Why Having Bad Credit Makes Banks Avoid Your Business

“Please George! Can I please borrow your bike? I promise I’ll bring it back to you tomorrow,” pleaded Roger.

“Sorry George, I don’t think so,” Roger replied, “Mike told me he leant you a video game last month and you still haven’t returned it.”

The above text could just as easily be a continuation of the children’s storybook we introduced to you in our last blog. Of course, in reality, it is yet another depiction of how bank loan officers treat small business owners applying for loans. How good is your credit? Do you have a history of borrowing money and showing difficulty with paying it back? Banks are not likely to hand out money to business owners who have bad credit.

Your credit score often means the difference between approval and denial.

On SnapCap.com, Kari Luckett explains that both your business and personal credit history is considered by bank loan officers when you’re trying to secure a business loan. They both help to determine your overall credit score. “Credit scores are represented in a numerical value to give lenders a quick and dirty way of understanding your credit risk,” she informs, “If you have a credit score below 600, chances are your loan application will get denied.”

It all comes down to trustworthiness. However, as most business owners can attest to, a low credit score doesn’t necessarily tell the story of how well one can be trusted with money. Emergency situations can arise causing cash flow issues that don’t enable generally dependable people from making payments on time. Nevertheless, a low credit score can be the death knell to an entrepreneur’s chances of securing funding for a planned business venture.

Your credit history counts for a lot.

On ToughNickel.com, Amanda Lu affirms that one’s credit history is not necessarily an indication of whether or not he/she can repay a loan. However, that history is an indication of how one has operated in the past. Loan officers use credit history as an indication of one’s future behaviours. Lu notes that it’s usually seen as the most important indicator as to whether or not a business owner can be trusted with borrowed money.

Loan officers “will want to see that you have had experience with credit and have made on time payments,” writes Lu, “Late payments showing on your credit history look bad, especially since they usually only show up if you were more than 30 days late. A late payment on a mortgage looks worse than a late payment on a credit card, since a loan officer would expect a higher priority to be placed on your home.” She goes on to notes that other items on your credit history such as collections, judgments and garnishments are “big red flags” to loan officers.

Bad credit won’t impact your ability to get a merchant cash advance!

At Synergy Merchants, we’re proud to say that such big red flags don’t exist when it comes to our unique merchant cash advance program. A bad credit history does not impact one’s ability to be approved for a merchant cash advance. Our application process is very quick and easy and most often, our clients are funded within 24 hours!

For more information about our unique merchant cash advance program, please don’t hesitate to call Synergy Merchants at 1-877-718-2026 or email us at info@synergymerchants.com.