Bad Credit vs Good Credit
Small businesses often need to take out a commercial bank loan to purchase inventory and debt is one of the ways of financing business operations. Lenders however, are becoming more tight-fisted with borrowers and those with bad credit are looked upon as derelicts whereas with a good credit rating, lenders welcome companies with open arms. For businesses with a poor credit rating, it can be a nightmare when it needs a loan to meet its daily operations until their earning assets are enough.
If your company hasn’t shown any significant expansion for instance the bank is less likely to approve a loan. Many small businesses, instead of expanding, have had to rob Peter to pay Paul just to stay afloat and consequently battle with their growing debt.
Bad Credit is Like a Death Sentence for a Small Company
Each month thousands of businesses around the world file for bankruptcy protection to salvage their companies but this in itself can add up to thousands of dollars. Add to that the fact that bankruptcy damages a company’s reputation and its credit scores. Bad credit is like a death sentence for a small company. A good credit rating is imperative for any business owner looking for a loan. Each lender weighs credit scores differently and it is well known that banks particularly have a lower threshold for risk than other lenders. The bottom line is that any lender will look at a company’s credit score to determine whether the risk is too high or not to provide the company with a much needed loan.
Your Credit Score Needn’t Stand in the Way of a Loan
Each business owner is judged on their business credit rating as well as their personal credit, and while there are also other metrics which come into play when determining whether a loan will be granted or not, it is the credit score which most times stands in the way of a company being able to get a loan. The arrival at a business’s credit score is derived from certain aspects that a credit rating agency will look at. Some of these are the size of the company, public records such a judgments or bankruptcy, payment habits, annual revenues, industry risk as well as looking at outstanding accounts.
Poor Credit Doesn’t Spell Disaster for a Company
It is always important to look at what got the company into debt first of all. Many times the problem starts with customers not paying on time or not at all. Banks are not willing to provide capital to businesses who haven’t been paid by customers and who in turn have not been able to manage their debt. It can be a relief for a company to discover that there are lenders who are willing to aid small businesses with short-term financial problems. Yes, the interest rates and fees can be significantly higher than with other lenders, but for a company, this is a small price to pay for having the means available to them to secure a loan. There are financing companies who will even help your company to once again return to one of the major lending institutions which can provide a lower interest rate. Exit Fees were banned in Australia so you won’t even incur costs by refinancing to another lender. As a business owner, however, it will still be wise to consult with creditors in order to consolidate loans and also arrange for better payment terms.
Consolidating Debt
If a company has bad credit, there is a misconception that they will not qualify for debt consolidation loans, but the truth is they can. Consolidating unsecured financial obligations has many benefits, including saving the business thousands of dollars and helping them to become debt free faster. It is true that not all lenders are prepared to assist bad credit borrowers, but the bottom line is that a poor credit rating certainly doesn’t mean a company not being able to consolidate its debt.
Lenders are taking a risk by providing capital to a company and they want to know that the company is a good credit risk. If your company isn’t a good credit risk, it doesn’t mean disaster for your company. There are reputable financial lenders who are skilled and experienced and whose mission it is to help flailing companies by offering them a customised loan. Companies can apply online and see how their bad credit poses no problem. You CAN Qualify for Finance
In Australia, no matter what bad luck your company has endured, if you need urgent funding, you still qualify for finance from a Bad Credit Loans specialist company who is registered and licensed and whose goal it is to put your company back in the market.