Picture the scenario: You’ve been running your business for a few years and in general it’s gone pretty well. But – and there’s always a but – you had a tough time a few months ago.Maybe one of your clients went into administration before they paid a big bill. Maybe you lost a bid on a major contract you were counting on. Maybe your landlord unexpectedly served notice and you were lumped with a costly relocation. Do any of these sound familiar? We know that bad things sometimes happen to good businesses and it doesn’t mean you’re any less capable of running your business well. However, it may leave you feeling a bit squeezed and looking for a finance solution. Now it’s decision time. Should you ‘fess up and share your troubled history with the banks?
First impressions countWhen it comes to applying for business finance, first impressions do matter. It’s important to put forth a considered and practical application backed up by your trading history and sensible forecasts. If you’ve ever been through a rough patch you might be tempted to try to gloss over it. There’s no need to air all your dirty laundry straight away, right? Wrong. So often we speak to business owners who try to cover up the truth when it comes to a blemish on their credit record. Sometimes they’re cagey – perhaps omitting to mention the fact that they’ve recently done a pre-pack. Sometimes they stall and try to delay bad news – forever promising they’ll send in accounts in a few weeks when they’re finalised. And on very rare occasions we’ve spoken with a business who has directly lied. It’s one thing to present your best possible angle but it’s another entirely to omit, hide or lie about data. In dating terms it’s the difference between good lighting and a flattering outfit versus photoshopping a picture from ten years ago. AtFunding Options our advice is to get it all out in the open.
The truth is out thereSooner or later the truth will come out and both you and your business will look like a safer bet if you’ve been honest from the start. And as the saying goes, time is money. You’ll have wasted a lot of both if you’ve tried to hide some ugly truths. Many lenders have very specific risk and lending criteria. You may be able to get a long way down the process but eventually their underwriters will do a thorough credit check and if you or your business have a slightly chequered past it will come to light. This can and often does put the handbrake on proceedings. It may stop proceedings because, for example, their credit policy doesn’t allow them to lend to previously insolvent businesses. But even if their credit policy is okay with this it will almost certainly call a halt to your application. They will view the fact that you didn’t disclose this as untrustworthy and this will be a red flag to their fraud team. Plus, other lenders will be able to see on your credit history that you’ve recently had credit searches. They’ll be wondering why your finance application with one of their peers hadn’t gone through and more likely than not it’ll make them nervous.
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