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• 01 Jun

  Business Finance With Bad Credit

  Getting business finance with bad credit whether its your company that has a bad credit history, or you personally, appears to be a concern for a number of businesses.

  I recently read an article online about how to improve the credit rating of your business, clearly, production of the article had been prompted by a need that the authors had identified for companies with bad credit to raise finance.

  Improving Your Business Credit

  It gave lots of good advice for improving your credit rating such as:

  • Not compounding the situation by shopping around after being turned down i.e. running more searches.
  • Looking at your credit report to see where the issues are.
  • Asking your suppliers to report your payments to credit agencies.
  • Reducing your balances on your credit facilities.
  • Increasing credit limits to reduce utilisation levels.

  The Reality

  Whilst it's good to know, some companies are not going to be in a position to have credit facilities increased or to reduce balances. The reality is that it can take a long time, and a lot of effort and knowledge to be able to rebuild a credit profile. A simpler solution to getting company finance may be required. There are sources of finance that are not reliant upon your credit rating to provide business finance. Indeed it can be provided to companies that are in poor financial shape, factoring your debts is a potential shortcut to raising cash for your company.

  Business Finance With Bad Credit

  I felt the need to comment on the article as factoring is a freely available source of business finance that often has little regard for your credit history (company or personal) as it tends to focus on the quality of your receivables (the debts owed to you by your customers). Therefore, the onus is on the standing of your customers, as opposed to your standing.

  You may not believe it but you can raise substantial amounts of cash through this methodology despite having issues such as court judgement against your company or even being in a Creditor's Voluntary Arrangement (a type of insolvency arrangement whereby part of all of your debt is repaid according to an agreed plan). I recently posted about how finance can be available for CVA companies even within difficult sectors like construction.

  Factoring Despite Poor Credit Rating

  The comment that I posted on the article about improving your credit was something like this:

  "If you are a company with a poor credit rating you are highly likely to still be able to raise money through factoring. Factoring can release c. 85% of your unpaid sales invoices for you to use for any purpose and the criteria to qualify are based on the quality of your customers, not you. Even if you have CCJs or are in a CVA (creditor's voluntary arrangement) you will still be able to get factoring so you don't need to worry about your credit rating to get finance from this source. We have just published an article about all the different types of factoring available and are happy to help anyone struggling to raise money for their company."

  So whilst rebuilding your credit may be a stepping stone to getting finance, you may be able to skip to the end goal and raise that finance through factoring. That money could be available in just a few days. We are happy to help point you towards finance companies that specialise in financing companies that have bad credit, call us for a confidential discussion on 03330 113622.

  By Glenn Blackman