Your business finance options may be expensive and somewhat limited…
If your small business is still in its early years, the chances of securing a loan from a traditional lending source can be quite unpredictable.
Banks can sometimes disapprove even healthy small businesses, and will turn down if a credit score is not quite high enough.
Why does bad credit affect loan options?
Lenders are looking for a reliable borrower; they want to see that debts are paid on time and in full.
They want to know how many different kinds of credit you have and how long you’ve been borrowing money.
Your credit score summarizes this information for lenders, giving them an easy way to evaluate your trustworthiness as a borrower.
If you’ve got bad credit, you may find you don’t qualify for a lender’s larger loan products, low APRs, or certain repayment schedules. Lenders don’t want to take the risk that you may not repay a hefty loan.
Moving forward on your path to success…
Having poor credit never feels good, especially for an entrepreneur trying to get their small business off the ground.
• Is taking out a secured loan against your home something you have considered?
• What is the value of your home in terms of business finance?
As a homeowner it’s possible that you have a significant amount of value locked up in your home, and if you prefer to use your own equity and ability to raise cash rather than borrow from the banks, then utilising the equity might be an option to consider.
Many banks are still reluctant to lend money to business and one of the ways in which business owners can still dictate the terms of their own success is using their own equity.
There are some big advantages for your business if you decide to borrow against your home:
You can borrow a lot more if you choose a secured loan vs an unsecured loan.
It isn’t unusual for lenders to offer higher values, when it is secured against your property.
What are the most common facilities available for financing a business?
A commercial mortgage is a loan secured by commercial property, such as an office building, industrial warehouse, or housing complex.
The proceeds from a commercial mortgage are typically used to acquire, refinance, or redevelop commercial property.
A bridge loan is a type of short-term loan, typically taken out for a short period, 2 weeks to 3 years pending the arrangement of larger or longer-term financing being arranged.
Development finance is funding for either major new building projects or comprehensive renovations. New housing estates, office blocks converted to flats, etc.
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (invoices) to a third party at a discount
A business will sometimes factor its receivable assets to meet its present and immediate cash needs.