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Orlando Business Lawyer / Blog / Sole Proprietorship / How to Build Credit as a Sole Proprietorship

How to Build Credit as a Sole Proprietorship


A sole proprietorship is the easiest and fastest way to start and run a small business in the United States. It’s also the most common type of business formation, with a large majority of businesses run this way.

However, getting money is not easy, and small businesses need a lot of money. Business owners who operate sole proprietorships will often come across the need for a small business loan or financing. Business credit can be very helpful in this regard, and this means you will need to have a good credit score.

There are some steps you will need to take first. For example, you will need to register your business and get a phone number and address. Having a separate business bank account can also be helpful. Next, you will need to start building your credit. Here’s how.

Get a Business Credit Card

A small business credit card can help your business build business credit as long as the card issuer reports payments to business credit agencies. You can find out online which ones do. The good news is that you don’t have to be an established business. You also won’t need to show proof of business revenues. A business credit card can be useful for managing cash flow, and some even offer perks such as travel rewards or cash back.

Get Trade Credit

Build credit for your business by doing business with associated companies. For example, if you are a general contractor, you can get credit accounts with building supply companies. Most vendors don’t check the owner’s personal credit history. Most of these accounts express payment terms as net-15, net-30, or net-60. What this means is that for a net-30 account, your business has 30 days to pay the invoice.

Try for a Loan

Some small business loans and lines of credit will help you build business credit. Check with the lender to see if they report payment history to commercial credit. Then make sure to make payments on time to ensure a positive payment history.

Borrow Responsibly

When you do get credit, be responsible with it. Don’t take on more debt than you can handle. You’ll improve your business credit score by living within your means and making timely payments.

Be Patient

Building business credit does not happen overnight. It can take some time for your credit line to increase and for your score to rise. By being patient, you build a financially healthy business.

Learn More About Sole Proprietorships

While creating a sole proprietorship is easy, getting the necessary funds to build a business is not. Getting loans and credit can be a challenge without taking the proper steps.

Orlando sole proprietorship lawyer B.F. Godfrey from Godfrey Legal can help you make the right decisions to lead your business to success. We have more than 30 years of experience working with entrepreneurs and established businesses. Schedule a consultation today by filling out the online form or calling (407) 890-0023.


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