Here is How You Can Prevent Bad Credit in Small Business

Beyond any shadow of a doubt, all businesses are sensitive to problems regarding the cash flow. This results in bad credit. However, it’s found that SMEs are more likely to face the problem of bad credit, thereby resulting in lesser opportunities to be able to take a loan whenever the situation demands so.
However, where there is a will there is always a way out too.

Down here, we’ve explained how you can prevent bad credit in your small business:

First of all,
Get back the money your customers owe to you. There must be many clients out there, who must have delayed the payment. You should focus on getting all the debts collected.

Further,
The other way round, just check whether you owe money to your suppliers. Maximize your window while you pay them. You can do that by getting an extension with no extra cost, in case of some suppliers. You can also manage your cash flow in a way that your stock is not overloaded on merchandise. It should be your topmost priority turning over the stock, regardless the size of the business.

Okay! We know that rising costs may trouble you. They possibly affect the small business comparatively even more. However, sigh! You can ask your suppliers about rebates for buying in bulk or getting discounts in case you are paying early for the stock. Try to shop around for the best prices.

Keep yourself updated…
It would be a good financial decision if you shun hesitation and call up your bank to ask about a review regarding the loans you’ve taken before. This will prevent the bad credits pile up. Moreover, there is a regular change in taxation laws and business rules. The changes in the rules and regulations in taxation or business come with a great impact on the cash flow. However, you can stay updated by subscribing newsletters from your local business networks. This way you can cope up with the latest amendments.

Plan ahead!
By that, we mean that just seize the moment and take a good financial management decision if the interest rates in the market are going low. It’d be a great time to negotiate with a lender for bad credit loan at that point of time. Otherwise, the interest rates may rise and you will end up troubled.

Let’s Debunk Some Home Loan Myths

First Myth -    A hefty deposit you would need to get a home loan in Australia.

Usually, 5 to 10 per cent deposit can help you qualify for a home loan.

However, if you have a guarantor, like your parents, you can borrow 100 per cent of the purchase costs.

Second Myth - The services of mortgage brokers are costly.

No, it’s not, rather, it’s Free. Mortgage brokers are paid by the banks.

However, there could be some exceptions like – if the home loan is less than $200,000, if your individual situation is complex, or if you are switching mortgages within the first two years of the loan.

Third Myth -    If you have a bad credit history, you aren’t eligible for a competitive home loan.

Not for everyone as it depends on your individual situation or if you have valid reasons for bad credit ratings, there are possibilities that a bad credit loan provider can consider your case.

Fourth Myth - The only thing to consider is the lowest interest on home loans.

Not necessarily the only thing, there are other costs like set up costs, exit fees, monthly charges, ongoing fees, insurance premium, conveyancing fees, etc. should also be considered that are generally included in the comparison rate you pay towards the mortgage.

Fifth Myth -     Credit cards aren’t considered by the lenders.

It’s a misconception that the borrowing power isn’t affected if you have multiple credit cards. Lenders assume that you have used your credit card up to its limit even if you haven’t. More number of credit cards can lessen the chances of your loan approval. Thus, it better to cancel the credit cards you no longer use or else you can decrease its limit.

Sixth Myth-   Lenders Mortgage Insurance (LMI) is there to protect you if you default on your home loan

If you borrow more than 80% of the value of the property, you pay a fee that is known as LMI. It doesn’t protect you from default, rather, it protects the lender if you go default and unable to pay back the loan. To be insured as a borrower, think of Mortgage Protection Insurance.

If you are still facing any apprehensions or have doubts to clear, then talk to the home loan experts at Loans Direct today.