Will I pay more due to my adverse credit?
The rate charged will usually be slightly higher if your credit history is poor. How much higher is down to the type of product chosen and the security offered to the lender.
Unsecured business loans offer very little security to the lender in the event of payments falling behind, meaning the rate charged will tend to increase sharply.
Asset finance, on the other hand, offers strong security to the lender, meaning they are less likely to lose money in the event of default. As a result, the increase in the cost will be much smaller than products with less security.
The key to ensuring your costs don’t increase too much is to offer more security to the lender, wherever possible.
How quickly can I expect to receive my funds?
This all depends on the type of funding you choose, some are quicker than others. In most cases, you will receive your funds in under 2 weeks.
Where funds are needed urgently, let us know and we’ll advise you on the best options based on your circumstances.
Some types of finance can be arranged in a matter of days.
Do I need to be a homeowner?
You don’t have to be a homeowner to get funding for your business. That said, the chances of your application being approved will increase dramatically if security is offered over a property.
Unsecured loans offer very little opportunity to the lender to get their funds back in the event of default and as such, keeping up repayments is of the utmost importance.
For this reason, your previous payment record is very important where lending is unsecured.
How can I improve the chances of my application being approved?
As mentioned above, offering security to the lender can significantly improve your chances of being approved. Other forms of borrowing including invoice finance, asset finance and merchant cash advances may also easier to secure than an unsecured business loan.
Where you have suffered CCJs and defaults, repaying these before applying for more borrowing will improve your chances of success. This shows the lender that you’re happy to pay your debts, even if you run into hard times in the interim.
Where the business has suffered poor results in the past, the more detail you can provide around how those issues arose and why they will not happen again, the better. This may include detail of new contracts that you have, previous directors who have left the business and even changes to the way you trade or market the business.
Does my personal credit history affect my application?
Yes, if your business is performing well, but the major shareholders and directors have adverse credit, your lender may not be comfortable lending. Although you are a separate legal entity to the business, your personal financial management is seen as a reflection of your ability to manage a company’s finances.
As such, if your business has a strong credit history but you have issues personally, you may need to provide security or provide further detail in order to see your application approved.
The best ways to improve your credit score
When you’re not looking to raise funds quickly, it may be worth trying to improve your credit score to get more favourable terms.
There are a number of ways to do this, with the most effective being:
Where there are inconsistencies on Companies House, correct them.
Where possible, pay off any CCJs and defaults.
Limit the number of credit checks done on both yourself and your business.
If you’re not personally on the electoral register, join it.
Make sure you pay all invoices and bills on time.
Ensure your accounts and annual returns are submitted on time and accurately.
Although we offer an online comparison service, if you have a poor credit history, it would be better to talk through your circumstances with one of our business funding experts. Unlike high street banks, they will listen to the full picture, and take a sensible view on any blips you may have suffered.
Call us on 01922 620008 or enquire online to get started and you could have the funds in your account in as little as 24 hours.