In concert with a good personal credit score, a strong business credit profile can make finding small business financing easier. In the midst of the crisis caused by the coronavirus however, it might not be a guarantee of a loan as small business lenders tighten their requirements and look at the current environment differently than they would have a week ago.

With that in mind, here are 4 things you can start doing today to build a strong business credit profile:

1. Know Your Profile

We tend to impact the things we pay the most attention to, so becoming familiar with your business cedit profile is one of the first things you need to do. All of the business credit bureaus offer ways to review your business credit profile, but Nav makes it easy to see both your business credit profile and your personal credit scores side by side so you can get the full picture—and it’s free.

You want to make sure that all the information the bureaus are reporting is accurate and up-to-date. Fortunately they are motivated to present the most accurate information possible, so if you can verify that something is incorrect they will fix it. Unfortunately, it likely won’t happen quickly, but they want the information they have as accurate as possible.

2. Don’t Use Your Personal Credit for Business Purposes

Although in times like these it can be tempting to use your personal credit to pay for business expenses—because it’s available, it won’t help you build a business profile and may even hurt your personal credit score. The higher balances often associated with business expenses will reflect poorly on your personal credit because the bureaus like to see your personal credit usage below 20-30%.

3. Establish Trade Accounts With Your Vendors

One of the fastest and easiest ways to build business credit is to apply for trade credit. Most vendors and suppliers are willing to offer their customers 30-day credit terms. And, if they report to the credit bureaus, your good credit history with that vendor will strengthen your business profile. If they don’t report to the bureaus, you may be able to build a good credit history with that particular vendor, but it won’t positively impact your overall business credit history.

4. Use the Credit You Need and Stay Current

Staying current with your credit obligations is one of the single most important things you can do to build a strong profile. This includes any loans or lines of credit you may have, any business credit cards you may use (another good way to establish a strong credit profile), the lease on your business, and your utility bills.

Although the business credit bureaus realize that a late payment will likely happen from time to time, they want to see that the majority of the credit notations in your file represent good credit habits.

4 Questions You Should Ask Yourself Before You Apply

A strong profile is only one step to finding the right business loan to fit your small business financing needs. Before you apply ask yourself:

  1. Why am I looking for a loan? In today’s economic climate, the better you understand why you are borrowing, the more likely you’ll be able to find the financing that will meet your needs. It might not be exactly what you think it will be.
  2. Which loan terms best fit my situation? Long-term needs like purchasing expensive equipment are different than buying quick-turnaround inventory. This will help you match the financing to the need. Depending on the need a credit card, term loan, or a line of credit could be just a few of the options.
  3. How much money do I really need? There are costs associated with borrowing regardless of the type of financing you need. Borrowing more than what you need can have some unintended consequences, so making sure you understand exactly what you need will help you avoid the added business expenses of borrowing more than you need.
  4. What does my credit profile look like? Different lenders have different credit requirements, so understanding your current credit situation will help you apply with the lenders where the odds will be the best.

A strong profile is not a guarantee to finding a small business loan, but it will make more options available than you would otherwise enjoy.