Introduction
The very first thing many entrepreneurs ask themselves after launching or expanding their business is where to obtain business credit. From buying stocks to financing equipment purchases, managing seasonal cash flows, and entering new markets, access to business credit can provide businesses with greater financial flexibility.
Yet, getting business credit is never simply about submitting an application. Any institution providing financing needs to evaluate factors such as business history, financial performance, repayment behavior, and operational stability. For young businesses or SMEs with limited borrowing experience, meeting these requirements can sometimes be challenging.
According to the World Bank’s SME Finance Forum, small and medium-sized enterprises represent a significant part of global businesses but continue to experience financing gaps, particularly in emerging markets where access to suitable financial products remains limited. This highlights why improving financial readiness and understanding available financing options are important considerations for SMEs.
However, the financing landscape has continued to evolve. In addition to traditional bank loans, businesses can now explore options such as invoice financing, trade finance, embedded finance, and technology-enabled lending solutions. With effective financial management, these approaches may provide SMEs with additional ways to manage working capital and support business development.
In this guide, we will explain how to get business credit, the challenges SMEs commonly face, and how modern financial technologies are influencing the future of business financing.
Why Business Credit Matters
Building Financial Flexibility
Business credit goes beyond simply obtaining loans. It helps organizations manage cash flow, purchase inventory, finance growth initiatives, and respond to unexpected business opportunities without relying only on available cash reserves.
A stronger business credit profile may improve access to different financing options that match specific operational needs.
For example, a seasonal retail business may require additional working capital before peak sales periods, while a manufacturing company may need financing to purchase materials before receiving customer payments. In both cases, access to suitable credit can help businesses manage timing differences between expenses and revenue.
Supporting Business Growth
For emerging companies, capital is often required before revenue is generated.
Business credit can support activities such as:
- Increasing production capacity
● Hiring additional employees
● Purchasing inventory
● Developing new products
● Upgrading technology systems
● Expanding into international markets
The International Finance Corporation (IFC) estimates that SMEs account for a large share of businesses worldwide and contribute significantly to employment creation. However, many SMEs still face challenges accessing appropriate financing, making credit availability an important factor in business development.
Business credit allows companies to pursue opportunities while maintaining operational stability.
Improving Commercial Relationships
Many suppliers, financial institutions, and business partners consider financial reliability when establishing credit terms or commercial arrangements.
Responsible borrowing and consistent repayment practices may help businesses build stronger relationships with suppliers and financing providers over time.
Common Challenges SMEs Face When Trying to Get Business Credit
Cash Flow Constraints
Many SMEs experience temporary funding shortages because customer payments often arrive later than business expenses.
Even profitable companies can encounter cash flow pressure when payment cycles do not match operational requirements. For example, a business may need to pay suppliers immediately while waiting 30, 60, or 90 days for customer payments.
According to research from the Federal Reserve’s Small Business Credit Survey, managing cash flow remains one of the common financial challenges reported by small businesses, particularly when they face rising costs or delayed customer payments.
Strong cash flow management is therefore an important part of maintaining financial stability.
Limited Business History
New businesses often have limited financial records available for lenders or financing providers to assess.
Without several years of operating history, businesses may need to provide additional information related to revenue performance, transaction records, business plans, or operational activities.
This does not necessarily prevent businesses from accessing financing, but it can influence how financial providers evaluate risk.
Traditional Lending Processes
Traditional financial institutions remain an important source of business funding. However, financing applications may involve requirements such as:
- Financial statements
● Business plans
● Credit assessment
● Collateral evaluation
● Documentation review
● Underwriting processes
For SMEs operating in rapidly changing markets, these requirements may create challenges, especially when businesses need financing within a specific timeframe.
Financing Gaps
SME financing gaps remain a global economic issue.
The International Finance Corporation has estimated that millions of formal SMEs in emerging markets face unmet financing needs. This gap has encouraged the development of digital finance solutions, alternative lending models, and technology-enabled financial services designed to improve access to capital.
These developments do not replace traditional financing but provide businesses with additional approaches to consider.
Practical Steps on How to Get Business Credit
Register and Structure the Business Properly
A clearly established legal business structure generally provides a stronger foundation when applying for financing.
Businesses should maintain accurate records, including:
- Business registration documents
● Financial records
● Tax documentation where applicable
● Revenue information
● Operational records
Clear documentation helps demonstrate business stability and allows financing providers to better understand the company’s activities.
Build Strong Financial Records
The financial performance of a borrower is usually evaluated based on factors including:
- Revenue history
● Cash flow performance
● Operating expenses
● Existing obligations
● Business assets
● Payment behavior
Maintaining organized financial information can make the financing evaluation process easier and provide businesses with better visibility into their own financial position.
Maintain Reliable Payment Practices
Consistently paying suppliers, lenders, and service providers according to agreed terms demonstrates responsible financial management.
Over time, reliable payment behavior may strengthen a company’s overall credit profile and improve relationships with commercial partners.
Businesses should also monitor their outstanding obligations carefully to avoid taking on financing commitments that do not align with their operational capacity.
Evaluate Financing Needs Carefully
Before seeking business credit, companies should identify the purpose of financing.
Common purposes include:
- Working capital requirements
● Inventory purchases
● Equipment investment
● International trade activities
● Business expansion
Choosing financing based on a specific business need can help companies evaluate suitable options rather than focusing only on obtaining the largest possible amount of funding.
Modern Financing Solutions Beyond Traditional Business Credit
The financing ecosystem has expanded significantly through advances in financial technology. While traditional business credit remains an important source of funding, SMEs now have access to a broader range of financing approaches designed around different business situations.
The most suitable option often depends on factors such as business size, cash flow patterns, industry requirements, financing purpose, and operational model.
Invoice Financing
Many businesses have significant value tied up in outstanding invoices.
Through invoice financing, businesses may access funds based on eligible unpaid invoices before customers complete payment. This can be useful for companies that operate with longer payment cycles and need additional working capital to maintain daily operations.
For example, a supplier may deliver goods to a large corporate customer with agreed payment terms. While the supplier has completed the transaction, payment may not arrive immediately. Invoice financing can be considered as one approach to managing this timing gap.
However, businesses should evaluate financing costs, customer payment reliability, and overall cash flow impact before choosing this approach.
Trade Finance
Importers and exporters often require funding before receiving payments from international customers.
Trade finance solutions are commonly associated with activities such as:
- International purchasing
● Supplier payments
● Import and export transactions
● Supply chain activities
Businesses involved in cross-border transactions may use trade finance approaches to manage payment timing differences between suppliers and customers.
According to the International Trade Centre (ITC), small businesses involved in international trade often face challenges related to access to finance, making trade finance availability an important factor in supporting global commerce.
Embedded Finance
Embedded finance refers to integrating financial services directly into digital platforms, business systems, or customer workflows.
Rather than accessing financing through a separate process, businesses may encounter financial services within platforms they already use, such as:
- eCommerce platforms
● Procurement systems
● Accounting software
● Marketplaces
● Enterprise management platforms
The objective is not simply to add another financial product, but to connect financial services with existing business activities.
Research from industry analysts has shown that embedded finance continues to attract attention as businesses explore ways to integrate payments, financing, and other financial capabilities into digital ecosystems.
Alternative Lending
Alternative lenders are increasingly using technology-based approaches to evaluate business performance.
Depending on the financing model, assessments may consider information such as:
- Transaction history
● Business cash flow patterns
● Digital payment records
● Operational performance
● Accounting information
These approaches may provide additional financing considerations for businesses that do not fit traditional lending models.
However, businesses should carefully evaluate financing terms, repayment obligations, and suitability before selecting any financing option.
Expert Perspective: The Future of Business Credit
The future of business credit is being influenced by changes in technology, data availability, and evolving business models.
SMEs are increasingly looking beyond traditional lending processes and exploring financing solutions that better match their operational needs.
Digital Lending Is Streamlining Applications
Digital lending platforms are changing how businesses interact with financing providers.
Technology may help simplify processes such as:
- Online applications
● Digital document submission
● Automated verification processes
● Application tracking
● Digital communication
The growth of digital lending does not remove the importance of responsible assessment. Financing providers still need to evaluate business performance, repayment ability, and relevant risk factors.
According to research from the Bank for International Settlements (BIS), digitalisation is influencing financial services by enabling new methods of service delivery and improving how financial information can be processed.
AI Is Enhancing Risk Assessment
Artificial intelligence is increasingly being explored in financial services to analyze different types of information alongside traditional financial data.
For business financing, AI-based tools may support areas such as:
- Data analysis
● Risk evaluation
● Fraud detection
● Operational efficiency
However, technology-based assessment continues to require appropriate governance, transparency, and responsible management.
AI is a supporting tool rather than a replacement for careful financial evaluation.
Open Finance Creates Better Connectivity
Open finance enables businesses and individuals to authorize secure financial data sharing between approved institutions.
For SMEs, improved connectivity between financial systems may help create a more complete view of business performance.
Potential areas of impact include:
- Reduced administrative processes
● Better financial visibility
● More connected financial services
● Improved data management
The development of open finance continues to depend on market adoption, technology infrastructure, and regulatory frameworks in different regions.
Embedded Finance Is Becoming More Relevant
Instead of treating financing as a separate activity, embedded finance integrates financial services into existing business processes.
For example, a business platform may provide access to payment tools, financial management features, or financing options within the same workflow where businesses already operate.
Industry research indicates that embedded finance adoption is expected to continue expanding as businesses explore more integrated digital experiences.
For SMEs, this development may create new ways to access financial services while managing daily operations.
Industry Example
Consider a food manufacturing company supplying products to supermarket chains across Southeast Asia.
The company receives customer payments under agreed payment terms but needs to purchase raw materials immediately to maintain production.
In this situation, the company may evaluate different financing approaches, such as invoice financing or working capital solutions, depending on its operational needs and financial position.
This example demonstrates that obtaining business credit is not only about securing funds. It is also about selecting financing approaches that match the timing of business expenses, revenue collection, and growth objectives.
Conclusion
Understanding how to get business credit is an important step for SMEs looking to strengthen financial flexibility and support long-term business development.
While traditional bank financing remains relevant, modern businesses now have access to a wider range of financing approaches, including invoice financing, trade finance, embedded finance, and technology-enabled lending solutions.
Building stronger access to credit requires more than simply applying for funding. Businesses should focus on maintaining accurate financial records, managing cash flow effectively, understanding financing requirements, and selecting solutions that align with their operational needs.
Bettr provides embedded finance infrastructure, digital lending solutions, and financing technology designed to support businesses and financial institutions in different markets.
Frequently Asked Questions
What is business credit?
Business credit refers to a company’s ability to obtain financing or payment arrangements based on factors such as financial performance, business history, repayment behavior, and operational stability.
How can a small business build business credit?
Small businesses can build business credit by maintaining accurate financial records, making payments on time, managing existing obligations responsibly, and developing consistent business operations.
Is it difficult for new businesses to get business credit?
New businesses may face additional challenges because they often have limited operating history and financial records. However, different financing approaches may consider various aspects of business performance depending on the financing model.
What are alternatives to traditional business loans?
Alternatives may include invoice financing, trade finance, embedded finance solutions, and technology-enabled lending approaches. The suitability of each option depends on the business situation and financing objectives.
How is technology changing business credit?
Technology is influencing business credit through digital applications, automated processes, broader data analysis, and integrated financial services. These developments are changing how businesses and financing providers interact.
References
- World Bank – SME Finance and Access to Finance Research
https://www.worldbank.org/ - International Trade Centre (ITC) – Trade Finance and SME International Trade Research
https://intracen.org/ - Bank for International Settlements (BIS) – Digitalisation and Financial Services Research
https://www.bis.org/ - International Finance Corporation (IFC) – SME Finance and Financial Inclusion Reports
https://www.ifc.org/ - Organisation for Economic Co-operation and Development (OECD) – SME Financing Reports
https://www.oecd.org/
This article is intended for informational purposes only and does not constitute legal, financial, investment, or other professional advice, nor does it constitute a recommendation of any product or service. This article should not be regarded as constituting an offer or a solicitation to buy or sell any regulated or financial products or services. It has not been reviewed by any regulatory authority in any jurisdiction. Bettr makes no representations or warranties regarding the accuracy, completeness, or applicability of the content, and readers are encouraged to consult with legal, financial, or other professionals for advice tailored to their specific situation. Bettr does not guarantee the accuracy and completeness of this article and expressly disclaims any and all liability to any person in respect of the consequences of anything done or omitted to be done wholly or partly in reliance on this article.
