Whether you’re and operator or just launching your business, having a strong business credit profile can radically improve your chances of qualifying for equipment financing — and on better terms. Instead of relying on personal credit alone, building business credit creates financial separation, demonstrates reliability to lenders, and unlocks bigger opportunities for growth.
In this guide, we’ll walk through what business credit is, why it matters, and practical steps you can take now to build your business credit before applying for equipment financing.
Business credit is a track record of how your business manages its financial obligations, similar to a personal credit score but specific to the company. As stated by Experian, lenders, suppliers and credit bureaus use it to evaluate your credibility as a borrower. Unlike personal credit, business credit is tied to your EIN and business entity, not your Social Security number.
A strong business credit score can:
– Increase your odds of equipment financing approval
– Help you secure lower interest rates and better terms
– Enable higher limits on lines of credit and credit cards
– Improve vendor and supplier terms like net 30 or net 60 financing
In other words: good business credit lowers perceived risk for lenders, which often translates into more capital at a cheaper cost.
Here’s how to lay the groundwork for business credit before you apply for equipment financing:
1. Separate Your Business from Personal Finances
Before lenders will consider your business credit, your business must be seen as its own financial entity. That means:
– Forming an LLC, S-Corp, or Corporation
– Obtaining a Federal Employer Identification Number (EIN)
– Opening a business bank account in your company’s legal name
As stated by the U.S. Small Business Administration, separating your business finances not only protects your personal credit but also creates a credit identity for your business.
2. Register with the Major Business Credit Bureaus
After your business is legally registered and has an EIN, you’ll want to establish a credit file with major business credit reporters such as Dun & Bradstreet, Experian Business, and Equifax Business. Obtaining a D-U-N-S Number from Dun & Bradstreet is often one of the first checkpoints lenders look at.
3. Build Trade Lines with Vendors & Suppliers
Work with vendors or dealers who extend net terms (like pay in 30 days) and who report payments to credit bureaus. Establishing trade lines and paying them on time builds a positive payment history — one of the key drivers of business credit scores.
4. Open and Use Business Credit Cards Responsibly
A business credit card can help you establish credit even if your business credit history is still new. Use it for recurring business expenses and pay the balance on time each month to build positive history and keep utilization low.
5. Monitor and Maintain Your Credit Reports
Just like personal credit, business credit profiles need to be monitored for accuracy. Regularly check your credit reports for errors and dispute any incorrect information. Staying on top of this helps maintain strong credit over time.
Once you’ve started to build business credit, you’ll be in a much stronger position when applying for financing. Here’s how strong business credit helps specifically with equipment financing:
Higher Approval Odds
Lenders place less weight on personal guarantees and more on your business’s own creditworthiness when you have an established credit profile. That translates into better approval odds for equipment loans.
Lower Costs & Better Terms
Stronger business credit can qualify your business for lower rates, longer terms, and larger credit limits, especially with lenders who focus less on personal credit and more on business stability.
More Financing Options
With business credit, you can pursue not just equipment financing, but also lines of credit, business credit cards, vendor financing, and even SBA-backed loans — giving you multiple tools to grow.
Plus, certain lenders will report your equipment financing payments o business credit bureaus. When you make on-time monthly payments, you strengthen your business credit further, fueling a virtuous cycle.
Building business credit doesn’t have to be a guessing game. At Truecore Capital, we work with business owners every day to evaluate where their credit stands today and outline clear, practical strategies to strengthen it before applying for equipment financing. The goal isn’t just approval — it’s positioning your business for better terms, lower costs, and long-term flexibility.
If you’re thinking about new equipment of future expansion, our team is ready to walk through your options, answer questions, and help you make informed decisions that support sustainable growth. Give us a call at (805) 422-7342 or submit a quick contact form to get in touch with one of our specialists today.
Sources:
– Experian, “What is Business Credit: The benefits of having a good business credit score,” [https://www.experian.com/blogs/small-business-matters/2019/01/25/what-is-business-credit/].
– U.S. Small Business Administration, “How to Build Business Credit Quickly: 5 Simple Steps,” [https://www.sba.gov/blog/how-build-business-credit-quickly-5-simple-steps].
July 5, 2024
July 5, 2024
July 5, 2024
by Augustine Sung