How Bootstrappers Can Build Good Credit to Access Capital as They Start Out

Written by Drew J. Kaplan  

I want to focus on some key early steps you’ll need to take when building pure business credit for your startup while bootstrapping.  You are probably familiar with a personal credit score, which is tied to your Social Security Number (SSN) and ranges from 0 to 850 where a score above 740 to 800, depending upon the credit bureau, is normally considered excellent. Business or corporate credit is tied to an Employer Identification Number (EIN) and ranges from 0 to 100 where a score above 80 is normally considered excellent. 

Where most bootstrappers get into trouble with credit is by starting out as a Sole Proprietorship without filing for an EIN. Other entities, for example a Subchapter Corporation (technically a Sub-S election on a C Corporation) will require you to use an EIN from the beginning. If you start as a sole prop and incorporate once you gain traction you will need to file for a new EIN. 

It is fine to start as a sole proprietorship operating under your own name as long as you file for an EIN. It’s probably simpler in the long run to incorporate but that can be an added expense when you are uncertain of the business viability. You can always do business under your own name and then file for a name change as you gain traction.

Here is where you can apply for an EIN

Here are some common incorporation options but you can also work with an attorney or an accountant. You will need both kinds of experts as your business grows, so establishing relationships early is not a waste of time.

The second place bootstrappers get into trouble is not creating a separate bank account for their business. Use your EIN to establish this. 

The third place bootstrappers can get into trouble is by personally guaranteeing business credit in a way that does not build a credit score for their company.  For example, use your EIN when applying for a credit card for your business and be careful to use it only for your business-related purchases.

Finally bootstrappers need to manage their business credit with the same care that they do their personal credit. Don’t miss payments on credit cards or other loans and obligations. 

About Drew J. Kaplan

Drew J. Kaplan is a serial entrepreneur based in Southern California. He started a B2B Internet Service Provider that achieved $80 million in sales and a profitable exit.  Drew’s other past ventures include a tech-infused wellness startup, an  interactive motion ride experience startup, a telephone company startup, and a New Zealand real  estate venture. Drew currently works for JGalt and can be reached at or 

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