How to build or improve business credit using private lenders

Having bad or no personal credit is something that many small business owners struggle with. The personal credit score is a heavy determinant of whether they will receiving business financing. It’s best practice to keep your business credit and personal credit separated. They are separate entities and graded differently. After all your personal income taxes and the taxes, your business pays are separate right?

To build or improve your business credit score you need to clearly prove that your business operations are profitable and that you have a consistent history of paying your bills on time. The first step to take is separating personal and business banking. Go to your bank and ask them to open a business banking account. Once you have a business bank account, start channeling all business-related transactions through your business bank account.

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Merchant Cash Advance (MCA) is one of the easiest way to ensure that you repay your borrowed amount on time. Fill out this form to find out if you qualify.

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As you’re doing this, apply to a private lender for financing so that you can demonstrate the ability to repay borrowed money. To prove your business operations is profitable – show an increase in business equity. Read on below to understand, step by step, how you can build a business credit history using private lenders.

1. Separate business from personal bank accounts

Your personal credit score is something you build over time. It is representative of your trustworthiness for paying back loans. Whenever you pay your bills or make payments on time using your personal bank account, you build personal credit. You can check your credit score through credit reporting agencies, like Equifax or Transunion to find out your personal credit score. If you would like to see your business’s credit score, you can use services such as Billmarket.

Similarly, a business credit score is built by paying business bills and expenses using a business bank account. Once you start using your business bank account to make all business-related transactions, you have proof of business cash flow for financial services providers to assess. The more money that is flowing through your bank account, the higher your borrowing potential with private lenders.


The first step towards building business credit is to have a business bank account and using it for all business related transactions! This creates a paper trail of your business transactions that financing services companies heavily rely on.

2. Borrow using your business bank account

Now that you have proof of your business cash flow, you need to show that you can borrow large amounts of money and pay them back on time. Borrowing and repaying a loan shows that your business is profitable, and has integrity (willingness to do the right thing). Any private financial services provider needs to be reassured that they will not incur any bad-debt by lending you money. You provide this confidence by proving that you’ve borrowed and repaid in full before.

Ensure that the financial services provider reports back to the credit bureaus. You will NOT be building business credit if the company you are borrowing from don’t tell the bureaus that you are making your payments on time.


Billmarket is a tool allowing you to check your business credit score for free, without affecting your personal credit score. It is available for any Canadian small business to use.

3. Increase business equity using borrowed money

If you’re selling your company, one of the factors determining the selling price of your company is the equity amount. It’s essentially what your company is worth. Equity growth can be directly attributed to growth in business. A rapid growth in business equity is called explosive growth, this is something private lenders are also assessing you on.  Now imagine that you’re a lender, you see that a business borrowed money, which was followed by a significant increase in business equity. This indicates that you have a solid business operation and are a low-risk borrower. This further increases your business credibility.


If you’re interested in learning more about business equity, we recommend you check out our Finance 101 guide to financial statements. Have a solid understanding of your business financing is an invaluable tool in arsenal.


After you’ve gone through this entire process of business credit building, you will be one step closer to lower interest rates. It’s important to keep your credit score healthy to ensure that you have lower interest rates. Having low-interest rates relate directly to having a lower cost of capital and higher profits margins. By separating your personal and business accounts you allow clear tracking of your business and personal transactions. Start applying for funding, if you get approved, make sure to pay your payments on time to further boost your credit score. By increasing your business equity you show that you have a solid business operation that is capable of turning funding into profit. Keep doing this consistently and see your credit score rise within 6 months! To check your business credit score for free use Billmarket.