Borrowing money for an SME can become a challenging undertaking if they have a bad or low credit score. Since the funds that the business needs cannot be obtained in a timely manner, the business owner can experience a wide diversity of problems. One of the most well-known includes being limited in the amount of business expansion that a business can do, especially when more opportunities are knocking on the door. Simply stated, sometimes a business may need a little extra financing to open up a new product line so that they can take advantage of the customer loyalty base that they have built up over time. Unfortunately, in situations like these the business cannot grow as desired due to the lack of funding.
What Are the Benefits of Having a High Business Credit Rating?
While business owners with a bad credit score may have all kinds of difficulties securing financing for their needs, this is not the case for those who have built up a good credit history and credit score. In fact, the business owners with a good credit score can take advantage of securing a loan from their local banks, financing companies and lending cooperatives. Another perk that they have available to them is obtaining a loan at very low interest rates, which makes the loans much easier to repay without being charged large sums of interest.
Further, when the business owner wants to expand their business by buying more equipment or property for the business, they can obtain the financial capacity needed to complete the expansion so the business can grow in numerous areas. For instance, if the equipment that the business owner purchases will be used to make more products or produce services, they can begin to generate more sales and cash flow, hire additional employees and increase their profits quite substantially. Regardless of the purpose for the financing, the business owner can pursue business plans without having to spend their valuable time pursuing limited options instead of obtaining a bank loan.
The Problems Faced by Philippine SMEs
In its 2012 study, the Department of Trade and Industry highlights access to finance as one of the most critical factors affecting SME competitiveness. “Many are unable to qualify for bank loans because they lack the necessary track record, collateral, financial expertise to manage a healthy cash flow. The lack of credit information, inadequate financial records, business plans, and limited management capabilities (Nangia and Vaillancourt 2007) has deterred banks from lending to MSMEs. In other words, banks believe that SME lending entails higher risks and larger transactions costs.”
How We Help SMEs
CreditBPO was set up precisely to address an SME’s access to finance through its IT-based proprietary credit rating platform. First, a business owner must know his credit rating and what goes into it. We generate that in 24-48 hours. Next, if a business has a bad credit score, it can be improved via CreditBPO’s composite rating system and actionable recommendations.
Even when the business owner does not have any present plans for obtaining a loan, it is important to ensure the business credit score is good so that they will not have problems should such a loan be needed. There are a few ways for the business owner to increase their credit score. One option is to secure assistance from traditional financial consultants. But cost and time required of the business owner might be major hurdles.
CreditBPO,your financial technology partner, will pave the way towards helping you improve your business credit rating at a very affordable cost; the same way tech companies like Uber, Apple, Alibaba, and Waze have lowered costs and innovated services that are now benefitting millions. You will understand how banks evaluate loan applications and where you stand with yours. The CreditBPO Rating Report and Dashboard will give the you a concise and accurate snapshot of your business’ credit worthiness and management capabilities alongside key recommendations that a business owner can prime his business with in order to increase its credit worthiness.
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? Sign up with CreditBPO!
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