Impaired Credit Doesn’t Mean You Can’t

There were 21,860 CCJ recorded against incorporated businesses in England and Wales in the first three months of 2016. This is a 17% fall on the same period the previous year and a dramatic reduction on the 71,867 CCJs filed in quarter one 2009.

The figures for CCJs filed against unincorporated businesses (partnerships, sole traders) bucked the trend with the volume of CCJs continuing to rise. It is much more difficult to get an actual figure on these filings but the trend can be established.

The reasons for CCJs are varied. It doesn’t have to be about non-payment or that your business has failed or is failing. Many judgements are filed for contracts in dispute, invoices sent to wrong address, moving office without notifying everyone or simply correspondence getting lost. My point is that whilst lenders will look at a CCJ as a bad thing and a warning sign for many businesses it is simply something that happened and has little bearing on creditworthiness at all.

Impaired credit is not just about CCJs. Lenders will look at;

• Missed payments
• Bank statements for returned items
• Late payments
• Defaults

All of these show on credit reports and bank statements and will form a measure of the decision a lender will make.

Working With Impaired Credit

Bear in mind the definition and wording of ‘impaired’, it means ‘weakened or damaged’ it doesn’t mean ‘dead in the water’, ‘hopeless’ or ‘lost cause;. Much as many high street lenders will leave you with the impression that there is nothing that can be done that is far from the truth.

If you are aware that your credit is imperfect then the chances are you will need to use a specialist to source commercial finance for you but rest assured that there will be options available, they are just not from your main high street banks.

Impaired Credit Lending

If you assume that a CCJ for non-payment is preceded by the odd default or bounced item and that many bounced items and defaults never lead to a CCJ then the number of businesses with some form of impaired credit is huge. If you make a second assumption that many of these businesses won’t realise they have a form of impaired credit then there are an awful lot of SMEs who will fail to access finance on the high street.

There are options available to the SME, as a guide;

• Property finance secured against commercial, semi-commercial or second charge over domestic residential. From £40k to £5m
• Quick decision with an answer normally inside 24 hours
• Terms from 3 months to 25 years
• Lending in sole trader, partnership, LLP or limited company names
• Flexible structure of repayments

There is no one stop packaged offering in this area, everything is bespoke and needs to be considered on an individual basis which we will always do.

Rest assured that there are options. If you want to look at what those options are then please get in touch, call us on 01293 541333 or use the contact form below.

By Dave Farmer

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