If you think about business credit for your bakery business at all, you probably think about it only when you’re getting ready to apply for a small business loan. 

But this is a case where “out of sight, out of mind,” isn’t a good mantra to adopt. Take a little time to focus on it, and you’ll discover there are several ways you may be able to leverage business credit to move your business forward. 

Here are four common ways business credit can help your business grow: 

1. Better Terms with Suppliers

While getting a small business loan can be great, many businesses rely on other types of financing: supplier credit is one of them. With a strong business credit history, you may be able to negotiate better payment terms with your suppliers. 

Let’s say your challenge is ingredient costs. Instead of paying up front (or cash on delivery) for flour, sugar, butter, and other ingredients, you might qualify for net-30 or even net-60 terms. That will give you longer to pay, and time to generate sales to pay those invoices.

Supplier terms can offer flexibility, and more working capital to:

• Stock up on seasonal ingredients when prices are favorable
• Take advantage of bulk purchase discounts
• Maintain inventory during slow seasons
• Bridge the gap between ingredient purchases and customer payments

For example, let’s say your pastry shop struggles with cash flow during the hectic holiday or wedding seasons. By building business credit, you may be able to secure net-45 terms with your main suppliers. This extra breathing room could allow your business to take on more orders without scrambling to cover those upfront costs.

2. Equipment Financing at Better Rates

Whether you need a new commercial mixer, or want to expand with additional ovens, strong business credit may help your business secure equipment financing at more favorable terms, such as:

• Lower down payments on equipment leases
• Better interest rates on equipment loans
• More flexible payment terms
• Quicker approval processes

But don't wait until your equipment breaks down to start building business credit. The best time to establish credit is before you need it. The credit-building process takes time. 

3. Emergency Access to Funding

Unexpected challenges can arise – from equipment failures to sudden opportunities for expansion. Strong business credit gives small business owners more options. It may help your business qualify for:

• Business lines of credit. Great for working capital, this funding gives you access to credit when you need it. 
• Business credit cards without personal guarantees. Some business credit cards offer lucrative rewards programs, and advanced expense management capabilities. 
• Better terms on short-term loans. Whether it’s an SBA guaranteed loan or one through an online lender, business credit may increase your financing options. 
• More options during seasonal fluctuations. Knowing your qualifications are strong gives you one less thing to worry about during your busy (or slow) season. 

Like building personal credit, building business credit takes time. Build it now and get the benefits later. 

4. Growth Opportunities

How do you hope to grow your business in 2025? 

Upgrade your website and add an ecommerce component? Expand your kitchen? Add a wholesale (or retail) division? Launch a food truck? Get your product into retail stores? Or perhaps even sell your business?

Whatever your goals, good business credit scores can make taking that next step easier. It won't mean automatic funding: good cash flow and solid financial statements will be important too, but good credit can open doors, rather than close them. 

How to Build Business Credit

Companies that purchase business credit reports—such as your suppliers, lenders, insurance companies, etc.—are looking at them to evaluate risk. They want to understand how much risk they may be taking if they do business with your company.

Beyond just a good credit score, other factors can make your business appear low-risk. That’s why the first step in building business credit is to make sure your business foundation is solid.

Forming a business entity, getting a business phone number, using a dedicated business address, and obtaining necessary licenses are all good steps. Once you’ve done that, you can open a business bank account and get a business credit card in the name of your business.

When it comes to actually building business credit scores, you need to get accounts with companies that report payment history to business credit bureaus. These can include supplier accounts, business credit cards, or many types of business loans. 

Once you get these accounts, paying on time is essential. Business credit reports list payments using “days beyond terms,” which notes how many days past the due date your company pays its bills. Pay a couple of days late and that may be reflected on your credit reports. 

Business credit scores can be nuanced as well; they can compare your business to other bakery businesses in your geographic area, for example. 

Avoiding Common Pitfalls

Several common mistakes can hinder credit building efforts. One is to wait to build business credit until you need it. Not planning ahead can hurt your small business in many ways; and this is one of them. 

Another is assuming that all companies that offer business financing report accounts (called “tradelines”) to business credit bureaus. But that’s not the case. You may have to seek out tradelines that report. 

Finally, there is a common misconception that all credit bureaus receive or report the same information – they often don't, which is why checking business credit with multiple bureaus is important. To review multiple reports at one time, visit Nav.com. The Nav platform allows business owners to check, manage, and monitor their business credit with the major business credit bureaus, and build financially healthy companies in one dedicated space.

About the Author

Gerri Detweiler has several decades of experience guiding individuals through the confusing world of credit, and has earned a reputation as a reliable and independent source on personal and small business credit. Today, Gerri serves as Education Consultant for Nav, a financial health platform for small businesses owners to build and manage their business and personal credit, track cash flow patterns, and understand their financing options before they apply.