If you are applying for a bank loan or start-up finance, banks might well check your credit references to assess whether you are an acceptable risk. You could be refused credit or your credit rating may affect the terms offered. A credit report on your business might include such things as your financial results (for the past five years), how long you take to pay your bills, court judgements, outstanding mortgages, credit recommendations and risk assessments.
Check with your accountant that they haven’t made any mistakes. If you are not satisfied with your scoring look at ways of improving your credit worthiness – perhaps by revaluing assets.
Remember it’s a two-way street
The bank should be as anxious to get your business (if it’s viable) as you are to get funding. Don’t necessarily jump into bed with the first willing lender. Compare banks and their offers. Remember you could be in for the long-term so think how the relationship might develop. Are they making a serious attempt to understand your business? Are they offering the best product for your circumstances.
There are a raft of financing options available apart from fixed loans and overdrafts. Have they broached the alternatives? Weigh up their advice carefully. They understand finance but not the minutiae of running your business on a day-to-day basis.
Don’t bury your head in the sand
If you run intro trouble and you don’t tell the bank, it will cost you more in the long run and you might even lose the business. Delaying telling your bank means the chances of bailing you out get slimmer. Work with the bank to devise a rescue strategy for the business (but work out your own salvage plan first). If you need free credit advice get in touch with us today.