When it comes to lending, many banks profile businesses using similar criteria. For example, banks and licensed moneylenders evaluate the documentation of the business before coming up with projections and performing analyses.
To ensure that your company is in good stead, here are a few ways you can strengthen your company profile for loan application and make it more attractive to banks and lenders.
1. Ensure impeccable credit history
The most crucial characteristic that lenders look at when evaluating your company for a loan application is your credit report. Banks will take a look at your credit report to assess your financial situation. It contains your credit payment history such as credit repayment trend, default records (if any), bankruptcy records (if any) and aggregated outstanding balances. For banks and finance companies, there are only 2 credit bureaus allowed to obtain such information: DP Credit Bureau and Credit Bureau (Singapore).
If you have a poor or unhealthy credit score, it could ruin your company profile and your loan application. Factors like your credit history, too many new applications, or the credit you have now can affect your report. Work with a corporate accounting services firm in Singapore like Ackenting Group to ensure that your company’s financial profile is in good state and gain professional advice on how to maintain a good credit score.
2. Maintain a good debt ratio
Your debt financing ratio is calculated by diving total liabilities by total assets. It can be used to indicate the financial health of businesses, which reflects how your business uses debt to finance its operations. Lower debt ratio is more likely to show lenders that your company is not over extended and is less likely to default.
3. Separate between personal and business credit
Particularly for small business owners, during the early years, business credit may be harder to come by. Finding ways to establish business credit rather than using your personal credit is good practice. Business expenses tend to run high and this can actually hurt your personal credit score. At the same time, your personal credit card won’t help to build a solid business credit profile, which makes it more difficult to attain a business loan later down the road.
4. Maintain a healthy cash flow
The above tips are all helpful in strengthening your company’s profile for loan application. However, most banks and lenders often advance loans based on the borrower’s ability to repay them. A good way to make a positive impact on your business credit profile is to ensure regular and timely payment on your business credit accounts. Building a strong profile involves demonstrating your ability to leverage credit effectively when you need it and making timely payments when you borrow.
Making good financial decisions may be difficult, but by outsourcing to a SME accounting services firm like Ackenting Group, we can help you re-organise your company’s financials and keep your financial information up-to-date. We ensure that your company can keep your finances healthy, cash flow in good stead, and boost your company profile for lending. With healthy finances, your business can thereby secure a strong company profile and obtain the required loan.
If you require any assistance on accounting services, feel free to drop us an email at johnwoo@ag-singapore.com or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.
