Independent small-business finance library
Business Credit, Explained
How business credit files and scores work, what lenders really check, and what each kind of financing costs, written in plain English for U.S. owners. We don't lend or broker anything, so there's nothing to sell you.
Facts checked against SBA.gov, the CFPB, the Federal Reserve's Small Business Credit Survey and the bureaus' own pages.
The order that usually works
Preparing for fundingSeparate
Form the entity, get an EIN, open a business bank account and keep personal spending out of it.
EIN-based creditEstablish
Get a D-U-N-S number, make your business name, address and phone match everywhere.
How files startBuild
Open a few supplier accounts that report payments, and pay on or before terms.
Trade linesBorrow well
Match the product to the need, compare offers by APR and total dollars, and read the guarantee.
Financing options
Calculators
All calculatorsThey run in your browser on the numbers you type. Each page shows its formula.
- APR and cost of capital calculatorTurn a factor rate, fee or note rate into an APR and a total dollar cost, so different offers line up side by side.
- Business loan payment calculatorMonthly, weekly or daily payment, total interest and an amortization summary for a term loan.
- DSCR calculatorDebt service coverage ratio from your income and payments, and how much new debt it leaves room for.
- Business credit readiness checklistTwenty checks lenders tend to look at first, scored, with what to fix before you apply.
Topic guides
All topics- Topic guideEIN-Based Credit vs Personal Guarantees: A Realistic GuideWhat 'EIN-only' business credit can and can't do, which kinds of credit young companies can get without a personal guarantee, and when lenders still require one.
- Topic guideBusiness Credit Compliance Basics: Records, Rules and Red LinesThe compliance basics behind business credit: entity standing, consistent records, honest applications, ECOA and Regulation B rights, state disclosure laws.
- Topic guideCost of Capital for Small Businesses: Rates, APR and Total DollarsHow to measure what business financing really costs: interest rate vs APR vs factor rate, fees, total dollars repaid, and the cost of equity and trade credit.
- Topic guideGetting Lender-Ready: How to Position a Business for FundingHow to prepare a small business before asking for financing: clean books, a clear use of funds, the right amount, the right lender type and the documents to gather.
- Topic guideBanks, Credit Unions, SBA Lenders and CDFIs: How Institutional Credit WorksHow community banks, credit unions, SBA lenders, CDCs and CDFIs differ as small-business lenders, and how each one tends to evaluate applicants.
- Topic guideBuilding a Relationship With a Lender Before You Need OneHow small businesses build trust with banks and credit unions over time: deposit history, clean reporting, a first small credit, and communicating before problems.
- Topic guideCapital Structure for Small Businesses: Debt, Equity and Working CapitalHow a small business can think about its capital structure: how much debt it can carry, matching debt to assets, working capital, owner equity and leverage ratios.
- Topic guideManaging Business Debt: Schedules, Refinancing and Avoiding StackingHow to manage existing business debt: a debt schedule, ranking debts by real cost, when refinancing helps, why stacking advances is dangerous, covenants.
- Topic guideCredit and Debt Before Selling a Business: A Cleanup GuideHow owners can prepare debt, liens, guarantees and credit files before selling a business, and how buyers' financing, including SBA loans, shapes the deal.
Financing options, side by side
Full comparison| Option | Best matched to | How it's usually priced |
|---|---|---|
| SBA 7(a) and 504 loans | Established businesses; real estate, equipment, acquisitions, working capital | Interest rate with SBA caps on the lender's spread; guaranty fees |
| Bank line of credit | Short, repeating cash gaps | Interest on what you draw, often variable |
| Term loan | One-time investments that pay back over years | Fixed or variable interest rate plus fees |
| Equipment financing | Machines and vehicles that secure the loan | Interest rate or lease rate |
| Invoice factoring | B2B sellers waiting on slow-paying customers | Discount fee on each invoice |
| Revenue-based financing | Businesses with steady, trackable revenue | Fixed payback cap repaid from a share of revenue |
| Merchant cash advance | Emergencies only, after cheaper options fail | Factor rate; APR often in the high double or triple digits |
Follow small-business finance on X (Twitter)
Program changes, rate news and owner discussions often show up on X first. These are live X searches we find useful; they open on x.com and we don't control what appears in them.
- U.S. Small Business Administration@SBAgov
- Consumer Financial Protection Bureau@CFPB
- SBA 7(a) news and talk"SBA 7(a)"
- Building business credit"business credit" paydex OR "net 30"
- MCA costs, in owners' words"merchant cash advance" APR
- Fed Small Business Credit Survey"small business credit survey"
- Invoice factoring"invoice factoring" small business
- Personal guarantees"personal guarantee" "business loan"
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GoHarvest is not affiliated with X Corp., the SBA or the CFPB. "X" and "Twitter" are trademarks of X Corp.
Worked scenarios
All tenInvented businesses, illustrative numbers, real arithmetic. They show how to reason through a decision, not what will happen to you.
- Hypothetical scenarioScenario: From Bootstrapped to BankableA hypothetical one-year-old cleaning LLC that has paid for everything on a personal card works out how to build a business credit file and become bankable.
- Hypothetical scenarioScenario: Flipping the Script on Funding by Comparing Offers FirstA hypothetical restaurant stops taking the first offer and compares an equipment loan, an SBA-style loan and a cash advance for $85,000 of kitchen equipment.
- Hypothetical scenarioScenario: Breaking the Barrier to Federal ContractsA hypothetical electrical contractor preparing for its first federal job works through registration, bonding and the working capital needed to carry the contract.
Financing by industry
All industriesFrom the blog
All articles- ArticleHow Business Credit Works, From First File to First LoanHow U.S. business credit files are created, what feeds them, how they differ from personal credit, and why lenders still look at the owner for young companies.
- ArticleBusiness Credit Scores Compared: D&B, Experian, Equifax and FICO SBSSThe main U.S. business credit scores side by side: what PAYDEX, Experian Intelliscore Plus, Equifax's risk scores and FICO SBSS measure, and their scales.
- ArticleThe PAYDEX Score Explained Without the HypeWhat Dun & Bradstreet's PAYDEX score measures, why 80 means paying on time, how many reporting accounts you need, and what does and doesn't move it.
- ArticleNet-30 Trade Lines: How Vendor Credit Builds a Business FileHow supplier trade credit (net-30 and similar terms) gets reported to business credit bureaus, how to tell if a vendor reports, and the traps to avoid.
- ArticlePersonal Guarantees on Business Loans: What You're SigningWhat a personal guarantee on a business loan or lease means, unlimited vs limited guarantees, SBA's 20% owner rule, and what you can realistically negotiate.
- ArticleHow to Check and Correct Your Business Credit ReportsHow to see what Dun & Bradstreet, Experian and Equifax report about your company, the errors worth fixing first, and how business disputes differ from consumer ones.
Questions people ask
Is GoHarvest a lender or a broker?
No. GoHarvest is an educational library. We don't lend, broker, take applications, sell leads or get paid by lenders for referrals. Nothing on the site is an offer of credit.
Can a new business get credit without a personal guarantee?
Sometimes, for small amounts: many suppliers extend net-30 trade terms on the business alone, and some business cards and vendor accounts start small. For bank loans, SBA loans and most lines of credit, owners of young companies should expect to sign a personal guarantee. SBA rules generally require one from every owner of 20% or more.
How is a business credit score different from my personal score?
Business scores are built from different data (mainly how the company pays suppliers and lenders, plus public records and company details), use different scales, and are sold to anyone with a business reason to check them. Dun & Bradstreet's PAYDEX runs from 1 to 100, Experian's Intelliscore Plus from 1 to 100, and Equifax's Business Credit Risk Score from 101 to 992.
Why does a factor rate of 1.3 not mean 30% interest?
A factor rate sets a fixed payback (1.3 means you repay $1.30 per $1 advanced) no matter how quickly you repay. If a $50,000 advance at 1.3 is collected in 126 business days, the estimated APR is about 109%. Our APR calculator does the conversion.
Are your funding scenarios real businesses?
No. Every scenario is invented to show how the numbers and trade-offs work. They name no real company, claim no results and should not be read as typical outcomes.
Who checks the facts?
We check program limits and scoring details against the primary sources (SBA.gov, the eCFR, the CFPB, the Federal Reserve's Small Business Credit Survey and the bureaus' own pages) and list them on each page. If you spot something out of date, email contact@goharvest.io.
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