A few setbacks in recent years have left you wondering if any lenders would provide financing to the company. While it’s true that some lenders will not work with you until your credit score recovers, there are others who would be willing to extend Toronto poor credit loans that will help your business in more than one way. As you begin to weigh options for financing, keep these basics in mind.
You’ll Have More Options If You Focus on Secured Loans
With your credit score in less than top shape, locking in an unsecured loan is less likely. Even though you may find a lender or two who’s willing to talk about this loan option, you’ll find seeking a secured loan a lot easier. That’s because pledging some asset as collateral reduces the level of risk to the lender. When the current market value of that asset exceeds the amount you want to borrow, the odds of being approved are higher.
The Interest Rates May Be Better Than You Hoped
You’ve heard stories about the higher interest rates that come with poor credit loans. Some of those stories are true. What you should remember is that they don’t apply to every lender who extends loans to companies with less than perfect credit.
There is a good chance that at least a few lenders will offer rates that are lower than you anticipated. While you still want to look at the terms and conditions closely, the interest rate may be one aspect of the loan that turns out to be quite good.
Lenders Will Focus on Factors Other Than Your Credit Score
Even lenders who offer poor credit business loans will pay some attention to the company credit score. What’s different is they may focus less on the score and more on other factors. For example, the aging of your Receivables may be of importance. Do most of your customers pay in sixty days or less? If you have a healthy cash flow, this could be the factor that motivates a lender to provide an offer.
Do Expect Some Differences in the Loan Terms and Conditions
Beyond the rate of interest, pay close attention to the terms and conditions found in the loan agreement. Identify any additional fees or charges that will apply during the life of the loan. Is there a clause that allows the interest rate to increase if you make one or more payments late? Are there fees for processing payments or some type of general account maintenance fee?
You want to identify each possible charge and consider how it affects the amount that you eventually repay. Projecting that amount will help you determine if that particular loan offer is your best option.
These Lenders Report to Credit Agencies Too
You may have heard that poor credit lenders are less likely to report to the three major credit bureaus. It’s true that some will not issue reports at all. What you want to find is a lender who does provide consistent updates to at least two of those three bureaus.
Why is this important? Timely payments on your loan rebuild your damaged credit score, but that only happens if the lender is reporting that activity. Before accepting any loan offer, ask which bureaus the lender reports to on a monthly or bi-monthly basis. As you make your installment payments, monitor the reports from those bureaus and watch how the positive comments help to increase your score in the months to come.
Never assume that your score will automatically prevent you from doing business with any of the business loan companies on the market today. There are lenders who will take your application seriously and maybe even make an offer. Do your research, identify the lenders who are most likely to work with you, and see what happens. You may be surprised at how quickly some of them respond in the affirmative.
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