How To Maintain A Good Credit Score With A Small Business Loan?
Follow these 4 suggestions if you've taken out
a short term loans or plan to prevent your credit score
from plummeting.
You've always harbored aspirations of opening your
bakery or boutique. You have some money set aside for a down payment. But to
finance your idea, you need a microloan.
You could be preparing to produce or stock a
seasonal good. You may need to update any outdated equipment. All of this calls
for money, which you lack.
Your best choice is a small business loan. You apply
for one and are certain that you will make timely installment payments.
Have you thought about the
consequences of taking out or not repaying your loans?
Your credit score is impacted by guaranteed SME
loans. If everything goes according to plan, you will notice a benefit.
But when you take on additional debt, miss payments,
or default on repayment, these loans can damage your credit.
Banks are more likely to report your loan to
companies compiling credit reports than licensed moneylenders in Malaysia. This
is not just applicable to financing for businesses.
Any late or missed payments will be reported to your
credit card provider if you have business credit cards with personal
guarantees. The annual statements you get reflect this.
Do you frequently make purchases or cash advances
with your credit card for your new or startup business? Your credit score may
be impacted positively or negatively depending on how you manage this line of
credit.
How can you ensure that it won't
impact your credit score?
Avoid combining your personal and company accounts
by following the example of other business owners. Utilize these four tips to
lessen the negative impact on your credit score.
Remove the sole proprietorship:
It might be challenging to maintain your personal
and business credit separately when you are a lone proprietor. As the owner,
you are subject to indefinite responsibility and may be held personally liable
for business obligations. Consider starting your firm as a private limited
company rather than a single proprietorship.
Get a business credit card for yourself:
To use only for company costs, apply for a business
credit card (or a personal card if you are not qualified). If you use your card
for commercial purposes, be sure to make prompt payments on all bills and cash
withdrawals. A bad report will be issued if you don't accomplish this.
Look at different options:
Use alternate funding sources in place of personal
credit cards, home mortgages, or asset pledges as security for company loans.
Can investments, term deposits, or retirement savings plans be used as
collateral for loans? It's possible that these loans won't show up on your
credit record and won't lower your total rating.
Consult a licensed money lender:
Find out if the licensed money lender Malaysia will
disclose your loan to credit rating agencies at the first hint of payment
troubles before you apply for a small business loan. Borrow from a reputable
lender who withholds information until all options for payment collection have
failed.
3 Common business loan myths
The only source of finance is from banks:
Banks and other comparable financial organizations
are the traditional sources of finance for SMEs in Malaysia. Although this
could be the standard in your field, there are still alternative possibilities
that are well considered.
Working capital loans are offered by legitimate
private lenders, frequently without the need for tedious documentation. In most
cases, you may receive funding approval within a week.
A flawless credit score is required for business loan approval:
The ability to obtain funding from banks or through
government subsidies may be hampered by low credit scores. If you satisfy the
conditions for a business loan, many money lenders in Malaysia will accept you
for a loan despite having less-than-perfect credit.
SME loans are not preferred by lenders for large companies:
Legal moneylenders do benefit from substantial
advances or long-term loans, but they are willing to work with all sizes of
businesses. Don't allow this fallacy to prevent you from contacting them for
SME finance.
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