Business Sources

Business Finance For Uk Companies With Poor Credit Ratings

Firstly, you need to take a good long look at Your Business and come to terms with why your company is classed as a poor credit. Do you never pay your bills on time? Do you regularly make losses? Have you got CCJs registered against the company or yourself? All these will affect the credit rating of your business and make sourcing busines finance more difficult and expensive.

You should get a credit report carried out if you are unsure of the credit worthiness of your business, this will highlight any CCJs or main issues with your credit history and you can at least start to take steps to repair it. Next, approach a broker who can help poor credit businesses source finance successfully. Come to terms with the fact your finance is going to cost you more because you’re classed as a higher risk. Be prepared to offer security, normally something such as directors guarantees will be required and can go a long way to help you get approved for finance.

As a poor credit business, you will have far less options when it comes to finance – you will be given a max term of 3 years, so if you wanted to spread your payments over a longer period it won’t be possible as that would be too much of a gamble in most underwriters eyes. You will normally have to put down 3 months payments in advance, but look on the bright side – that at least means your monthly payments will be less as a result of the deposit and you’ll pay it off 3 months earlier.

You will also normally only be able to source approximately £10,000 of finance for new business equipment as a maximum, again because a larger facility would be classed as too risky. Once you have a facility it will show up on your credit report for other funders to see when you try and get additional finance, and the amount you already have outstanding will be factored into the new funders decision on how much they lend – they need to believe you can meet the payments for the additional loan.

Finally, make sure you pay your loans off on time. The worst thing you can do is not pay your monthly finance payments – this will be visible on your credit report that you have missed payments on a loan for all underwriters to see, and do you think they will then lend you money if they can see you already haven’t paid another lender? This pretty much ensures you’ll struggle securing finance. At least once you have a small facility and are making regular payments on time, this will help you repair your credit and the new funders can see you’re back on track when considering if they’ll lend you any more money for new equipment.

About the Author

I work with the UK based finance comparison website – http://www.HonestJohnny.co.uk – an impartial UK comparison site that provides the latest deals on banking, loans, credit cards, investments, insurance, pensions and annuities, shopping, mortgages, and remortgages. If you are UK based, you can compare a range of the latest financial products to ensure you find your best deal.

www.HonestJohnny.co.uk – Your Personal Finance Comparison Expert
www.HonestJohnny.co.uk/businessfinance – Your Business Finance Comparison Expert 

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