When you have a poor business credit file, it is difficult to raise the finance you need. Mainstream lenders such as banks are hesitant to lend to anyone without a good credit score. Fortunately, there are alternative solutions for raising finance for bad credit such as Money Trumpet, and you can even use these funds to repair your business credit to improve your choices in the future.
Repairing Your Credit
To understand how to go about repairing your credit, you need to understand how your credit score is determined. There are factors to which banks assign points to figure out your credit score. For example, take a look at the following factors considered by banks:
- Financial Performance: this includes public data about your company, as well as your net worth and how much cash your business has on hand.
- Director’s history: they look at whether or not the director has a history of being involved with failing businesses.
- Winding up orders: if you have been subject to a winding up order, it can affect your application.
- Business county court judgments: they will look at how many you have and what the value is.
You should get your credit score so that you can know where your credit score is, and you should then work on repairing it. If you are in debt, it makes good sense to work on paying down the cards with the largest balance first. Keep track of your credit scores, as they are instrumental for any kind of loan.
How to Find Bad Credit Business Loans
If you have bad credit or are considered a high credit risk, you may be eligible for an alternative source of lending. This is even more the case if you have valuable assets and good turnover. You need to remember that you will probably pay higher interest, but you can often pay these kinds of loans early, without penalty, which will reduce the overall cost of your loan. Take a look at the following loans that you may be eligible for if you have a poor business credit file:
- Secured loan: If you or your business owns valuable assets, including machinery, equipment, real estate, vehicles, or technology, you may be eligible for a loan that is secured by these possessions. This type of loan can be less expensive because it is a lower risk since your asset is backing it.
- Government grant: You can get funding from the government, and they won’t make you pay it back. These grants come in many forms, including cash and equipment.
- Equity crowdfunding: You can use equity crowdfunding to raise cash from different investors who each give a small amount of money. You need a compelling business plan, and investors will usually have a stake in your company.
- Guarantor loan: If you have a guarantor, you may be able to borrow up to 15,000 pounds. You just need a friend or family member with good credit.
- Business cash advance: You can often borrow money against your future sales. You will sell your future sales to a lender for a discount.
