What Is Subprime Business Finance?
If your business has had to deal with a problematic period of trading in the last few years and got into financial difficulty such as exceeding its overdraft facility with the bank, not being able to maintain its loan repayments or pay its suppliers on time then it may have some adverse credit data recorded with the credit reference agencies here in the UK. Unfortunately, such data stays on your business’s credit file with the credit reference agencies for a period of 6 years and this can cause problems.
For instance, you may find that your bank is reluctant to provide further finance and declines a request to increase your business overdraft facility or perhaps turns aside an application for a commercial mortgage. So, what can you do if such a situation occurs?
Well, you will be pleased to hear that there are a number of lenders that are prepared to consider an application from a business that has a bad credit record with the credit reference agencies. This is sometimes referred to as subprime business finance. Such finance could be the likes of a business loan or a commercial mortgage.
Such a lender will obviously look at a finance application from a business that is struggling financially very closely as there is an increased risk that the borrower will default on the borrowing. The level and type of adverse credit will have a bearing on the lender’s decision as will a number of other factors. If subprime finance is agreed then the lender may require an increased level of security, a larger deposit and may charge a higher rate of interest in view of the increased level of risk.
So, how do you source subprime business finance? Well, as with a lot of things, you could use the Internet. You will discover that there are a number of lenders that will consider finance for bad credit businesses. Another option is that you could use the services of a commercial lending broker to help source such finance that should be able to help put together a lending application on behalf of your business for a fee.