In your personal life, your credit score underpins almost everything to do with your personal finance and lending opportunities. Similarly, credit scores play a vital part in getting the finance approved for business owners looking to take out business finance, such as a commercial loan.
If you, or your business, have a poor credit history, accessing commercial loans through banks and traditional lenders might be tricky. At darkhorsefinancial.com.au, we are specialists in helping businesses with a bad credit history — read on to learn more about how your credit score affects your chances of getting a commercial property loan.
Bad credit can happen to the best of businesses
If your business has wound up with a bad credit score, then you’re certainly not alone. Times have been tough for businesses of all sizes in Australia over the past few years, thanks to a myriad of factors. The global pandemic, supply chain shortages and a labour market we’ve never seen before may have taken their toll on your business’s financial situation.
For business owners who are on the other side and looking to grow their business by accessing a commercial property loan, bad credit can feel like a barrier to moving forward. Thankfully, all is not lost — even in a rising interest rate environment. We specialise in supporting businesses to get out of a lousy credit corner and can work with you to source a bad credit loan, despite what may be on your credit file.
Are there bad credit loans for commercial properties?
Just as you can access a bad credit car loan as an individual borrower, commercial lending is available to purchase properties, even for those with poor credit.
There’s no escaping the fact that your borrowing power could be limited if a credit check on your business returns an unfavourable result. Credit checks aren’t the sole determinant of the outcome of your loan application, though.
You can look at different loan terms, loan amounts, a larger deposit, the rental income of the intended property purchase (if it’s to be a rental property) and many other factors of your individual circumstances to support your application.
Your credit file
Perhaps your business doesn’t have any outstanding debts, part IX debt agreements or credit defaults; maybe you’re simply a new business with limited financial history or a credit file. In this situation, a lack of credit history is worse than having good credit history (and can be on par with bad credit) in the eyes of many financial institutions.
Can I improve my credit history?
While you can’t change what’s happened in the past, if you’re financially responsible, then there are many ways to help boost your credit rating moving forward:
- Keep your bank statements in the green to show you could easily cover loan repayments in the future.
- Use a business plan to forecast any stress points to your cash flow or working capital.
- Keep a mindful eye on interest rates.
- Make extra repayments where you can to pay down existing debt (including personal loan products such as car loans or your home loan).
- Be mindful that unsecured loans are usually more expensive than secured finance.
- Review your existing credit accounts. Using comparison rates can be a great way to identify redraw fees, early repayment fees and other fees that could drive the total cost of your existing debt up. Many businesses refinance their debt to access more affordable options and to avoid a part IX debt agreement.
Does a bad credit loan come with guaranteed approval?
Even if you’re applying for a small loan, there are no guarantees when it comes to getting a bad credit loan. Your best chance of getting the approval you want for a business loan is to work with specialist lenders with an Australian Credit Licence who offer business loans for businesses and owners with bad credit.
Discuss your commercial property loan dreams with darkhorsefinancial.com.au
At darkhorsefinancial.com.au, we offer commercial lending solutions for businesses that struggle with getting their credit over the line. Let us help you reach your commercial property dreams, even if your credit history seems like a nightmare.
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