credit score and any business age. Bank of America and Wells Fargo both offer secured business cards that report to business credit bureaus.
The secured card serves two purposes for a new business. First, it adds a revolving credit tradeline to your business credit profile, complementing your vendor trade credit tradelines. Having both types of tradelines creates a stronger credit profile than having only one type. Second, it gives you a functional business credit card for purchases, subscriptions, and advertising spend while your business is too new for unsecured card approval.
Business Store Credit Cards
Retail store credit cards from Office Depot, Staples, and similar business suppliers often have lower approval thresholds than general-purpose business credit cards. These cards can only be used at the issuing retailer, but they report to business credit bureaus and add another tradeline to your profile. If you purchase office supplies, furniture, or technology for your business, a store card accomplishes the purchase and the credit building simultaneously.
Credit Products Available After 90 Days
Unsecured Business Credit Cards
After 90 days of vendor payment history and ideally a PAYDEX score of 80 or above, unsecured business credit cards become available. These cards do not require a deposit, and many offer cash back, travel rewards, or other benefits. Approval depends primarily on your personal credit score (most require 650 or above) and your existing business credit data. American Express Blue Business Cash, Capital One Spark, and Bank of America Business Advantage are common first unsecured cards for new businesses.
Microloans
SBA microloans of up to $50,000 are available to businesses that have been operating for at least 90 days, though most microloan intermediaries prefer at least six months of history. Microloans are administered through nonprofit community lenders rather than banks, and they are specifically designed for new and underserved businesses. Interest rates range from 8% to 13%, and the application process involves a business plan, financial projections, and an interview with the lender. Microloans are one of the most accessible early financing options for businesses that need capital beyond what vendor credit and credit cards provide.
Credit Products Available After 6 to 12 Months
Business Lines of Credit
Online lenders like BlueVine, Fundbox, and OnDeck offer business lines of credit to businesses with at least six months of operating history and consistent monthly revenue. Credit limits range from $5,000 to $250,000 depending on your revenue, credit scores, and time in business. These revolving credit facilities let you draw funds as needed and pay interest only on the amount you borrow. Interest rates for newer businesses are higher than for established ones, typically 15% to 35% APR, but the credit line itself is a powerful working capital tool and adds a valuable tradeline to your credit profile.
Revenue-Based Financing
If your new business is generating consistent sales through an ecommerce platform or payment processor, revenue-based financing from providers like Clearco, Wayflyer, or Shopify Capital may be available after six months. These lenders evaluate your sales data rather than your credit scores, making them accessible to businesses with strong revenue but limited credit history. Repayment is automatically deducted as a percentage of daily or weekly sales.
SBA Loans
Most SBA lenders require at least 12 months of operating history, though the SBA itself does not set a minimum. SBA 7(a) loans offer the best interest rates and terms available to small businesses, typically 7% to 10% for well-qualified borrowers. To qualify, you need a personal credit score of 680 or above, a PAYDEX of 80 or above, documented revenue sufficient to cover the loan payments, and a clear business purpose for the funds. Starting your credit-building process from day one puts you in position to qualify for SBA financing by the end of your first year.
What Your Personal Credit Means for a New Business
Until your business has its own established credit profile, your personal credit score is the primary factor lenders use to evaluate your creditworthiness. A personal score of 720 or above opens the most doors for a new business, including unsecured business credit cards from day one and faster approval for lines of credit after six months. A score of 650 to 719 still qualifies for most products but may result in higher interest rates and lower credit limits. Below 650, your options narrow to secured cards, vendor credit, and alternative lenders that focus on revenue rather than credit scores.
Your personal credit and your business credit are separate but related, especially in the early stages. As your business credit profile strengthens, lenders place less weight on your personal score for business credit decisions. After two to three years with strong business credit, many products become available based primarily on your business profile. Read our guide on separating personal and business credit for the complete strategy.
Month-by-Month Timeline
Month 1: Form your entity, get your EIN, open a business bank account, apply for your DUNS number, open three starter vendor accounts, apply for a secured business credit card. Total cost: LLC filing fee ($50 to $500) plus your first vendor orders and credit card deposit.
Months 2 to 3: Continue placing orders and paying early on all vendor accounts. Use your secured card for regular business expenses and pay in full monthly. Your DUNS number arrives and vendors begin reporting to bureaus. Your first PAYDEX score generates around month three.
Months 4 to 6: Apply for unsecured business credit cards. Add one or two more vendor accounts. Explore microloans if you need capital. Your business credit profile now has three to five tradelines with consistent positive payment data.
Months 7 to 12: Apply for a business line of credit from an online lender. Explore revenue-based financing if your sales support it. Continue building tradelines and maintaining early payment discipline. By month 12, your business credit profile should be strong enough for traditional bank financing.
Year 2: SBA loans, larger credit facilities, and negotiation of existing terms all become realistic. Your credit profile has 12 or more months of depth, multiple tradeline types, and established scores at all three bureaus.
Mistakes That Slow Down New Business Credit
Applying for products you cannot qualify for yet. Every denied application creates a hard inquiry on your personal credit report and wastes time. Match your applications to your current stage: vendor credit and secured cards in months one to three, unsecured cards at month three to four, lines of credit at month six, and loans at month twelve.
Not using your EIN consistently. If you apply for three vendor accounts using your SSN and two using your EIN, the SSN accounts report to your personal credit while the EIN accounts report to your business credit. Your business profile gets only two tradelines instead of five. Always use your EIN.
Waiting to start until you need credit. The best time to start building business credit is before you need to borrow. If you wait until you need a $50,000 inventory loan to start building credit, you are 12 months behind. Start the process during your first month of operation, even if you have no immediate financing needs.