Get the Financial Support Your Business Needs

At Accion Opportunity Fund (AOF), we believe that every business deserves a chance to grow. Whether you’re ready to expand your team, purchase new equipment, or manage cash flow, we’re here to help. This page will guide you through understanding loans, preparing to apply, and finding the best financing option for your business.

Understanding Business Loans

Explore the types of loans available and what they mean for you.

• Term Loans: Borrow a set amount, repay with interest over time.
• Working Capital Loans: Cover short-term costs like payroll, supplies, or rent.
• Equipment Loans: Finance the purchase of vehicles, machinery, or technology.
• Microloans: Smaller amounts, often easier to qualify for, to manage immediate needs.

How to Qualify for a Loan

AOF offers loans with clear terms and flexible requirements. To get started:

• Check Your Credit Score: AOF does not rely solely on credit scores when evaluating loan applications, and instead assesses loan readiness based on factors like character, annual revenue, payment history, and other criteria. This creates a more holistic approach to lending decisions.
• Know Your Revenue: Minimum annual revenue of $50,000 and at least 12 months in business.
• Prepare Your Documents: Tax returns, bank statements, and business plans help show readiness
  

Compare Loan Options

It’s important to know the differences between banks, fintech lenders, and AOF.

Feature	Banks	Fintech Lenders	Lending with AOF
Approval Speed	Slow	Fast	Moderate
Interest Rates	Varies	Often High	Competitive, Transparent
Support	Limited	Minimal	Human Advisors Available
Accessibility	Strict	Flexible	Designed for Real Businesses

Real Success Story

When Marcus, a food truck owner, needed to upgrade his fleet, he couldn’t secure funding from big banks. AOF stepped in with flexible business loan options and free business coaching. Now, Marcus has three trucks, higher revenue, and a thriving business.

Pro Tips from AOF Business Advisors

AOF Advisor Tip: Always project cash flow at least 3 months past your loan repayment schedule to avoid surprises.

AOF Advisor Tip: Gather all your financial documents before applying to speed up approval and show lenders you’re prepared.

AOF Advisor Tip: Borrow only what you need—smaller, manageable loans keep your business healthy and credit strong.

Top Loan Application Mistakes to Avoid

Not Knowing Your Numbers
And here’s the other landing page: Be ready to show your revenue, expenses, and cash flow. Knowing your numbers makes you a stronger loan candidate.

Incomplete Applications
Missing documents delay approval. Gather tax returns, bank statements, and licenses upfront to keep things moving.

Overborrowing
Don’t take more than you can handle. Borrow what you need and can comfortably repay to keep your business stable.

Ignoring Your Credit
Check your credit score and fix any issues before applying. AOF works with credit scores as low as 600.

No Clear Loan Plan
Have a plan for how you’ll use the loan. Show how it will help grow your business.

Your Business Loan Questions Answered 

What’s the minimum credit score for a business loan?
AOF requires a score of at least 600.

How soon will I get approved?
You can get pre-approval in as little as 15 minutes, with funds available in about 4 business days.

Are there prepayment penalties?
No, you can pay off your loan early without extra fees.

What types of businesses qualify?
AOF supports businesses with at least 12 months of operation and $50,000 annual revenue.

Can I use the loan to start a business?
No, these loans are for established businesses only.

Explore More Resources to Boost Your Business Growth

• [How to Write a Business Plan]
  
• [Understanding Your Cash Flow]
  
• [Unlocking Capital: Innovative Funding Strategies for Entrepreneurs]

The AOF Difference: Flexible, Accessible Direct Business Lending

Nonprofit Mission – Built to Support Your Success

As a mission-driven organization, we reinvest in communities and provide direct business lending to help companies like yours grow. Our focus is on your success, not our profit.

Free Business Resources – Tools and Guidance at No Cost

From financial checklists to interactive tools, we offer a wide range of free resources to help you make confident financial decisions.

Human Support – Real People Who Understand Your Journey

Unlike automated online lenders, we offer personal guidance from expert advisors. Our team works directly with you to ensure you’re ready and supported throughout the loan process.More Accessible – Designed for Real Businesses, Not Just Big Corporations

AOF’s direct lending approach is more flexible and affordable than traditional banks or high-cost fintech options. We lower the barriers, so you can get the financing you need to grow your business with confidence.

The AOF Difference: Flexible, Accessible Direct Business Lending

Nonprofit Mission – Built to Support Your Success

As a mission-driven organization, we reinvest in communities and provide direct business lending to help companies like yours grow. Our focus is on your success, not our profit.

Free Business Resources – Tools and Guidance at No Cost

From financial checklists to interactive tools, we offer a wide range of free resources to help you make confident financial decisions.

Human Support – Real People Who Understand Your Journey

Unlike automated online lenders, we offer personal guidance from expert advisors. Our team works directly with you to ensure you’re ready and supported throughout the loan process.More Accessible – Designed for Real Businesses, Not Just Big Corporations

AOF’s direct lending approach is more flexible and affordable than traditional banks or high-cost fintech options. We lower the barriers, so you can get the financing you need to grow your business with confidence.

Decades of Transparent, Trusted Lending – Helping Business Owners Succeed with Integrity

For over 30 years, AOF has supported small businesses with trusted loans and resources.

• $1 billion+ deployed in nearly 35,000 loans
  
• In FY24 alone: $97 million disbursed to 1,699 businesses
  
• 4.5M small business owners have accessed our free Business Resource Library
  
• 35,000+ used our coaching, events, and technical assistance
  
• 107,000+ jobs supported through business lending and the New Market Tax Credit Program (NMTC)
  
• 67% of business owners with lower credit scores improve their credit to a decent or good level by the time they finish paying off their loan

Accessing financing from an outside source can be a great way to grow your small business, but with so many different types of external financing, it can be difficult to choose the right option for you. While an injection of capital can be just what your business needs to reach its goals, choosing the wrong type of financing or agreeing to unfavorable terms can damage your business’ financial health. A cash flow crunch, high APR, and short repayment terms can make it harder to keep your business running smoothly. This guide explores the differences between term loans and lines of credit, so you can make the best decision for your business.

Term Loans and Lines of Credit: The Basics

A term loan is a lump-sum of money provided upfront by a financial institution to the borrower in return for pre-determined repayment terms. Repayment terms include the payment schedule, interest rate, and term, or length, of the loan. Term loans are commonly offered by banks, credit unions, and online lenders. A line of credit is a pre-approved variable-amount loan or borrowing limit that you can draw on at any time without having to justify the use of the funds. Lines of credit are almost always provided by a bank or credit union with whom you already have a working business relationship. Term loans and lines of credit can both be good financing options for small businesses, but they won’t be right for everyone. It is important to consider your business needs and goals when choosing between a term loan and a line of credit. To learn more about the cost difference between term loans and lines of credit, check out this article.

Term loans are best for business owners when:

• You need to be able to predict your exact repayment schedule over a long period of time
• You don’t have already-owned assets you can borrow against
• You don’t have a credit score or you have a lower credit score
• You do not have an established relationship with a business banker
• You haven’t been in business for very long
• You need a larger amount of capital

Lines of credit are best for business owners when:

• You already have an established relationship with your business banker
• You need variable amounts of money at intermittent times
• You know you will be able to pay back the line of credit in a short period of time
• You need to access money quickly to capitalize on a business opportunity
• You have a valuable asset (like business equity, property value, savings, or personal investment portfolios) that you can borrow against. There are unsecured lines of credit that don’t require collateral, but they are uncommon for personal loans and small businesses.
• You need a lower amount of capital

Term Loan: Pros and Cons

Common examples of term loans are a home mortgage, a car loan, or a small business loan. Some term loans are secured by assets that you already own, meaning that your lender has a right to that asset if you’re unable to repay the loan. Term loans can also be unsecured, meaning you don’t have to put up any assets as collateral. Your ability to access a secured or unsecured loan will depend on several factors, including the amount of the loan, your credit history, and your financial history. When you qualify for a term loan, you will agree to repayment terms for the money you borrow. These terms typically include a down payment amount, a fixed interest rate and initial fees (often expressed as APR), a monthly repayment amount, and the total number of payments or length of the loan. Term loans can be provided by many different kinds of financial institutions including banks, credit unions, community development financial institutions (like Accion Opportunity Fund), and online lenders.

Pros

• You know exactly how much you are going to repay and when you are going to pay it.
• If you are choosing between a loan and a line of credit from your business bank, the loan will often have a lower interest rate than the line of credit.
• You can often get larger loan amounts than with a line of credit. Term loan amounts are often tied to the value of the asset you are purchasing, not the value of assets you already own.
• It is possible to get term loans without excellent credit, assets you already own, or a well-established relationship with your business banker.

 Cons

• Many lenders require you to justify what you are buying with the loan funds and show how it will help your business.
• If you plan to use the loan to purchase equipment or another large asset, your lender or vendor may require a down payment. These funds provided up-front will likely need to come from your own savings and could be as much as 20% of the total cost of the asset.
• You are locked into a long-term contract. You have to make regular loan payments for the entire term of the loan, which could be years or decades.
• It often takes a long time to get approved for a term loan. From the time you submit your application, it can take days or weeks before your financial institution is able to make a decision on your application. This makes it challenging to use a term loan to take advantage of certain business opportunities, like a sale on equipment, or to cover urgent needs, like a payroll shortfall.
• You can only use money from the loan for the specific purpose that was approved in the loan. If you applied for a loan to buy a new oven for your bakery, the loan funds can only be used to buy that oven.

Line of Credit: Pros and Cons

Most people are familiar with a small-scale line of credit in the form of credit cards. As with a credit card, when you have a line of credit, you are pre-approved by your business bank to borrow up to a certain amount of money at any time. When you qualify for a line of credit with your bank, you will agree to repayment terms for the money you borrow. These terms will include the interest rate, credit limit, and any assets or collateral that are tied to the credit line. Unlike most credit cards, you will have to pay interest on any money you draw on (borrow) from your line of credit, regardless of how quickly you pay off the principal amount you borrowed.

 Pros

• Once your line of credit is established, you can get the money you need when you need it. You don’t have to worry about losing out on a business opportunity because are waiting for your loan application to be processed.
• It can help smooth out your cash flow cycle. Every business has different financial needs. For example, a seasonal business might experience a dip in money coming into the business at certain times of the year. A line of credit can help you continue to operate during these times.
• You’ll develop an even deeper connection with your business banker. This can be hugely beneficial as you continue to grow your business.

Cons

• Interest rates are higher than what you can usually get on a term loan from a bank.
• Interest rates can be variable. The interest on your line of credit is usually related to prime (the prevailing interest rate set by the Federal Reserve) and can vary from month to month or week to week.
• You have an indefinite amount of time to repay the principal of the loan. This can be both good and bad. Lines of credit don’t usually have a fixed repayment term for the principal of the amount you borrow. However, you are required to pay interest every month on the money you have borrowed. This is good because you can use the money for as long as you need it. This can be bad because you might pay higher (and variable) interest rates on a large sum of money until you are able to pay back all the money you have borrowed.
• You often must pay a fee every year for your line of credit, even if you don’t use it.
• The limit of your line of credit is based on a fixed percentage of assets that you own. Your credit limit is tied to the value of those assets, so you cannot sell those assets and still maintain the line of credit.

 Beware of Predatory Lenders

According to Debt.org, “Predatory lending is any lending practice that imposes unfair or abusive loan terms on a borrower. It is also any practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitive, or unscrupulous actions for a loan that a borrower doesn’t need, doesn’t want, or can’t afford.”

When searching for financing for your business, including in the form of term loans and lines of credit, it is essential to evaluate the lender and make sure that its lending options are right for you and your business, just as much as the lender is evaluating you as a borrower. Companies that are not regulated and bound by state treasury laws typically offer loans full of hidden fees and fluctuating payment schedules. These daily or weekly repayment schedules can strip business owners of the cash they need to operate.

When evaluating a financing offer, you want to look for traditional terms such as a monthly payment schedule, easily understandable terms, and APR. When it comes to daily or weekly payments, proceed with extreme caution. Depending on your cash flow, it may be best to avoid such a loan because it can hurt the future of your business.

Lenders that do not clearly share upfront the cost of a loan or who advertise that they’ll give you fast cash without asking for details about your business may have something dangerous to hide. If you are considering a loan, be sure to familiarize yourself with predatory lending practices and techniques to protect your business.

When in doubt, don’t be afraid to ask for a second opinion: Accion Opportunity Fund offers one-on-one business coaching totally free of charge, and a professional business expert can take a look at your financing offer to help you understand the terms and decide what’s right for your business. If you have questions about term loans and lines of credit, our business coaches are here to help!

 Financing with Accion Opportunity Fund

If you do decide that a term loan is right for you and your business, consider working with Accion Opportunity Fund. At Accion Opportunity Fund, our goal is not only to help you get the funding and support you need to launch your business, but to help you grow and thrive once you’ve got your foot in the door. Accion Opportunity Fund is a government-regulated, non-profit financial institution with a mission to help small business owners reach their goals. Find out more about our small business loan program and apply online today.

Disclaimer: Average interest rates and typical loan terms can change rapidly, so please thoroughly check with any provider to confirm rates and terms.

Learning with Accion Opportunity Fund

When it comes to your finances, you want clear guidance and easy-to-implement tools based on your unique needs. Visit Learn with AOF to get started strengthening your financial management and meeting your goals.

Experience a different kind of financial education. Learn with AOF has flexible, on-demand courses developed by small business owners, for small business owners. Learn on your schedule, with no time commitment or limit. Save your progress any time to fit courses into your busy schedule.

Keeping business and personal credit separate can be tricky for small businesses, especially when you are the business. Even if you’re the sole business owner, experts recommend having a clear distinction between your personal and business finances. Building business credit aside from your personal credit is part of that equation.

To some extent, your business and personal credit may remain linked, no matter how hard you work to keep them separate. For example, if you’re applying for financing and don’t have a long enough business history to qualify, you may need to add your personal guarantee into the mix. Here are a few other important things to know about business credit vs personal credit.

What’s the difference between business and personal credit?

Your personal credit is connected to you by your Social Security Number. Your business credit history is linked to you by your Employer Identification Number (EIN) or Tax ID Number, which is how the government recognizes your business for tax purposes. You can apply for an EIN online and receive it almost instantly. Technically, if you’re a sole proprietor, you don’t need an EIN for taxes, but to establish business credit, you do.

Your personal credit history is curated by the three major credit bureaus, Equifax, Experian, and Transunion, and you have one profile with each. Experian and Equifax also have business credit reporting services. Your business profile is separate from your personal credit history.

There are credit reporting services that only deal with businesses, with Dun & Bradstreet being the largest and best known. If you have more than one business, you can have a separate report for each, as long as it has its own EIN.

Personal vs. business credit scores

Your personal credit is frequently summarized into a single number that helps creditors see where you stand at a glance. FICO is the most commonly used method of scoring personal credit. There is no equivalent for businesses; each commercial credit bureau scores and reports its own way.

The most important factors for scoring businesses are usually how you pay your bills, how much debt you carry, and what type of industry you’re in. Generally speaking, business credit scores have fewer variables than FICO scores, and it is easier to improve the score for a business than it is for an individual.

On the downside, there are fewer legal protections for business credit. While consumer credit laws allow you to challenge anything on your report and have incorrect entries removed, there are no such laws when it comes to commercial credit. That means if there are issues with your business credit report, you could have a much tougher time getting those dealt with. Small business owners can challenge discrepancies with the agency that has them listed, but the agency doesn’t have to respond.

Why do I need business credit?

In many cases, you won’t be able to complete business transactions if your business doesn’t have available credit. Lenders will use a business’s credit history when figuring out whether or not to loan the business money. You’ll also need credit to get business insurance. In many instances, you won’t be able to buy goods and services for your business without access to credit.

Why can’t you use your personal credit for all of that? In some cases you can, but you really shouldn’t. First, the IRS has strict rules about mixing personal and business expenses. Using personal checks or a personal credit card for business purposes makes your bookkeeping much tougher. Most people also believe your business looks a lot more professional when you pay for business expenses with dedicated business funds.

Perhaps most importantly, if you use personal credit to run your business, you put yourself and your family at risk if your business experiences bankruptcies or other financial troubles. Creditors will then come after you, as you will be personally liable for the expenses incurred by the business.

When personal and business credit mix

There are times your personal and business credit will affect each other, especially if you’re a sole proprietor. In most cases, your personal credit will impact your business far more than the other way around.

Some business credit card applications will require your Social Security Number. A landlord may want to run a personal credit check before leasing you a space. A small business loan may need a personal guarantee. In fact, under some circumstances, the Fair Credit Reporting Act does allow lenders to review the personal credit history of sole proprietors for business lending purposes.

If you can avoid using your Social Security Number (and hence, allowing access to your personal credit history) for business purposes, that will help keep the two separate. Credit bureaus don’t distinguish between business and personal inquiries, and incurring too many business-related credit inquiries can have a negative impact on your personal credit score.

For small businesses, your personal and business credit scores can be very closely linked, so it’s smart and important to protect both.

Business credit vs. personal credit FAQs

When it comes to the minutiae of business and personal credit, it can be easy to get lost. Here are some questions new entrepreneurs frequently ask about mixing business credit with personal credit.

Is it possible to build business credit if you have bad personal credit?

Since business and personal credit files are separate, it’s possible to establish strong business credit even if you have a low personal credit rating. The trick is to firmly distinguish your business credit from your personal credit before you start trying to build your business credit score.

You can do this by always paying your business expenses through a business bank account or business credit card, and always depositing business income in a business account before writing yourself a paycheck. Whenever you apply for new lines of credit, business credit cards, or bank accounts for your business, try to always use your EIN rather than your Social Security Number. This will maximize the separation between your business and personal accounts, helping you grow your business credit history independently of your personal credit baggage. Once your accounts are separate, you’ll be able to really focus on building up your business credit history (see “How can I build business credit?” below).

Is business credit just a safeguard for personal credit?

Business credit is more than just a veil for liability purposes. In fact, the U.S. Small Business Administration recommends thinking of your business credit report as a gauge for the financial history and reputation of your business. There are a number of benefits to maintaining good business credit. These include:

Access to funding

Bad business credit is more common — and more detrimental — than you might think. In 2021, about 27% of businesses surveyed by the NSBA claimed they were unable to secure the funding they needed. The same survey reported that a whopping 20% of business loan applications were denied because of bad business credit.

Conversely, when you have good business credit, it’s much easier to access funding opportunities. Need a small business loan? Youre much more likely to qualify. Emergency relief? At your fingertips. Plus, a higher credit score will help you secure a wider variety of loan options, lower interest rates, and better loan terms.

Higher credit limits

Small business credit cards and lines of credit often come with more business benefits than personal credit accounts. You are more likely to receive bonus rewards on phone bills, online advertising, or office supplies, for instance.

The limit you’re offered on your business credit card may also be higher than what you qualify for on your personal cards. Usually, that limit comes down to the lender’s analysis of your personal income, business revenue, and overall creditworthiness. Having a higher limit on your business card can be especially useful if you have high operating or inventory costs each month and don’t want that spending to negatively impact your personal credit utilization ratio.

Better terms from suppliers

One of the biggest benefits of building your business credit — and keeping it separate from your personal credit — is that when it comes time to purchase additional equipment and inventory, you’ll have a solid enough financial reputation to do so. As long as your suppliers trust that your cash flow is stable and that you will repay your debts on time, they won’t see you as a credit risk. They’ll be more comfortable in both allowing you to purchase on credit, and in giving you better terms when you do.

Does business credit affect my personal credit, or vice versa?

It’s important to separate your personal and business credit as much as possible. However, even if you do your best, they can still both impact your business. Just how much depends on the lender or loan issuer.

On some loan, credit, or lease applications, your lender or landlord will ask for your Social Security Number, either in addition to or instead of your EIN. This generally means that your personal credit report is being reviewed.

Similarly, if you’re using personal assets or personal liability to secure a loan and don’t have a lot of business credit built up, your personal credit history will likely come into play to fill in the gaps. (This is especially true if you’re a sole proprietor versus part of a partnership business.) However, if a lender only asks for your EIN, it’s likely that they won’t look at your personal finances. In this case, your personal credit isn’t likely to impact your business credit.

Conversely, your business credit can also impact your personal credit. Again, this depends on the lender or creditor’s policies. For instance, some business credit card issuers report all business card activity to the credit bureaus (Equifax, Experian, and TransUnion). This can have an impact on your personal credit history and credit score. Other credit card issuers, however, only issue reports in cases of default. Here’s a rundown of some of the bigger issuers’ policies:

• Capital One: Reports all activity
• Chase: Reports in case of default
• Discover: Reports all activity
• Bank of America: Reports if the account is delinquent
• Citi: Reports all activity
• Wells Fargo: Does not report
• PNC: Does not report
• American Express: Reports in case of default

How can I build business credit?

The easiest way to establish business credit is to keep all your personal and business finances separate from the get-go. You can also:

Open a separate business checking account

Use your business checking account to pay the business’s bills and employees, including yourself. If you’re incorporated, you have to do this, but it’s good advice for ALL businesses. Use the EIN we discussed above to apply for the account, and use a separate business mailing address and telephone number, even if it’s for a mobile phone.

Pay your bills on time

Negative payment history, including both late and missing payments, is one of the big red flags credit bureaus look for when calculating a business’s credit scores. To avoid adverse impacts to your business credit rating, try to pay your bills on time (or early if you can). This shows future lenders that you’re a reliable borrower. It can also help boost your credit score, unlocking higher loan amounts and lower interest rates.

Apply for and use a business credit card

Pay business expenses with this card, not with your own personal card. This not only makes tracking expenses much easier, but it helps you build credit for the business as you use and pay off the card. If you can’t qualify for a business card immediately, start with a secured card, which is backed by money you put in the account to guarantee you’ll pay.

Ask for credit terms from your vendors

Even if the credit limit is small to start and the time frame is relatively short, asking for a small advance will help you build your credit. Pay the bills on time, and after a few transactions, ask to have the limit and/or term increased. Success with even one or two vendors will give you positive credit references to build on in the future.

Apply for a small loan

Since your goal is to build business credit, a lender that reports to credit bureaus can help boost your ratings. Take out a small loan, such as a working capital loan, from such a lender and set aside the money to pay it off on time. Accion Opportunity Fund (AOF) is one microlender that reports on-time payments to credit bureaus, helping you build credit. AOF provides affordable, flexible capital, and its loans are easier to qualify for than those from other financial institutions.

The other good news is that you don’t always need a Social Security Number to get a loan. Some lenders, like Accion Opportunity Fund, offer loans to individuals with ITINs (Individual Taxpayer Identification Numbers).

Register with the business credit bureaus

Experian and Equifax allow you to open a business credit file. Apply for a DUNS number from Dun & Bradstreet to get started.

Select your business structure carefully

One of the best ways to separate your business and personal finances is to do it legally as well as financially. Instead of setting up your business as a sole proprietorship, take yourself out of the mix and form a corporation or LLC instead. (See our article on the Legal Structure of a Business for the hows and whys.)

What is the difference between business credit and personal credit?

Personal credit is tied to your Social Security Number (SSN) and reflects your history with personal loans, credit cards, and bill payments.

Business credit is linked to your Employer Identification Number (EIN) and tracks your company’s financial behavior, such as paying vendors or taking out business loans.

Example: If you use a personal credit card to buy inventory, it impacts your personal credit. Using a business card does not—if properly separated.

Does my personal credit affect my business credit?

Yes—especially when you’re starting out. If your business has little or no credit history, lenders may rely on your personal credit score when evaluating loan or credit applications.

Example: A business credit card may require a personal guarantee and check your FICO score if your company is new.

Can my business credit affect my personal credit?

Sometimes. If your business credit card issuer reports account activity to consumer credit bureaus, it can show up on your personal credit report—especially if you default.

Example: Capital One and Discover often report both positive and negative activity to personal bureaus.

Can you build business credit if you have bad personal credit?

Yes! Business credit is a separate file. You can build it by paying vendors on time, getting a business credit card, and opening accounts under your EIN—not your SSN.

Example: Apply for a net-30 vendor account that reports to Dun & Bradstreet, even if your personal credit is low.

Does applying for a business credit card affect my personal credit score?

It can—if the issuer checks your personal credit or reports account activity to personal credit bureaus.
Some cards only report in cases of default, while others report everything.

Capital One: reports all activity
Chase & Amex: report only in default
Wells Fargo: does not report

Which business credit cards do not report to personal credit?

Several cards do not report regular activity to consumer credit bureaus, helping keep your personal credit separate. Examples include:

• Chase Ink Business (reports only in default)
  
  
• American Express Business (default only)
  
  
• Wells Fargo Business (does not report)
  
  
• PNC Business (does not report)
  
  

?Always confirm the issuer’s policy before applying.

Does an LLC have a credit score?

Yes. An LLC can have its own business credit profile and credit score—if it has an EIN, a DUNS number, and credit accounts in its name.

How do I open a business credit file?

1. Apply for an EIN from the IRS
   
   
2. Get a DUNS number from Dun & Bradstreet
   
   
3. Open a business bank account
   
   
4. Open vendor accounts and business credit cards
   
   
5. Make payments on time
   
   

Credit bureaus like Experian Business and Equifax Business will generate a file once you start borrowing under your business identity.

How long does it take to build business credit?

It can take 3 to 6 months to generate a score and 12+ months for stronger limits and better terms—depending on your payment history and number of accounts.

Example: Net-30 accounts and secured credit cards can jumpstart your profile within a few billing cycles.

Can I get business credit without using personal credit?

Yes—but it’s harder. Most lenders check personal credit for new businesses. To qualify with only business credit:

• Build trade lines with vendors
  
  
• Apply for EIN-only cards or credit with no personal guarantee
  
  
• Work with lenders like Accion Opportunity Fund that offer alternative approval paths

What’s the difference between a business credit card and a personal credit card?

Feature	Business Card	Personal Card
Linked to	EIN	SSN
Reports to	Business credit bureaus	Consumer bureaus
Rewards	Tailored for business (ads, software, etc.)	Tailored for personal (travel, groceries)
Protections	Fewer consumer protections	FCRA and CARD Act apply

Tip: Never mix purchases—it muddies accounting and credit separation.

What credit score does a business start with?

Business credit scores don’t start at zero like personal FICO scores.
Some start at 100 (Paydex) or 1–100 (Experian Intelliscore) after your first tradeline reports.

You need at least one vendor or lender to report before your score is established.

Explore business funding with Accion Opportunity Fund

Building business credit can open up all kinds of doors. Having a strong financial reputation and a clear credit history can help you qualify for everything from emergency funding and short-term working capital loans, to long-term equipment loans — all of which can help you take your business to the next level.

That said, we at Accion Opportunity Fund understand that building up your business credit takes time. That’s why your credit score is only one of many factors we use to determine your financial health when you apply for our small business loans. We’ll consider your history in business and other details, then issue loan terms customized to your business’s specific needs. If you’re looking for funding to start or grow your small business, take a look at our available small business loans today.

 

The word “debt” has a strongly negative connotation for many of us. Financial experts concur that debt gets a bad rap – the reality is that not all debt is bad. In fact, a certain amount of the right kind of debt can even boost your credit rating! Managing good credit while taking on debt is a balancing act – here’s how to get it done.

1. Never Miss A Payment

The single most important part of maintaining good credit while taking on debt is making all of your payments. Always pay on time and in full. Missing payments is going to crash your score quickly, so make sure that you can comfortably cover the payments for whatever debt you’re taking on. Your payment history is a big part of your credit score – stay on track and your score will rise, but miss a payment or two and it will drop quickly.

2. Borrow the Right Amount

In addition to payment history, your overall debt level is a major component of your credit score. Credit bureaus will compare your overall debt level to your income and assets. If your debts are larger than your assets or your payments are bigger than your income, that’s going to hurt your score – you can’t comfortably take on more debt and that makes you a higher credit risk.

This takes some number crunching. You’re borrowing money for a reason, whether it’s new equipment or to fund an expansion or remodel your store. You have to borrow enough to get the job done but you also need to make sure your overall debt levels are comfortable. In some cases, you may find that you need to wait and pay down some other debt before you take on more. It’s not just about being able to make the payments; it’s about the overall ratio and how it affects your credit score.

3. Be Strategic About Your Debt

Different kinds of debt have different ramifications for your credit score. Taking on a ton of credit card debt, which comes with a very high-interest rate, is going to affect your score differently than a bank loan for the same amount. Remember that your credit score is designed to reflect the likelihood that you’ll repay loans. A structured loan for a set amount is easier to keep up with than credit card debt that may continue to grow and stick you with a ton of interest. Before you take on debt, shop around and make sure you’re getting the best possible terms.

4. Take Advantage of Support Resources

Choosing the right kind and amount of debt is a balancing act and the right level will vary from industry to industry and business to business. There’s no magic formula! So, consider working with an organization like the SBA to learn about your options and make sure you have the financial implications nailed down. They offer educational resources to help you understand how to take on debt, what the relevant terms mean, and how to decide what fits your business needs best.

5. Watch Your Score

Keeping tabs on your credit score is always important, but it’s especially crucial when you’re managing debt or obligations. You need to know what your credit report looks like before you start trying to take on debt in case you need to do some work to improve your score and so you can see how the credit bureaus are rating your current financial situation. You’ll also need to monitor it regularly as you make payments to ensure that you’re getting credit for all of your payments and that there aren’t any errors on the report.

Individuals are entitled to one free copy of their credit report every year from each of the three credit bureaus (Equifax, Experian, and TransUnion). You’ll have to pay a fee to see your business credit report.

Debt Isn’t A Four-Letter Word

Having debt isn’t going to tank your credit score automatically. In fact, the way you handle debt is where your score comes from in the first place. The trick is borrowing thoughtfully and repaying faithfully. Borrow within your means and pay on time and in full.

Whether you’re expanding your product offering, hiring employees, or moving your operation from your home to an office space, growing your company takes capital. Credit is one of the most important factors banks consider when making the decision whether to approve or deny your loan application. Your level of credit-worthiness is one way lenders determine your ability to pay back the money. If you have no credit or bad credit, many lenders will deem you too high-risk. There are other options available to you if your credit is lacking, but they often come with smaller loan amounts and higher fees than a bank loan. Using a credit card is an easy way to build your credit and demonstrate financial responsibility, as long as you use it wisely.

 

Shop Around for the Right Card

When you have a limited credit history or a low credit score, you may not be able to qualify for many of the credit cards on the market. Here are some things to consider as you shop around for the right card for you:

• Too many credit card applications hurt your credit score. It’s important to shop around for the best deal, but don’t apply for every one that looks good. Weigh your chances of being approved against the ding to your credit report. Be selective when applying.
• Have a separate credit card for your business, if possible. Keeping your business and personal finances separate is recommended for many reasons, but when it comes to building business credit, it’s crucial.
• If you can’t get a business credit card, consider a secured credit card. Though business credit cards come with many perks for owners, they can often be out of reach for those with limited or bad credit. A secured card-one where you deposit money up front that serves as collateral-is an avenue for establishing or reestablishing credit. Some secured cards offer the option to convert to a standard card after remaining in good standing for a set period of time.
• Read the fine print. Make sure you understand the fees associated with your credit card, factors that can affect your APR, and your financial responsibilities before you sign on the dotted line.

How to Use Credit Cards Wisely

Whether you’re building or repairing credit, the same crucial rule applies when using your credit card: pay your balance in full each month.

Here are some more ideas to ensure you’re helping, not hurting, your credit:

• Pay fixed business expenses with recurring charges. Are there any regular costs you’ve already budgeted for that can be paid by credit card, like your business phone or insurance? Set those up as recurring credit card charges. This rule applies if you know you already have the money to pay those bills-you’ll just be paying back the credit card company, rather than the vendors.
• Set a monthly spending limit for credit card purchases. Set a small spending limit for yourself for non-fixed business costs, and stick to it. Make sure it’s an amount that you can realistically pay off each month.
• Always pay your bill on time. Late fees can add up quickly. If you find that the due date of your credit card is too close to other recurring monthly payments, call the company and request a different day to pay your bill each month.
• If you have to carry a balance, pay it off quickly. Paying your balance in full every month is the best way to establish good credit, but on a rare occasion, an unexpected financial burden could arise. If you find yourself unable to cover the full amount one month, make at least the minimum payment and pay off the remaining balance as soon as possible.

After several months of using your new credit cards responsibly, check your credit report to see if you’ve made any impact. You can check your reports from the three credit bureaus, TransUnion, Experian and Equifax, for free once per year at AnnualCreditReport.com.

Building your credit is just one way to make your business attractive to lenders, but it’s an important one. Making your credit cards work for your business means you’ll have more options available to you when it’s time to invest more capital into your growing company.