For SMEs in the Philippines, applying for a business loan has never been more crucial. Funding needed for upgrades or expanding successful product lines can't wait on complicated loan procedures or lengthy credit checks. Your business relies on moving forward quickly and efficiently when opportunity strikes, so that you can make the most out of it. However, many business owners don't realize how important their credit rating is for loan approval. Without the proper tools, your access to the proper loan can be hindered or even denied. CreditBPO can help you increase your chances of obtaining a loan for your business.

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Understanding How Banks Rate Your Business

Before you even apply for your business loan, you must consider how banks will rate your business. There are some general rules of thumb to keep in mind during preparations for this process.

Reason for the Loan – The first thing that the bank will start with is the reason for the loan. They will want to know that the purpose is to guarantee that the loan will not be used to fund any inappropriate activity.

Character & History – Loan financiers will also ensure you and any involved business partners have upstanding character, including how you've managed your business' credit history previously and even possibly how you managed your own personal credit.

Loan Repayment – In addition, banks will also want to look at whether or not the loan will be repayable. While putting up collateral isn't necessary in some cases, it can be helpful in light of the other factors involved.

Knowing your credit rating will go a long way toward knowing where you stand before you even apply for your loan.

The Benefits of a High Credit Rating Score on Your Loan Application

A high credit rating score indicates how creditworthy your business is. When it is time to apply for a business loan, a higher credit score does have benefits for your application. Let's take a look below:

  • Higher Chances of Obtaining a Loan
    • Conventional lenders & creditors prefer to extend credit to businesses that meet their corporate compliance guidelines. This includes the requirement of having a good credit rating score.
  • Lower Interest Rates
    • Every cent counts for any business owner. Having good credit standing allows your business to obtain lower interest rates.
  • Limit Personal Liability
    • Creditors and lenders are less likely to require a personal guarantee for business financing if you have a good credit rating.
  • Conserve Business’ Cash Flow
    • Most suppliers and vendors extend credit to businesses with good credit standing, with 30 to 60 day terms. This will help you conserve funds while obtaining the products and/or services your business needs.
  • Increased Credit Limits
    • Creditworthy businesses have access to higher credit limits compared to businesses without.
  • Attract Potential Investors
    • Having an established credit history and available credit improves the appearance of your business’ financial capacity and stability, helping draw in more buyers and investors.

The Final Word on Business Credit Rating and Loans

While your score might be based on some factors beyond your control, like years in business or how long you've had your business account, checking your score gives you a starting point against which you can measure any progress. At CreditBPO, our goal is to build awareness of the factors that determine your business’ credit worthiness, how the banks might rate your business, and guide you with actionable recommendations that will help improve your business’ credit rating. As you can see from the information outlined above, there is much to consider to make sure that your business has what it needs before applying for a business loan.

Excited at knowing how banks would very likely rate your business? At increasing your chances of getting a loan? At getting ahead of the competition?

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