Business credit can be one of the biggest game changers for a company. It lets you invest in growth, cover expenses, and compete with larger firms. But too often, business owners believe myths that just aren’t true, and those beliefs stop them from getting the funding they need.
As someone who has spent years helping entrepreneurs access capital and grow their companies, I want to walk you through these myths and clarify what’s true and what’s not.
I’m passionate about this because I know the impact it can create. In fact, it was a big part of taking my own business from 8 million to well over 100 million in revenue within the span of 6 years. I could pretty easily share hundreds of examples from clients off the top of my head, and we have thousands of clients who have experienced similar outcomes.
My goal is to help you see clearly how business credit works so you can grow your business with confidence.
Myth 1: You don’t need a personal guarantee
The single most common myth is that you can get business credit without a personal guarantee. That idea gets spread a lot on social media. Some posts say things like “all you need is a brand-new EIN to land six figures in funding.”
Here’s the hard truth: if you want business credit, you’re almost always going to have to sign a personal guarantee.
This means that if your business can’t pay back what it borrowed, you are personally responsible. Some people think that’s unfair or risky, but lenders see it as a way to protect their capital. And from my experience, it helps make you a smarter business owner. Knowing that you’re personally on the line forces you to plan wisely and manage your money more carefully.
If you think you can skip this step, you might end up waiting forever for a type of funding that simply doesn’t exist for most small businesses—at least not at the start.
Myth 2: Your business needs a long history to get credit
Another common myth is that your business needs years of history before it can get credit.
That’s simply not true. You could open a business today and still get credit.
The key thing lenders look at is whether you can repay them. That starts with your personal credit, so if yours is good, you can leverage it to help your business get started with its own credit. However, having more cash flow and a track record of revenue can help you qualify for higher credit limits or better terms over time.
So don’t let “newness” stop you. If you have a clear plan and can show that you manage money responsibly, you can start building business credit right away.
Myth 3: Business credit doesn’t show up on your personal credit reports
Some people think that business credit and personal credit are linked — that if you get business credit, it will show up on your personal credit report. That’s not accurate.
Here’s how it works: when you first apply for business credit, lenders usually check your personal credit. That means a credit check might briefly appear on your personal report. But once your business has its own credit accounts, those do not show up on your personal credit report. Business credit reports are separate.
It’s important to understand this difference. Your personal credit score matters early on when you’re getting started, but business credit builds over time based on how you use that credit and manage payments.
Myth 4: You need a certain amount of revenue to get business credit
A lot of business owners believe they have to hit a specific revenue before they can qualify for credit. That’s another myth.
Revenue can influence how much credit you can get. But it’s not a strict requirement. I’ve helped many brand-new companies get funding even when they didn’t have much revenue yet. What matters more is how you manage your finances and prove to lenders that you’re responsible with your credit. If you use your credit responsibly and pay back what you borrow, lenders are more likely to increase your limits as your revenue grows.
So don’t let a revenue number become a barrier. There’s no magic dollar figure you must hit before you can get started.
Myth 5: Lenders only give credit to businesses that don’t need it
Finally, some people think that lenders only approve credit for businesses that “don’t need it.”
This misunderstanding comes from the fact that people mix up cause and effect.
In reality, lenders approve credit for businesses they believe will repay the debt. A high credit score or more assets often means a business has shown financial responsibility. That’s different from “not needing credit.” Lenders want to earn money from the interest and fees they charge. They have to lend to people they trust, so if your credit history shows you handle money well, you’re more likely to get approved.
It’s not that lenders avoid helping companies that need money. They just look for signs that the business can pay it back.
The bottom line…
Business credit doesn’t have to be a mystery. But myths—especially ones that spread through social media like a wildfire, can confuse entrepreneurs and keep them from getting the funds they need.
The five myths we just talked about are some of the most common ones out there, but they’re far from the only ones. That’s why it’s so important to follow the advice of people who actually know what they’re talking about.
If you understand how credit really works, you can make better decisions for your business. You can build your business credit step by step, use it to grow, and unlock opportunities that might have seemed out of reach.
Don’t let misinformation slow you down. With the right knowledge and the right plan, you can get the credit your business deserves.