The Best Business Decision Every Highly Qualified Borrower Makes

Maddie Shepherd

Staff Writer at Fundera
Maddie Shepherd is staff writer at Fundera. Beyond her deep knowledge of small business financing, Maddie's specialty is business credit cards—she'd love to help match your business with the credit card that benefits you most!
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As you start your own business, you’re stepping out onto uncharted territory. Luckily, there are many, many business owners who’ve done this before you—and quite a few of them who have pulled off things successfully. That means you have a template for success in lots of respects.

Though much of your success will rely on sheer luck and perseverance, one common theme we’ve seen in the some of the most successful businesses is something you can control. (You should be breathing a sigh of relief!) Within all of the most successful and qualified small business loan applicants, there’s a pretty common thread: a majority began building business credit from the very beginning.

If you’re a new business, you might be surprised by just how easy it is to build business credit even as you’re just setting up shop. And if you have some time in business already and need to get your score up, don’t worry—you can do that, too. Here’s our guide for making it happen.

The one business decision that the most qualified borrowers make is to begin building business credit ASAP.

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What You Need to Know About Business Credit

Before you begin your efforts to build business credit, you’re going to want to be familiar with exactly how business credit works. Just like personal credit attempts to sum up your trustworthiness as an individual borrower, business credit attempts to sum up your business’s trustworthiness as a borrowing entity.

The top lenders who offer the most affordable business funding on the market will likely consider your business credit when deciding whether or not to lend to you and what kind of terms to grant you should you qualify.

There are a few different scales for business credit scores, but most range from 0 to 100 (some go up to 300). They indicate business credit history, including a business’s:

  • Repayment history
  • Credit obligations
  • Legal filings
  • Bankruptcies
  • Judgements
  • Time in operation
  • Repayment performance compared to that of similar companies

Three primary business credit bureaus—Experian, Equifax, and Dun & Bradstreet—will determine where a company’s business credit score measures. Each will grant more weight to certain business credit criteria than others, so don’t be surprised if your business credit score is different from each of these bureaus. (Much in the same way that you have three different personal credit scores, if you’ve ever noticed that.)

→TL;DR (Too Long; Didn’t Read): Your business credit history indicates your business’s trustworthiness as a borrowing entity and history with debt. Strong business credit will strengthen your business loan application to get you more affordable funding and ultimately help your business grow.

How to Build Business Credit from Scratch

Starting from scratch with an entirely new credit history can seem daunting, for sure. Starting to build personal credit certainly wasn’t an easy thing to figure out, and the prospect of doing it all over again certainly isn’t the most exciting part of starting your own business.

This time around, however, building business credit will be a bit more straightforward—especially if you’ve already taken the time to build your personal credit. This is a result of one simple fact: You’ll be able to secure a business credit card with your personal credit score and then build your business credit history with responsible spending on that same business credit card.

Unlike the cruel irony of building personal credit—a process that often requires you to have personal borrowing history—building business credit won’t require that you have business borrowing history beforehand.

In fact, business credit card issuers typically really only consider your personal credit score when deciding whether or not your qualify for a business credit card. And this makes them an ideal tool for a new business owner looking to stack their startup’s financial clout.

→TL;DR: Business credit cards are the ideal tools for building business credit for your startup. You can secure one with your personal credit history and then use that card to build your business credit history.

Build Business Credit With No-Interest Balances

Though carrying a credit card balance might feel counterintuitive in your attempts to build credit, a business credit card with a 0% intro APR period actually makes it a viable option. A 0% intro APR period allows you to carry an interest-free balance during your first months with a business credit card.

In order to build business credit, you’ll need to make sure you make you make your minimum monthly payments on time, every time—not doing so could also make you forfeit the remaining months of your 0% intro APR period. Plus, you’re going to want to make sure you’re not outspending over 30% of your available credit—otherwise, your business credit score will suffer thanks to your business credit card spending.

Other than those two caveats to keep in mind, building business credit while carrying no-interest balances will be pretty straightforward—especially with the SimplyCash Plus from American Express.

→TL;DR: Business credit cards with 0% intro APR periods allow you to build business credit while carrying zero-interest balances. You’ll just need to make sure you make your minimum monthly payments on time every month and to not outspend 30% of your available credit.

The SimplyCash Plus from American Express

The SimplyCash Plus offers one of the longest 0% intro APR periods on the market—you’ll be able to access 15 months of zero-interest balances for your business purchases with this card. After your intro period, the card will come with an APR that will depend on your creditworthiness and the market Prime Rate. Be sure to check the issuer’s terms and conditions to get the latest APR information.

The cash back rewards that the SimplyCash Plus offers, however, will last as long as you spend, and your spend on the SimplyCash Plus will earn you cash back at the following rates:

  • 5% cash back for the first $50,000 you spend annually on:
    • Wireless phone services
    • Office supply store purchases
  • 3% cash back for the first $50,000 you spend annually on your choice of one category from a list of eight options
  • 1% cash back on everything else

Technically speaking, as you spend responsibly with the SimplyCash Plus, you’ll be able to build business credit, carry an interest-free balance, and earn valuable cash back for your business. And you won’t have to pay a single cent in annual fees to do so.

→TL;DR: The SimplyCash Plus is a no-fee, cash back business credit card that has a 15-month 0% intro APR period that allows you to carry a zero-interest balance while also building business credit.

Build Business Credit While Earning Cash Back

Alternatively, if you’re looking to earn the most cash back possible while building your business credit, then consider a business credit card that comes with a cash back welcome offer.

Credit card issuers attach welcome offers to cards so that they can sweeten the deal to attract new cardmembers and get them spending right away. You’ll typically need to spend a given amount within your first few months with the card, and then the card issuer will reward you with the welcome offer once you reach that spending threshold.

And welcome offers in the form of cash back are particularly useful for businesses that are just starting up—we can’t think of anything that a new business owner could need more than extra cash.

The Chase Ink Business Cash

The Chase Ink Business Cash credit card is our top choice for new business owners who want to earn lots of cash back as they build business credit. If you spend $3,000 during your first three months after opening your Ink Cash account, you’ll earn $500 in cash back.

You’ll also earn some pretty substantial sustained cash back rewards with the Ink Cash. As you spend responsibly with this card and build credit, you’ll also be earning cash back rewards at the following rates:

  • 5% cash back on the first $25,000 you spend annually on:
    • Office supply store purchases
    • Internet, cable, and phone services
  • 2% cash back on the first $25,000 you spend annually at:
    • Gas stations
    • Restaurants
  • 1% cash back on everything else

The Ink Cash will also offer you a 0% intro APR period of 12 months, which doesn’t quite measure up to the SimplyCash Plus intro APR period, but will save you some serious money in avoided interest. And best of all, the Ink Cash is also a fee-free card, so you won’t have to pay an annual fee to access all that it offers.

→TL;DR: The Ink Cash offers a $500 cash back welcome offer for new business owners who are looking to earn serious cash back while building business credit.

Build Business Credit While Earning Travel Rewards

Maybe your business requires a lot of time in airports—meeting potential investors face-to-face, seeking out potential locations, maybe even having an onsite visit to a successful business in your industry to get an idea of how things should work.

If you’re going to be traveling tons for your new business, then you should consider a business travel credit card that will allow you to earn free travel as you spend responsibly to build business credit. And many business travel cards will also come with welcome offers that could earn you remarkable amounts of free travel.

The Chase Ink Business Preferred

The business credit card that offers one of the most generous travel rewards welcome offers is the Chase Ink Preferred. If you spend $5,000 during your first three months after opening your Ink Preferred account, you’ll earn 80,000 points.

If you redeem these points for travel through the Chase Ultimate Rewards portal, then they’ll be worth 1.25 cents per point, making your welcome offer worth $1,000 of free travel. And as you keep spending, you’ll earn even more travel rewards:

  • 3x points for the first $150,000 you spend annually on:
    • Travel
    • Shipping
    • Search engine and social media advertising
    • Internet, cable, and phone services
  • 1x points for everything else

One thing to keep in mind about the Ink Preferred—this card will come with a $95 annual fee, so that extra cost will hamper any value you eek out of it.

→TL;DR: The Ink Preferred is the best business credit card for new business owners who want to earn travel rewards as they build business credit—this business card comes with a welcome offer that is worth $1,000 of free travel.

Build Both Personal and Business Credit

All of the business credit cards we’ve highlighted so far you can get with your personal credit history, sure, but that personal credit history has to be good to excellent.

If you’re a new business owner hoping to build business credit, but your personal credit isn’t strong enough to get a more premium business credit card, then you’ll want to look for a business credit card that will accept cardholders with credit below 620.

The Capital One Spark Classic

The Capital One Spark Classic is hands-down the best card for new business card for new business owners with average personal credit (550+) who want to build business credit. As you spend with the Spark Classic, you’ll earn an unlimited 1% cash back for no annual fee at all.

Even more, Capital One reports your Spark Classic account activity to both business credit bureaus and personal credit bureaus. As a result, your responsible spending on the Spark Classic will allow you to build both business and personal credit.

→TL;DR: The Spark Classic is available to business owners with personal credit of 550 or above, and will allow you to build both personal and business credit.

https://www.fundera.com/blog/different-credit-scores

If You Want to Appeal to Business Lenders, Work on Building Your Business Credit

Building business credit as soon as you possibly can will strengthen your business’s finances. And it’s incredibly easy to do with a business credit card.

If you pick the right business credit card, building business credit will have some pretty stellar positive externalities. Whether you’re avoiding interest, earning cash back, flying for free, or building personal credit, there will always be a more exciting perk that goes hand-in-hand with building business credit.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Maddie Shepherd

Staff Writer at Fundera
Maddie Shepherd is staff writer at Fundera. Beyond her deep knowledge of small business financing, Maddie's specialty is business credit cards—she'd love to help match your business with the credit card that benefits you most!

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