Building Business Credit: Understanding the Role of Personal Credit and Financial Readiness
Starting or growing a business requires more than just a great idea—it requires access to funding and the creditworthiness to obtain it. That’s why understanding how to build and manage business credit is crucial for every entrepreneur. In this detailed conversation hosted by Black Tech Link, Elizabeth Cotton, Executive Director of the organization, teams up with Claudio Bergen, Assistant Vice President at US Bank, to explore the critical link between personal credit and business credit, and what steps small business owners can take to succeed.
This event, part of Black Tech Link’s Small Business Mastery Program, was made possible through support from California’s GO-Biz SB TAP grant initiative. The goal is to help underserved and minority-owned businesses understand and implement foundational financial strategies that will sustain long-term growth.
Why Business Credit Matters
When applying for funding, both personal and business credit will be reviewed. Lenders are looking for:
Payment history
Credit utilization
Time in business
Inquiries and public records
Business structure and ownership details
Liens or judgments
Claudio emphasized that having separate financial identities for personal and business matters is crucial. While it’s not mandatory, it’s recommended to establish an EIN (Employer Identification Number), open a business bank account, and apply for a D-U-N-S number through Dun & Bradstreet. This helps delineate your personal credit from your business operations.
Credit Reporting Agencies You Need to Know
Claudio outlined the three main business credit bureaus:
Dun & Bradstreet: Focuses on trade credit and how you interact with suppliers.
Equifax Business: Reviews business lines and loan management.
Experian Business: Covers business credit data used by lenders and vendors.
In addition, PayNet and LexisNexis are two other important players. PayNet tracks lease and loan data between businesses and lenders. LexisNexis gathers both financial and non-traditional data and is often used by lenders for larger funding requests.
Monitoring your reports from these agencies is essential. Claudio advises checking your business credit reports at least once a year to make sure everything is accurate and to avoid surprises when applying for financing.
Establishing Business Credit from the Ground Up
Building your business credit requires taking strategic steps early. These include:
Registering your business name (fictitious name statement for sole proprietors)
Filing for an EIN
Opening a business bank account
Applying for a business credit card (even if secured)
Requesting suppliers and vendors report your payments to credit bureaus
Avoiding late payments or overutilization of credit
Even new businesses can begin building credit through secured credit cards or vendor accounts. Many lenders, including US Bank, offer secured cards that function just like regular credit cards and report to credit bureaus.
Understanding the Five Cs of Credit
Lenders use the Five Cs to evaluate creditworthiness:
Character – Credit history and personal integrity
Capacity – Ability to repay based on income and debt
Capital – Personal or business assets and investments
Collateral – Assets offered to secure the loan
Conditions – Industry, market conditions, and intended use of funds
Claudio shared that different lenders weigh these factors differently. For example, startup loans rely more on personal credit and collateral, while working capital loans may look deeper into business credit and revenue history.
Avoiding Predatory Lending
Small business owners must also be wary of predatory lending practices. High interest rates (especially those above 20%), aggressive sales tactics, lack of transparency, and unclear loan terms are red flags. Legitimate lenders should provide clear terms, rate comparisons, and allow you time to review documents.
Claudio recommends avoiding unsolicited loan offers by email and thoroughly researching any lender before signing anything.
Funding Options Beyond Traditional Banks
There are three main categories of funding options:
Traditional Lending: Offered by banks and financial institutions. Typically requires strong financial history and credit.
Subsidized Resources: Includes SBA loans, local government programs, and grants. These often require more documentation but offer favorable terms.
Alternative Lending: Options like crowdfunding, friends and family, venture capital, and angel investors. Useful for startups or businesses with non-traditional models.
Claudio also discussed the importance of CDFIs (Community Development Financial Institutions). These organizations are mission-driven and often provide funding to underserved entrepreneurs who may not qualify through banks.
Factoring and Contract Financing
Businesses that secure large contracts but lack immediate capital to fulfill them can benefit from factoring. In this model, the bank fronts the cost based on a contract and collects repayment directly from the client. This helps business owners stay on schedule with inventory or production without taking on long-term debt.
Claudio shared a real-life example of a small business that landed a contract with Walmart and used factoring through US Bank to scale production, eventually expanding to major national retailers.
Final Advice
Throughout the session, Elizabeth and Claudio emphasized that building strong financial foundations takes time, effort, and strategy. Entrepreneurs are encouraged to:
Separate personal and business finances
Monitor both personal and business credit reports
Leverage community partners, such as Black Tech Link, for support
Attend workshops and seek guidance from trusted advisors
Use tools like secured credit cards and CDFIs to grow your credit responsibly
This was just the beginning of a series of educational events designed to demystify business financing. Black Tech Link will continue hosting workshops covering credit repair, CDFIs, supplier diversity, and government contracting.
If you are a business owner or aspiring entrepreneur looking to take control of your financial future, building business credit is a powerful step toward sustainable growth. And with resources like Black Tech Link and knowledgeable advisors like Claudio Bergen, the path becomes a lot more accessible.
Stay tuned for upcoming events, and don’t hesitate to reach out for one-on-one consultations. Your financial foundation starts here.
Want to Join the Movement?
If you’re a small business or nonprofit looking to grow, modernize, and get connected to real opportunity—Black Tech Link is here for you.
➡️ Visit blacktechlink.org
📌 Click on the Small Business Mastery Program
🗓️ Book a free session by hitting Talk With an Expert
Your mission deserves to thrive. Let’s make that happen—together.