How to Build Business Credit in Canada: A Step-by-Step Guide for Small Business Owners

Wondering how to take your business to the next level without maxing out your own credit cards? Building business credit can be one of the smartest long-term moves you make as an entrepreneur in Canada. It opens the door to better loan terms, larger credit limits, and supplier trust—all without relying solely on your personal credit profile. Whether you’re launching your first business or scaling an existing one, strong business credit gives you financial flexibility when it matters most.

According to Innovation, Science and Economic Development Canada, only 18% of small businesses requested debt financing in 2022—a signal that many may be unsure how to access or qualify for credit. That’s why learning how to build and maintain your business credit from day one is so important. In this guide, we’ll walk you through the key steps, offer practical tips, and explain the Canadian-specific tools available to help you succeed.

Key Takeaways

• Business credit is separate from your personal credit and crucial for long-term financial health.
• Building credit starts with proper registration, bank setup, and vendor relationships.
• Products like business credit cards, bank loans, lines of credit and net-30 accounts can help establish your credit.
• Monitoring your business credit score allows you to catch issues early and unlock better financing options.

What Is Business Credit and Why Does It Matter?

Business credit reflects your company’s ability to repay borrowed money and manage financial obligations responsibly. It works much like personal credit, but instead of being tied to you as an individual, it’s linked directly to your business entity—meaning lenders, suppliers, and insurers evaluate your business’s financial health separately from your own. Business credit scores are assessed by commercial credit bureaus like Equifax Canada or Dun & Bradstreet and are influenced by factors such as payment history, credit utilization, and the length of your credit profile.

A strong business credit score can:

• Help you qualify for business loans and lines of credit
• Unlock trade credit and supplier terms
• Improve your reputation with landlords and service providers
• Separate your business and personal finances for tax and legal purposes

Does Personal Credit Impact Your Business Credit?

In the early stages, yes. Lenders may review your personal credit to assess risk, especially if your business doesn’t yet have its own credit history. This is particularly common with sole proprietorships and startups applying for loans or credit cards. However, as your business credit profile develops, it becomes possible to access financing based on your company’s financial health alone.

How to Build Business Credit in Canada

Building business credit doesn’t happen overnight, but with the right steps, it’s absolutely within reach. Whether you’re just getting started or looking to take your next big leap, here’s how to lay a strong credit foundation for your business.

Step 1 – Formalize Your Business Structure

Before you can start building credit, your business needs to be seen as a separate legal and financial entity. That means establishing a formal structure and setting up the essential tools that lenders and credit bureaus recognize.

Register Your Business Entity

Incorporating or legally registering your business is a foundational step toward building business credit in Canada. Most lenders and credit bureaus require your business to be formally registered, meaning unregistered sole proprietors often won’t qualify for business credit products. Creating a legal business structure gives your company its own identity, increasing your credibility with banks, suppliers, and government agencies.

In Canada, you can choose from several types of legal business structures, each with its own implications for liability, taxation, and credit access:

• Sole Proprietorship:
  The simplest and most common structure. It’s quick to set up, but there’s no legal separation between the business and the owner, meaning your personal credit may be used for loans and liabilities.
• Partnership:
  Two or more individuals share ownership. In a general partnership, all partners are personally liable. A limited partnership (LP) or limited liability partnership (LLP) offers varying levels of personal protection.
• Corporation:
  A legally separate entity from its owners (shareholders). Incorporating federally or provincially provides limited liability protection and helps you build credit under the business’s name. Corporations are more likely to be approved for credit and financing on their own merit.
• Cooperative (Co-op):
  A business owned and democratically controlled by its members. Less common, but can be registered as a separate legal entity eligible for credit and funding.

You can register your business federally or provincially through the Government of Canada Business Registration Portal, depending on where and how you plan to operate.

Open a Business Bank Account

Separating your personal and business finances is a crucial early step in building business credit. A dedicated business bank account signals to lenders, suppliers, and even the CRA that you’re operating as a legitimate business, not just managing side income. It also makes your financial records easier to track and audit, especially when it comes time to apply for financing, file taxes, or monitor cash flow.

In Canada, most financial institutions offer tailored business banking solutions. These accounts often include features like expense tracking, mobile cheque deposits, credit card integration, and overdraft protection. 

To open an account, you’ll typically need your business registration documents, business number (BN), and valid ID. Starting with a business chequing account will help you build the financial foundation necessary to qualify for credit cards, lines of credit, or term financing in the future.

Apply for a DUNS Number or Business Identifier

A D-U-N-S® Number (short for Data Universal Numbering System) is a unique nine-digit identifier used by Dun & Bradstreet to track a business’s credit activity and global credibility. Think of it as a business fingerprint—recognized worldwide by lenders, suppliers, and even governments. In Canada, having a DUNS Number is especially useful if your business plans to:

• Apply for vendor credit or supplier terms
• Build a credit file with Dun & Bradstreet
• Expand into international markets or work with global partners

Even if you’re a small, local business, having a DUNS Number signals to potential lenders and partners that you’re a legitimate, established operation worth trusting. Many suppliers and credit bureaus rely on your DUNS profile to determine payment history and creditworthiness.

The good news? It’s free to apply for a DUNS Number in Canada, and it only takes a few minutes. You can get started directly on Dun & Bradstreet’s Canadian website to request your number and begin building your business credit profile.

Step 2 – Start Building a Credit History

Once your business is set up, the next step is to start building a credit history. This involves using financial products that are reported to commercial credit bureaus and managing them wisely.

Apply for a Business Credit Card

Getting a business credit card is one of the easiest ways to start building your credit profile. Choose a low-limit card that reports to commercial bureaus like Equifax Business and use it for regular expenses, like software subscriptions or office supplies. Paying the balance each month helps establish a strong payment history.

To qualify for a business credit card, you’ll typically need a registered business, a business bank account, and may be asked to provide income details or undergo a personal credit check. Make sure any card you choose reports to a commercial credit bureau—this is key for building real business credit.

Work with Vendors Who Report to Credit Bureaus

Just like credit cards, not all vendors your business is financing with report payment activity to credit bureaus, but those that do can play a big role in helping you establish and strengthen your business credit. Look for suppliers that offer net-30 or net-60 accounts. These are trade credit terms that give you a set number of days to pay your invoice after receiving goods or services:

• Net-30 means payment is due 30 days after the invoice date.
• Net-60 gives you 60 days to pay.

These arrangements not only support your cash flow but also help establish a positive payment history, provided payments are made on time. Common vendors that may offer these kinds of terms include:

• Office supply companies (e.g., Staples Business Advantage)
• Logistics and shipping providers
• Marketing firms or print shops
• Small business lenders or commercial service providers

Use a Secured Business Card or Small Loan

If your business has little or no credit history, there are smart ways to start building it. 

Secured Business Credit Card

A secured business credit card is a great first step. It requires a refundable deposit as collateral and helps you build credit with regular use and on-time payments. It’s ideal for covering smaller expenses while showing financial responsibility.

Small Business Loan

Another option is a small business loan from a bank or alternative lender, typically ranging from a few thousand to tens of thousands of dollars. These loans can provide working capital for things like inventory, equipment, or marketing. Bank loans generally report to credit bureaus and can help build your business credit. Keep in mind that not all alternative lenders do the same, so it’s important to ask before applying if building credit is a priority.

No matter which option you choose, consistent, on-time repayment is key to establishing strong business credit.

Step 3 – Practice Smart Credit Behaviour

Once you’ve opened credit lines or trade accounts, the key to growing your score is using them responsibly. Smart habits and proactive management go a long way.

Pay Bills on Time or Early

Your payment history is the single most important factor in your business credit score. Paying bills early—even just a few days ahead—can help avoid negative impacts on your Days Beyond Terms (DBT), a metric tracked by credit bureaus.

Maintain Low Credit Utilization

Credit utilization measures how much of your available credit you’re using. Try to keep this under 30%. For example, if your credit limit is $10,000, using $2,000–$3,000 or less will show lenders that you can manage debt effectively.

Step 4 – Monitor and Manage Your Credit Profile

Good credit management doesn’t stop once your accounts are open. Monitoring and refining your profile helps you stay on track and spot issues before they become problems.

Check Your Business Credit Reports

Keeping an eye on your business credit is one of the smartest things you can do. You can easily check your profile through Equifax Canada or Dun & Bradstreet by setting up a business account on their websites.

When you review your report, look out for things like incorrect balances, unfamiliar accounts, or late payments that you know were made on time. A sudden drop in your score without explanation can also be a red flag.

If something doesn’t look right, don’t worry — both bureaus let you dispute errors online by submitting a quick form and any proof you have. Catching and correcting mistakes early helps keep your credit healthy and your financing options open.

Limit Credit Applications

Applying for too much credit too quickly can trigger multiple hard inquiries, which may temporarily lower your business credit score. Lenders may also see frequent applications as a sign of financial stress.

To protect your credit profile, apply only when necessary, and try to space out applications by a few months when possible. Before applying, research your options and check if a lender offers a soft check or pre-qualification — this can give you insight into your chances without impacting your score.

Credit Tools to Help You Grow

Once you’ve laid the foundation for business credit, the next step is putting it to work. The right credit tools don’t just help you cover expenses—they can support growth, improve cash flow, and even earn rewards. Whether you’re managing seasonal swings or preparing for expansion, these financing solutions can provide the flexibility your business needs.

Use Business Credit Cards Strategically

Business credit cards are one of the simplest ways to build credit and streamline your spending. Look for cards that offer cashback or points on common business purchases such as gas, travel, software subscriptions, or office supplies. Many Canadian banks and fintech companies offer no-fee business cards designed for small business owners.

Leverage Business Lines of Credit

A business line of credit gives you ongoing access to capital, so you can draw what you need—when you need it—and only pay interest on the amount you use. It’s ideal for covering short-term expenses, managing seasonal fluctuations, or seizing unexpected opportunities.

As your business credit improves, you’ll typically qualify for higher limits and better rates. For Canadian businesses, It’s a powerful tool to help keep your business moving forward.

How Business Structure Impacts Credit

Your legal structure affects how lenders assess your business, your liability, and your access to financing:

Your business’s legal structure does more than define how you operate—it also plays a major role in how lenders assess your creditworthiness, who holds liability for debts, and what types of financing you may qualify for. Whether you’re running a solo operation or have partners and employees, the way you set up your business can directly impact your access to credit, your tax obligations, and the financial protections available to you. Understanding the differences can help you make smarter decisions from day one.

Set Your Business Up for Success—Download the Credit-Building Checklist

Building strong business credit doesn’t have to be overwhelming, especially when you have a clear roadmap to follow. From registering your business and setting up proper banking to tracking payments, monitoring your credit reports, and managing your credit utilization, staying organized is key. To help you stay on track, we’ve created a free business credit builder checklist you can download and use as you build your credit step by step.

Download Here: Free Business Credit Checklist

The 8 Types of Business Credit (and How to Use Them)

Not all credit is created equal. In fact, different types of business credit serve different purposes—some are great for everyday expenses, while others help fund larger investments or cover short-term gaps in cash flow. Understanding the credit tools available to you can help build a stronger financial foundation and improve your business credit profile over time.

1. Vendor Credit (Trade Credit)

Vendor credit refers to short-term financing offered by suppliers, typically with net-30 or net-60 payment terms (meaning payment is due 30 or 60 days after purchase). This type of credit is commonly used for routine business needs like office supplies, inventory, or equipment. To make the most of it, choose vendors that report your payment history to business credit bureaus, and always pay on time—or early—to build a positive credit history.

2. Supplier Credit (Trade Credit)

Supplier credit is often extended to businesses purchasing in bulk or on a recurring basis, especially in industries like manufacturing, wholesale, or international trade. These credit terms are typically longer or more flexible than vendor credit and may require a more established relationship. Using supplier credit responsibly can help you maintain steady inventory without draining cash reserves.

3. Service Credit

Service credit comes from companies that provide essential business services, like internet, phone, and software subscriptions. While often overlooked, consistent on-time payments to service providers can positively impact your business credit, especially if those providers report to credit agencies. Set up autopay or reminders to stay current on these bills.

4. Retail Credit

Retail credit includes loans or lines of credit offered by banks, credit unions, or large retailers. These are often used to finance major purchases like renovations, equipment upgrades, or technology. Make sure to compare interest rates and terms, and avoid carrying high balances to protect your credit score.

5. Business Credit Cards

Business credit cards are one of the most accessible ways to start building credit. They allow you to separate personal and business expenses, track spending, and often earn rewards like cashback or travel points. 

6. Business Loans

Business loans provide a lump sum of capital that’s repaid over time with interest. They can come from traditional banks or alternative lenders, including online platforms. Loans are typically used for larger, long-term investments such as purchasing equipment, expanding operations, or covering major expenses. Evaluate repayment terms, interest rates, and qualification requirements before applying.

7. Business Lines of Credit

A business line of credit offers flexible access to funds, allowing you to borrow only what you need—when you need it—up to a set limit. Interest is only charged on the amount used. Lines of credit are ideal for managing cash flow, covering seasonal dips in revenue, or handling unexpected expenses. They can be secured (backed by collateral) or unsecured (based on creditworthiness).

8. Merchant Financing / Cash Advances

Merchant financing or cash advances provide upfront capital in exchange for a percentage of your future sales. This option is especially useful for businesses with fluctuating revenue, such as retailers or seasonal businesses. While it’s a fast way to access funds, the cost can be higher than traditional credit products. Use merchant financing for short-term needs, and make sure the repayment terms align with your cash flow.

How Financing Helps Businesses With Established Credit

Once your business has a solid credit foundation, accessing financing becomes both easier and more affordable. Lenders are more likely to offer faster approvals, higher credit limits, and better interest rates to businesses with strong credit histories. This financial flexibility allows you to invest confidently in key areas like marketing, hiring, new equipment, or expanding operations, without putting unnecessary strain on your cash flow.

Your Next Step: Financing That Grows With You

Business credit isn’t just a score—it’s your ticket to sustainable growth. Once you’ve established a reliable track record (typically six months or more), you may qualify for term financing or a business line of credit from Merchant Growth.

Explore financing options that work with your business goals, not against them. Learn more about term financing with Merchant Growth.