Small Business Credit Building Tips 101

[Minion]

I wanted to bring some info over to the Square Community from various parts of the web to help only as a guide for small business starting out or established business' to further expand their profile.  I am in no way an expert, nor a consultant for legal advice and YMMV as with anything.  As with all credit, be responsible. 

Establish the Business 

(mostly if you are here, you have probably already done this, but I will list some steps for others who may not be at that point.

• Name Your Company
• Incorporate Your Company
• Obtain an EIN 
• Establish A Location
• Establish a Business phone number.
• Establish A business checking account
• Establish A D-U-N-S Number (Dunn & Bradstreet aka D&B)

If you don't currently have a DUNS number, you can obtain a FREE one.  DO NOT pay for their services.  It is  not necessary to pay for a DUNS number but a sales rep may call you and try to talk you into paying for one, and or "speeding" up the process.  

Establish Business Credit 

Establish your business Net 30 Accounts.  Once you have all the above figured out, you can began to apply for some net 30 accounts.  Do not go on an app spree by applying to many places at once, this could potentially block your account and have a negative effect.  3-4 Net 30 Accounts seem to be a sufficient start to building your business credit.  Below is a list of current companies that offer Net 30 Accounts.  Once Approved, make a small purchase each month for a couple of months.  There is no need to spend more than you can.  to get the best D&B PayDex score possible, try to pay off at least 15 days before the statement due date, otherwise just be sure to be by the due date.

• Fedex/Kinkos
• Quill
• ULine
• NEbs
• Reliable
• Office Depot
• Gemplers
• Grainger
• NewEgg Business (net 30)
•  

WHAT IS A PAYDEX SCORE - A Paydex score is what D&B uses to tell potential creditors about your payment history and worthiness. It scales from a range from 0 to 100, with 100 being the best possible score. You are going to want to keep your Paydex score at or above 80. Paydex score are broken down as follows:

100 - Pays before invoice is generated
90 - Pays during discount period
80 - Pays when invoice is due
70 - Pays 15 days beyond terms
60 - Pays 22 days beyond terms
50 - Pays 30 days beyond terms
40 - Pays 60 days beyond terms
20 - Pays 90 days beyond terms
UN - Unavailable

 WAIT FOR PAYDEX SCORE - In order to receive a Paydex score, you will need to have five tradelines reporting to D&B. Once you have five reporting you will be assigned your Paydex score. Now that you have this Paydex score you can move on to establishing revolving accounts, you can move on to Building Your Business Credit.

Building Your Business Credit

• Establish more Tradelines- Now that you have a paydex score, you are going to want to see companies for revolving credit lines. Again, you do not want to go on an app spree.  Apply for a couple new accounts and then wait a few weeks before applying for a few more.  Applying for too many at once can negatively effect your business score.  
• Below is a list of companies that offer revolving credit on terms. 
• **Please remember that if they ask you for a personal guarantee to tell them you DO NOT want to give it. Most times the company will just process the application without it.**

1. Staples
2. Walmart Community Card by Capital One (not accepting new applications at this time) 7/7/22
3. Dell-(No PG)
4. Amazon Business Net 55  (no longer offered as of 1/2/23)
5. Lowes Corporate Net 30 (NO PG)
6. Home Depots Corporate Account (No PG)
7. Sams Business Store Card 
8. Floor & Decor (No PG)\
9. Ford Credit-  It is possible to obtain a vehicle loan based on EIN only

Below are a list of gas companies that offer credit cards for companies without a personal guarantee as well, and come in handy when on the road for business.

1. Conoco 76
2. Shell
3. Exxon/Mobile
4. Chevron
5. Sunoco

From all of my research, there are only two companies that offer a Business Credit Card without a PG (personal guarantee) since the bank bailout of 2008.  Yes you can still get a business card like AMEX, Chase, Capital One Spark etc but all of those will run your personal credit, and the point of this is to build your Business Credit. 

1. Sams Club Business Mastercard- You must be a member and you must print out and out the application in store.  You CAN NOT apply for this online. (decline PG when filling out the application in store and make sure the associate knows you are not PG'ing this)
2. Citizens Bank Business Card-  You must reside in a state where they offer their services.  The company will only do a soft pull on your personal credit, and pull your EQ business report
3. GM Business Card- This is issued by Marcus Goldman Sachs. 

Business Charge Cards

Here is a list of soft Pull credit cards some of these are revolving credit, but with higher interest, so you should treat it like a charge card and Pay in Full every month.  All of these will be a soft pull on personal credit , but a hard pull on Business Credit.  Thanks to KnowledgeSeekr for putting this list together.   Most of these will require you to connect our business bank via Plaid, or upload 3-6 months of bank statements when submitting the application. 

1. Capital on Tap
2. Divvy
3. Torpago
4. Ramp
5. Kleer Card

Checking out your Business Credit Scores

D&B Paydex Score-  Iupdate.dnb.com  Once you have your tradelines set up you can view your paydex score on the site listed.  THis site can be very slow, and is usually down, but seems to work best on Sundays

Nav-  Nav.com will show your Experian Business Credit Score.  They offer some great resources as well to further your business credit adventure.

note* They usually don't show Equifax Business score, and most companies don't look at the Equifax score. 

Experian Business   If you are serious about building your business credit, and once you have some tradelines and revolving credit lines open, it may be worth purchasing their annual report.  It is slightly less than $200 annually so i would only suggest using it if/when you are serious about your score. 

Ecredable- (Business account) Link utility accounts (water, electric, cell, landline, internet, some net accounts) to ecredable, they can then report upto 24 months of payment history to your business credit reports. Upfront fee of $49.95, followed by $9.99/a month.  This can be useful to help build accounts that don't/won't normally report to your business credit report. 

I will update this thread with information as needed, and if you have any questions feel free to ask, and I will try my best to answer them. Happy Business Credit Building!

[Helen]

Thank you very much for putting all of this together and sharing it with the Community @Minion!

[Minion]

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@Helen wrote:

Thank you very much for putting all of this together and sharing it with the Community @Minion!

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My pleasure!

[Biskuthead63]

• In 2 days time my ulcer is feeling better. Who does these kind of things these days. I thought it was sink or swim. Thank you for some rock solid advice. This app and tools gonna make this start easier than I thought. I'm old school and if i can do it, anybody can. Trust me.
• Eric 

[AdamB]

This is great! Building credit can be really opaque and mysterious in a lot of ways. Thanks for shining a light on it!

[Minion]

Absolutely, and not a problem!  Like stated much of this info is aimed at building business credit without the use of a personal guarantee, and simply just takes time and patience..  

[PartyManiaMD]

I find the whole time and patience part the most mind boggling. I went for a commercial loan from my bank and they said they'd be able to help me in 6-12 months once my business is more "established".... By then I won't "need" a commercial loan. We've been open for 11 years but due to the way the company was set up I essentially had to create a new company.

I really appreciate Square Loans because they look at the real data when it comes to loan eligibility (sales, volume, etc) versus traditional banks that have their head stuck in the clouds. 

Good to know some of these companies offer terms to newer companies, I've run into a road block when it comes to terms as a lot of distributors want references from someone already giving you terms. (11 years ago they'd just give terms without checking).

I feel bad for anyone starting a new business nowadays, the chips seem stacked even further against startups.

[Minion]

Yeah that time and patient part is the worst.  Most small business owners don't really "need" to do these steps, assuming their personal credit is top notch, and they don't mind the hard pull.  My situation was the opposite and Im not a huge fan of having multiple "business" cards report the balance on my personal to bring down my score. 

My biggest hurdle now trying to get the Citizens Bank card before the end of the year is they go off from Equifax business.  Their business side is worse than their personal side as far as reporting data and it is complete opposite of Experian Business profile, so i get to play the waiting game and hoping things report like they should in the coming months. 

Square Loans, to me is a decent option for funds that are less than $5k.  Anything more than that I feel like a local Credit Union can do better and build a relationship with.  Square doesn't have underwriters and their algorithm is well, still hit or miss based on the forums. It is a very simple and straightforward though funding option with Square.  So that is a W for Square. 

[rjonin]

Thanks so much.

Though, I've completed these steps, the information for a few net 30 companies is extremely helpful.

[Minion]

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@rjonin wrote:

Thanks so much.

Though, I've completed these steps, the information for a few net 30 companies is extremely helpful.

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no problem @rjonin 

The amazon one was pretty new to me, but I've been using it for a few months now, and seems to report at the end of the month.  

[rjonin]

This is like super juicy information. Biz credit is kinda like the Wizard in Wizard of Oz and you've pulled back the curtain.

So thanks again!! 

[Minion]

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@rjonin wrote:

This is like super juicy information. Biz credit is kinda like the Wizard in Wizard of Oz and you've pulled back the curtain.

So thanks again!! 

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I LOL'd at that. Not a problem Glad to help and shed a little light.

Cheers

[Doran]

This is really helpful @Minion I've been in business for over 10 years and so many of these I didn't know!  Like I just found out I have a DUNS #! 

[Minion]

Glad it is of some use to you @Doran .  I will say that Uline does report quickly but you are going to pay for shipping, and that $20 box of gloves, may cost you $65 after shipping.  Very steep shipping costs, so if you do choose to give them a go, try to hit the limit for free shipping, or just a small minimal order that you can afford. 

[erikjones]

This was great @Minion! Appreciate you taking the time to put this information together. 

If anyone is looking for an additional business credit card option, our company was approved for the Amex Blue Business Cash Card after a couple months of credit building. The first credit line we opened did require a PG and a personal credit check, but for this Amex card they didn't require either - so that may be a an option worth exploring for building credit as well! 

[Minion]

@erikjones Interesting.  Was the first credit line with Amex as well?  I'm almost positive, for other products (like their BBC card) it is only a soft pull on personal credit for existing customers.  Just curious if you don't mind sharing.

[erikjones]

@Minion I don't mind at all! The first credit line was with Capital One - which required a personal credit pull despite my being an existing customer. For the Amex, however, there was no personal credit check or guarantee required. I was sure to call them and provide details and specifics into our business plan, projected revenue, etc. so that may have aided in the approval. 

[Minion]

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@erikjones wrote:

@Minion I don't mind at all! The first credit line was with Capital One - which required a personal credit pull despite my being an existing customer. For the Amex, however, there was no personal credit check or guarantee required. I was sure to call them and provide details and specifics into our business plan, projected revenue, etc. so that may have aided in the approval. 

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Ahh okay Right on.. maybe because you called in vs app'ing online.  I know generally if you are an existing AMEX holder, its *usually only a SP on your personal, and 99% HP if you are not current customer. You are that 1% it seems.  Capital One is brutal on credit pulls, usually all 3 bureaus, brutal hit, for a company that are not as giving on increases or starting limits compared to others (like amex with a 3x limit increase on their cards)

All in all I appreciate the feedback with that Amex, I may give them a call and chat later since I don't want a Hard Pull on my personal and see where that goes. 

[erikjones]

I think calling and speaking to someone is always going to improve your chances of approval. Especially if it allows you to explain any projects or new ways to expand your business that may require an additional line of credit. There's just so place on most online apps to add that, or any, context. 

Fortunately I didn't anticipate any reasons for a personal credit pull for quite some time so I was able to "absorb" that initial blow of the Capital One personal credit check. That allowed me to start a solid business credit that I was fortunate enough to extend off of my personal credit. Then once that was established we were able to dovetail that into the Amex, solely in the businesses name - no PG or personal credit pull. 

Worth noting is that these cards/accounts were not given very large credit balances. As far as establishing business credit and having some additional operational flexibility,  it has been really helpful! I'm not sure this would be a successful route to take if you or your business were looking for a substantial line of credit.

I'll do my best to keep updating the credit journey as we go in case it may help anyone else in the future! 

[Minion]

Yeah I think you definitely snuck by on that one.  I spoke to someone earlier, and as I thought any of the "small business" cards (less than 4 million sales) is always a PG, otherwise you would get their Corporate Line which then is all business. 

I mean more power to you for sneaking in to AMEX though without the personal score hard pull. They are generally very generous with their limit increases, usually abou 3x.  I'm thinking laster this year or early next year I'll pull the trigger once some inquiries come off from my personal. 

Appreciate the feedback and business credit talk!

[erikjones]

Man, well however it happened I'll consider myself and the company very lucky. Hope you have the same luck later this year or next! 

Happy to have talked this through!