There is nothing wrong with being ambitious. In spite of having a credit history that is not so favourable, you can still give wings to your dreams, albeit with a little more effort. If you are looking to start or expand your commercial enterprise, you may have to take a few extra steps than otherwise required to convince the potential lender of your financial integrity. It is understandable that financial institutions would be reluctant to lend money to an individual with poor or bad credit, however, you can improve your credit rating in the following ways:
- Scrutinise your credit history
First things first- get hold of your credit report to realistically know the state of your credit credibility. If you are lucky, there might be some inaccurate items that you can easily dispute and get off the report.
- Present a detailed business plan
To secure a loan for your business, you need to first convince the financial institution of the viability of your business. To start with, present a plan which contains a description of your business, the short term and long term goals of your enterprise, the role of the property that you wish to construct/buy with the loan, the marketing strategy you will employ, etc. The more detailed the plan, the more convinced the lender will be of your commitment to the cause and in turn increase the chances of you acquiring a loan for commercial property.
- Arrange for a large down payment
This may seem counterintuitive but will work to convince the lender that you mean serious business. Usually, the borrower needs to offer some asset as collateral in case they default on the repayment of loan, but in this case when you have poor credit history and would like to refrain from offering collateral, you can make a huge down payment. This amount will depend on the financial institution’s discretion.
- Opt for a secured loan
A secured loan essentially means that you offer some form of collateral against the loan that you have taken. This could be in the form of property, valuables, etc. Such a loan may put the collateral at risk of being taken by the financial institution in case of non-repayment of the loan but will drastically improve your chances of getting the loan as the risk of loss to the lender is significantly reduced.
- Make a repayment plan with past creditors
Contact each of your creditors and work out a new repayment plan with them. This will improve your credit history as well as show your potential lender that you are conscientious about making the loan payments. Ask your other creditors for extensions or other benefits that will make it easier for you to repay the loan.
Whether you want finances to buy land for commercial purposes or construct your business on already purchased land, there is a loan for everything. Simply ensure that you have studied and understood your credit history thoroughly and made the appropriate and possible improvements to get a better credit score.