Not easy at all, is the simple answer and it is not just about your businesses credit score… although it helps to have a good one.
Yes… Banks do still say yes; but what happens if your bank says no? Is that it or should you try to find out why and whether you may be more successful elsewhere? The ‘why’ is always an important question. Banks like all commercial organisations use in the first instance credit scores and your business financials to determine whether they will lend. They will also look at your business plan and the reasons cited why you are seeking finance. How you present your loan application to the bank or indeed to any prospective funder is critically important. In the short term there is not much you can do about your credit score, unless you have satisfied County Court Judgements (CCJ’s) which can be removed. Likewise your financials cannot be improved overnight and you cannot change your profit and loss account and balance sheet from a period which has already finished.
You can though showcase your business in a favourable way, by projecting your financials forward, showing that the business is growing and that profitability levels and balance sheet ratios will improve. Putting this in a concise and easy to read format will help a prospective funder to view your loan application more favourably than it might have done had it just been reliant on your credit score and year end financial statements.
So who do you approach for funding?
As suggested above, you should always try your bankers first, as they already know you and the process for obtaining perhaps an increased overdraft or a new loan, may well be quite straightforward. If this is unsuccessful, then you need to find someone who will agree to fund your requirements and at a good rate and post 2008, there are now a whole raft of additional areas to explore. Perhaps the most popular form of business funding now is peer to business lending or crowd-funding. There are of course a number of other funding options, notably from local chambers of commerce etc which should be considered, but for sheer simplicity crowd-funding looks to be the way forward.
