For new business credit, there is one pressing question at the forefront of every fledgling entrepreneur's mind: "Where do I get business credit?" For thousands of small business start-ups obtaining business credit can be a nightmare. The reality is until you've developed a good track record with business credit, many commercial banks and other traditional lenders will be reluctant to extend credit to you.

For start-up companies and new businesses that have a comprehensive plan and product(s) in place, but no revenue, a lending institution will recommend that they seek financing through informal or private investors. These investors may include friends, relatives, partners, even universities with targeted research and development funds. Financing institutions are more apt to deal with firms that are sufficiently developed, and have a proven track record in their industry.

When it comes to establishing new business credit, there are generally three key reasons to borrow in the first place. The first reason is to purchase assets. A line of credit to acquire assets could be for buying short-term, or current, assets (inventory), and would be repaid once the new inventory is converted into cash as it is sold to customers.

In order to take out business loans, new business credit should already be in place. This way, if your business is already up and running, you can take out a loan to repay the money you borrowed from an informal investor. The third reason folks establish business credit is to replace their own equity. If you want to buy a partner's share in your business, but you don't have the cash to do it, you can consider taking out a line of credit or a loan.