Building business credit can help you get loans and other forms of funding that your small business needs to grow. It can also help you secure lower rates on business insurance or better terms with suppliers. But it’s important to know that establishing business credit isn’t an overnight process. In fact, according to the NSBA Small Business Access to Capital Study, 20% of small business loan applicants have their applications denied due to their business credit rating.

But if you’re struggling to get business financing, it may be time to rethink your strategy. Here are some simple steps you can take to build your business credit and improve your chances of getting approved for business funding.

1. Select the right type of entity for your business.

Choosing the wrong type of entity can make it more difficult to get credit for your business, and may result in lenders asking for personal guarantees. To avoid this, choose a legal structure that allows you to use your business’s EIN (Employer Identification Number) instead of your personal social security number when applying for financing or business credit cards.

2. Register with a business credit reporting agency.

Whether you’re opening a sole proprietorship or are an established company, you need to register with a business credit reporting agency. This will ensure your payment history is reported to the major credit bureaus and improves your business credit score.

3. Build credit by paying bills on time and in full.

A strong Net 60 credit score is a result of good payment history, and the best way to establish this is by paying all your vendors and other creditors on time and in full. This may include your credit card issuers, banks and other commercial lenders.

4. Set up a business bank account and pay your bills on time.

A business bank account helps to establish and develop business credit by proving that you can be responsible with your money. It can also help you to manage your debt levels and keep your spending within a reasonable amount.

5. Get an EIN for your business and open a business bank account.

Using an EIN instead of a social security number for tax purposes will help you build business credit by demonstrating that you can be responsible with your money and keep your personal finances separate from your business’s. You can also use an EIN when applying for business loans or credit cards, which will increase your chances of getting approved.

6. Start to pay your bills on time and in full.

The most important step in building your business credit is to ensure that all of your vendors and other business creditors report your payments to the major business credit bureaus. The business credit bureaus measure your payment history by a number called “Days Beyond Terms” (DBT). If you pay late or overpay, it can negatively affect your business credit score.

By following these tips, you can quickly build your business credit and start to see the benefits. Your credit will be easier to obtain and you’ll have the tools to better negotiate terms with business vendors, which can be vital for growing your business.