• Home
  • Blog
  • Caught in the Recession Rubble? Build Your Own Empire with a Recession-Proof Self-Employed Business

Caught in the Recession Rubble? Build Your Own Empire with a Recession-Proof Self-Employed Business

November 14, 2023
Recession-Proof Self-Employed Business

Wondering how to recession-proof, or social distance proof, your business?  These are unprecedented times. Many business owners are wondering how to get business funding. Federal funding is available, but it may not be enough.  The self-employed are perhaps taking one of the hardest hits, not even sure their business will be around when this is all over. Here’s one tip that could help.  Building business credit can help you establish a recession-proof self-employed business. 

7 Steps to Building Business Credit and Establishing a Recession-Proof Self-Employed BusinessRecession Proof Self Employed Funding Credit Suite

Our economy is cyclical, with almost predictable ups and downs.  Recessions come and go. While some feel it more than others, very few go unaffected.  If you are one of the ones feeling the crunch of layoffs and unemployment, try looking at it as an opportunity. 

It may not feel like it now, but you can overcome the crunch by starting your own business. This is possible despite what your personal credit looks like. How do you build a recession-proof self-employed business? 

It takes time, but if you follow the steps and trust the process, you could build quite the empire out of the recession rubble.  Take that idea that you have been tossing around and make it a reality. It’s never too late to follow your dreams, and sometimes the harsh realities of a recession are just the kick in the pants needed to get started. 

Once you have your idea in place, it is time to get to work building business credit so your recession-proof self-employed business has a strong foundation. 

1. Kick Your Business Out of the Nest 

It is vitally important to remember to keep your business separate from your personal identity and financing when you want to build business credit when self-employed.  During a recession, your personal credit is even more vulnerable. This is due to the very nature of what often happens to personal finances during a recession.

Protect your FICO and keep it from affecting your business fundability.  Do this by establishing your business as a separate entity. It is essential to building a recession-proof self-employed business. 


To have a recession-proof self-employed business, you need to organize your business as a corporation, S-Corp, or LLP. This step is not free, but it is very much worth the cost for a couple of reasons.  The first is that it makes building business credit possible by further establishing your business as its own entity.  

The second is that it offers some protection for your personal finances from the liabilities of the business.  You can choose to form as a corporation, an S-corp, or an LLC. Choose the one that is the most cost-effective for your purposes. 

They each offer different levels of protection and have different tax regulations associated with them, but they all serve the purpose of separating your business to help build business credit when self-employed. 

When it comes to a recession-proof self-employed business, you should think harder about the cost versus the benefit of greater liability protection.  While forming a full-on corporation isn’t for everyone, during a recession the benefit of personal protection from business liabilities can be even greater. 

Get an EIN

We are a nation run on numbers. We use numbers for virtually everything, including identification. People have social security numbers, driver’s license numbers, PIN numbers, and a number of others in our daily lives. To build business credit, your business needs to have its own identifying number not attached to you. 

The IRS can issue an EIN, which is the business equivalent of an SSN. It is free via the IRS website and an important first step in separating your business from yourself. 

Contact Information

Your business needs its own telephone number, fax number, and address. A virtual address is fine, but don’t rely on a P.O. Box or UPS Box. An 800 number or some other toll-free exchange is best, and be sure to get a business listing in the directories.

Online Image

Set up a dedicated email for your business as well as a professional looking website. Even the most solid of businesses will look like a farce to creditors if they check it out and the website is poorly put together. It doesn’t have to be elaborate, but it should be free from errors, all links should work, and it should be professional in appearance.

The same is true of an email address that is simply [email protected]. The business email address needs to reflect that it is specifically for the business.  Something like “[email protected]” is more professional. 

2. Keep Up with the Numbers

Ditch the shoebox for an actual accounting system. It doesn’t have to be expensive or hard to use. QuickBooks Online is a solid go-to, and there are plenty of other options as well. This will help you when lenders need to see reports, as you can just run them from the system.

Along these same lines, be sure you have a separate bank account for your business, and use it to keep business finances separate from personal finances. Pay yourself a salary from this account, but do not use your personal account for business expenses or your business account for personal expenses. 

While this does not directly build business credit, it does further establish your business as a separate entity and allows you to offer creditors a more accurate business financial picture.  It can also help recession-proof your self-employed business by helping you to see where you stand and make adjustments if needed before you get into trouble.

3.Apply for a D-U-N-S number

Once the first two steps are complete, you need to sign up for a free D-U-N-S number from Dun & Bradstreet. While they are not the only business credit reporting game in town, they are probably the most commonly used by creditors. Building business credit with them is vital, and to do that, you must have a D-U-N-S number.

When you sign up for the number, they will try to sell you other products and services. Put on blinders and keep moving forward. None of those things are necessary, and the number is totally free. Having a credit score with Dun & Bradstreet, called a PAYDEX, requires both a D-U-N-S and at least three tradelines reporting. It is impossible to have a PAYDEX without a D-U-N-S number.

Discover our Get Business Credit guide, with everything you need to know about building credit for your business.

4. Get on Record

It is also impossible to have a credit score of any type, from any credit reporting agency, without creditors that will report your payments. This is where it gets dicey. You have to have credit to build your credit score. How do you do that? Can you even get credit without a credit score?  How do you get credit when creditors are holding on to their funds tighter than ever during a recession?  

If you build your recession-proof self-employed business before the downturn, you are golden in this area.  It’s hard, but not impossible.

Establish Tradelines

This is where you start.  Establish tradelines with starter vendors. These are vendors that will issue invoices with Net 30 terms or longer. While you may need to make a few initial purchases with these vendors to establish yourself as a customer before they will extend these terms, there is no personal credit check. They do sometimes want to see a certain amount of time in business, however. 

As you pay the invoices consistently and on-time, these vendors will report your payments to the credit reporting agencies, thus establishing your business credit profile. Some of the most common and easiest to start with are Uline and Grainger

These are the easiest to start with simply because they sell products that most any business can use on a daily basis. Items such as paper, toner, pens, pencils, packing supplies, and even janitorial supplies. After you order from them a few times, apply for net 30 terms, pay on time, and watch your business credit score start to build like a snowball rolling downhill.

Once you have 8 to 10 tradelines reporting your on-time payments to the credit agencies, you can start to apply for various business credit cards. This is where the “recession-proof” part of a recession-proof self-employed business really starts to build.

Order Matters When Applying for Business Credit Cards

Once you start to build a good business credit foundation with starter vendors, you can apply for business credit cards.  However, you have to work in order. If you start applying for the highest limit, lowest interest rate credit cards right away, you will be denied every time. 

First, apply for store cards.  These are credit cards you get from a specific store that you can use only in that store.  They typically have low limits and higher interest rates, and they are limited to use either in the issuing store or on their website. 

Next, after you have a few of these cards reporting, try applying for fleet credit cards.  These cards can only be used for gasoline costs and automobile repair and maintenance.  

Lastly, once you have several of these reporting on-time payments to the business credit reporting agencies, you should be in good shape to apply for those cards with lower rates and higher limits that are not restricted by retailer or type of expense. 

As you can see, it all starts with building trade lines with starter vendors. Then a whole credit world opens up to you!  You just have to apply to each type of card in order.

Ask Utilities to Report

The more businesses you have reporting to the credit agencies that you make consistent, on-time payments each month, the faster you will build business credit when self-employed. Everyone has to pay utilities, even during a recession.  Creditors care about you making consistent, on-time payments, and payments to utilities count.

They are an easy way to start building business credit once you have a credit profile, but you have to ask them to report. They are not required to do so.   

Remember, you will still need tradelines.  They are necessary to accomplish the task of having at least three accounts reporting and a D-U-N-S to establish your credit profile with them in the first place.  Adding utilities will just help the process move faster. 

5. Use the SBFE to Help You Build Business Credit When Self-Employed 

The SBFE, or Small Business Finance Exchange, is a not-for-profit entity. It gathers data on small businesses from lenders that are SBFE members. They then use this information to create credit products that lenders can use to make credit decisions.

One of the characteristics of a recession-proof self-employed business is that the credit information about it is positive and available to lenders.  They can help with that. 

How Does it Work? 

They use what they call a “give-to-get” model. Members release information about those they extend credit to. In return, members are able to receive information through the SBFE which can help them make future credit decisions. 

It all starts with SBFE members reporting payment history and other information about borrowers. Then, the SBFE normalizes the raw data into usable data. This data goes to partners called certified vendors.  Some credit agencies, including Dun & Bradstreet, are certified vendors.

Certified Vendors then use the information from the SBFE to create credit reporting products that only other SBFE members can access.  

Members have access to the data since they also contribute information.

How Can They Help You Build a Recession-Proof Self-Employed Business? 

When you do business with SBFE members, you know your information is being reported. This means you are building business credit. How do you know if your lender or vendor is a member? Ask them. If they are not, consider mentioning that they become a member. However, there are enough members that it should not be difficult to find plenty of them to do business with.  Just be certain you are making your payments on time, consistently. Otherwise, you will be doing more harm than good.  

Discover our Get Business Credit guide, with everything you need to know about building credit for your business.

6. Keep An Eye on Things

Once you have a D-U-N-S number and some accounts reporting, you will want to keep an eye on your credit report. Credit monitoring serves a couple of different purposes for your recession-proof, self-employed business. 

The first purpose is to, of course, ensure your credit report is accurate and complete. If there is missing or incorrect information on your credit report, you will need to get it corrected. Request corrections in writing, and send copies, not originals, of backup documentation. 

The other reason it is important to monitor your credit is so you know which accounts are reporting, how many accounts are reporting, and when you qualify to start applying for credit in higher tiers. You need at least 14 accounts reporting to get approval at the cash credit tier, and you will never know if you have that if you are not monitoring your credit score. 

You can also watch your score rise. This is powerful motivation and confirmation that your business may indeed be recession-proof. The easiest way to do this is with a credit monitoring service.

7. Pay on Time

None of the steps you take to build business credit when self-employed will matter at all if you do not make your payments consistently on-time. While this is not the only factor in your business credit score, it is the one with the most impact. Whether or not you make your payments each month, on-time, is the number one factor that creditors use to determine your fundability. 

Since it is a recession, you will need to be careful.  Even the most recession-proof self-employed business can get into trouble.  You need to obtain credit and use it, but do not overload yourself to the point you cannot make the payments.  Find a responsible balance. 

Discover our Get Business Credit guide, with everything you need to know about building credit for your business.

What Does Building Business Credit Have to Do with Building a Recession-Proof Self-Employed Business? 

There are a couple of ways building business credit can help you with both your personal finances and business finances during a recession. 

Protect Your Personal Credit

Building business credit is essential to business success. Without business credit, your ability to fund your business relies totally on your personal credit. If you have great personal credit you may not think that is such a big deal. 

It means, however, that your business financial issues can impact your personal credit as well. This is bad in the best of times but even worse during a recession.  Limits on personal credit cards are not as high as those on business cards. That means just by the nature of business transactions you may always carry a balance near your limits. 

If that happens, it will affect your debt to credit ratio negatively, which in turn negatively impacts your credit score even if you are making your payments on time. If your business has its own credit, this is not a problem. Limits are higher, so you have more credit to work with, and regardless, it doesn’t affect your personal credit. 

Access Funds to Build Your Business

Solid business credit gives you access to the funds you need to run your business. You can handle any issues that come along.  Even those that require cash outlays larger than what your cash on hand can handle comfortably. 

Imagine having access to the funds needed to not only run but also to grow your business, even during a recession.  A business that can thrive and grow during hard economic times is the very definition of a recession-proof self-employed business.   Building business credit makes that possible. 

You Can Build Business Credit with a Recession-Proof Self-Employed Business

If you are caught in the recession rubble, consider it the perfect opportunity to make all your entrepreneurial dreams come true.  If you want to build the best recession-proof business possible, these tips will help you. To get started, you simply have to separate your business from yourself.

Once you have it established as a separate entity, you can get to work applying for tradelines that will report your payments to the credit agencies. From there, if you follow these steps, your business credit score will help you build your empire out of the rubble.

About the author 

Faith Stewart

Faith has a BBA with a major in Accounting, and a combined 20 years of experience in the fields of finance and account.

Before switching to writing, she spent 10 years working in various areas of small business and personal finance and accounting, including working as a public auditor at BKD, LLP, Financial Director at Central Arkansas Development Council, and Commercial Credit Analyst at Farmer's Bank and Trust.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

Stay In The Loop

Subscribe to our weekly newsletter that delivers the most actionable, tactical, and timely business financing tips you actually want and need for Free
*Plus get instant access to the 3-part Fundability™ training - a systems that helps your business become more Fundable and makes you look great to credit issuers and lenders