How to build credit for a business loan

Getting approved for a business loan isn’t just about choosing the right lender, it’s about demonstrating that your business is financially responsible, stable, and capable of repaying what it borrows.

This means building a strong business credit profile, keeping your accounts in good order, and maintaining a financial cushion. In this guide, we’ll explain the key steps you can take to strengthen your creditworthiness and improve your chances of securing funding.

Why business credit matters

Lenders assess several factors before offering finance. These typically include:

• Your business and personal credit history

• Financial accounts and trading history

• Cash flow and profit margins

• Existing debts and repayment performance

• Savings or financial reserves

A strong credit profile signals that your business is low-risk, which can lead to:

• Lower interest rates

• Higher loan amounts or credit limits

• Longer repayment periods

• Access to a wider range of finance options

Building credit takes time, but with consistent effort, it can significantly improve your access to funding.

Here are the steps you can take to build credit for a business loan. 

Set up a business bank account

One of the most important first steps in building business credit is opening a business bank account. This helps create a financial footprint for your business and shows that you are operating separately from your personal finances.

Lenders often look at your business banking activity to assess:

• How long you’ve been trading

• Whether your cash flow is consistent

• If your business can manage regular expenses and repayments

To build a strong credit profile:

• Open a business bank account as early as possible, ideally when you start trading

• Use it for all business income and expenses

• Keep your account in good standing (no unauthorised overdrafts or missed payments)

• Maintain a consistent transaction history that reflects stable business operations

Over time, responsible use of your business bank account helps demonstrate that your business is financially active and well-managed, which lenders value when assessing loan applications.

Use a business credit card responsibly

One fast way to build credit is to use a business credit card.

• Pay off the balance in full each month to avoid interest

• Keep usage below 30% of your limit where possible

• Make payments on time: late payments damage your score

Many business credit cards are designed for startups and small businesses with limited history. Some even offer cash back or rewards to offset spending. If you're exploring options, check out our guide to the best business credit cards in 2025 for a quick comparison.

Build a cash buffer to strengthen your position

Lenders want to see that your business is not solely dependent on borrowed funds. A cash buffer, or savings reserve, shows financial stability and helps you prepare for unexpected changes in income.

A business savings account can strengthen your position in several ways:

• Demonstrates financial resilience: If income drops temporarily, your business can still meet its obligationsActs as a deposit: Some loans (e.g. asset finance or commercial mortgages) require upfront contributionsImproves financial ratios: Strong liquidity can reduce perceived risk for lenders

A savings buffer covering three to six months of essential expenses is a good benchmark to aim for.

Always pay on time

Payment history plays a major role in your credit score. Late or missed payments, whether to lenders, suppliers, or service providers, can damage your credit profile and reduce your chances of approval.

To avoid this:

• Set up direct debits or automatic payments where possible

• Use accounting software or calendar reminders to track due dates

Consistency in meeting payment obligations demonstrates that your business is dependable, which is a strong positive sign for business loan providers. 

Keep your credit utilisation low

Credit utilisation refers to how much of your available credit you’re using. For example, using £9,000 of a £10,000 limit equals 90% utilisation, which is considered high.

Lenders generally prefer businesses to use no more than 50% of their available credit. High utilisation can suggest financial pressure, even if you’re not struggling.

To manage this effectively:

• Aim to stay well below your credit limits

• Consider requesting a limit increase if you regularly use most of your available credit

• Repay balances in full whenever possible, especially on revolving credit

Monitor your credit score regularly

Staying on top of your business credit score helps you spot potential issues early, before they affect your ability to borrow. Late payments, errors, or changes in public records (like CCJs or insolvencies) can all impact your score.

With Capitalise, UK businesses can check and monitor their credit score for free, understand what’s affecting it, and get alerts when something changes, helping you stay loan-ready at all times.

“Being proactive about your business credit profile puts you in a stronger position when you need funding and helps you avoid surprises.” Nick, Head of Funding at Capitalise.com

Strengthen relationships with suppliers and lenders

Some suppliers offer trade credit (e.g. net 30 terms), which helps build your credit history. 

If you've already borrowed from a lender and repaid successfully, that positive track record can make them more likely to extend additional credit or offer better terms in the future. 

Lenders value consistency and reliability. Building trust with one can lead to wider opportunities across the market.

Know what lenders look for

Although every lender has its own criteria, most will consider the following:

Understanding these requirements in advance can help you tailor your application and address any weak areas beforehand.

New business? Start here

If your business is new and doesn’t have a credit history yet, you can still take steps to build trust with lenders:

• Consider using a business credit card to establish a credit history

• Open a business savings account to show financial stability

• Request credit terms with your suppliers and make sure to repay early

• Monitor your business credit profile to keep your details accurate

Need funding?

Securing the right finance can make all the difference to your business, whether you're managing cash flow, investing in growth, or planning ahead. At Capitalise, our platform brings together access to over 130 UK lenders, expert support from funding specialists, and real-time credit score monitoring, so you can make informed decisions and secure the funding that fits your business best,  all in one place.