The importance of the credit check when starting a new business

The importance of the credit check when starting a new business

Starting a new business is daunting at the best of times, but when you need to consider a loan in order to get set up, it goes to another level.

Funding is such a vital part of getting set up for product businesses; buying stock, renting premises etc. but it can feel that lenders are holding back, making you doubt whether or not you want to continue on the journey.

At Streamlion, we’re really proud of our high success rate when it comes to getting start-ups off the ground but there is one area that prospective business owners can do to really maximise their chances of success.

Making sure you understand your credit history and your credit score. 

What does that mean?

Your credit history and credit scores are vital pieces of information that lenders use to understand your financial wellbeing.

They tell the lender a lot about you – how well you have repaid debt in the past, if you have missed any repayments on mobile phones, utility bills, rental/mortgages and also how much you owe other people.

Lenders will never want to add more debt to your burden, so they always make sure you can afford the loan repayments before approval is granted.

Your aim is a fair to good credit score.  So, before you start looking for any funding, it’s worth looking at your credit score to make sure you won’t fall at the first hurdle.

What do you need to do?

You can check your credit score using one of these sites.

All three of the above allow you to carry out a free check on your credit score.

An Experian credit score is out of 999. ClearScore credit checks are out of 700 and Equifax are out of 850.

All these will tell you what it is and how it compares to the national average.  A healthy credit score means you can apply for any funding you want with confidence.  This tends to be a score that is fair to good or above.

The website will also give you guidance on areas that need attention.

What happens if my credit score is Very Poor or Poor?

The good news is that you can do something about it.

When you get your credit score, you will be able to download your credit report as a PDF.  This will give all the detail you need to help you understand what has influenced your score.

The sorts of things that can negatively affect credit scores are:

  • Late or non-payment of bills
  • Being close to credit limits on overdrafts or credit cards
  • Too many ‘hard’ credit checks – these are checks carried out by lenders & creditors in the past
  • County Court Judgements (CCJs)

Whichever company you use to check your credit score will be able to help you to improve the score.  Just get in touch with them directly.

And ongoing?  What to do……

It’s good discipline to check your credit score every month. Many of the websites will offer the chance for an automated update to be sent to you. This means you will know of any issues at an early stage and can take action to remedy them.

Then as soon as you’re ready, you can apply for the funding you want with confidence and achieve your new business dream.

Streamlion specialises in helping entrepreneurs starting on their business journey.  We help you create a business plan and finance details which ensures that your loan application will be successful.  We can give you the peace of mind that you haven’t missed anything with your loan application by acting as your trusted business advisor.

If you’re interested in finding out more, contact Helen via helen@streamlionconsulting.com or call 07790 493033.

 

What’s the best source of funding for my start-up business?

What’s the best source of funding for my start-up business?

If you’ve got an exciting new idea for a business, you’re probably aware of the minefield that is funding applications.

Should you approach your bank or choose a start-up loans specialist lender? Read on, and we’ll demystify all.

The choice

High Street Banks – traditionally, banks have preferred to loan money to established businesses as they like to mitigate their risk with some form of security (such as your assets) to underwrite the loan. This hasn’t really changed and, despite some claims that they lend to start-ups, once you get to the small print, they are only offering growth or expansion loans to those who have already started trading for at least 2 years and filed positive returns.

Start-up Loan Scheme – this is the government-backed Start-Up Loan Scheme. These loans are considered a personal loan but can only be used for business purposes. They are unsecured, which means there is no need for your assets to be secured against the loan. They are available to brand new businesses who have not yet started trading, and established businesses that have been trading for less than 2 years.

Alternative Lenders – there are some lenders out there who will lend to start-up businesses. Typically this will be industry specific and over a certain minimum amount. Can also be postcode dependent and the interest rates are usually higher.

The real choice

Once you start investigating what’s available, you are likely to find the start-up loan scheme is the only viable option for most genuine start-up businesses.

The scheme has been set up to focus on new businesses and there is no risk to your personal assets with this method of financing. Loans are available up to the value of £25,000, payable over 60 months maximum at an interest rate of 6%.

Don’t be put off by the narrative that start-up loans are “for would-be business owners who have struggled to secure funding from traditional lenders”. This doesn’t mean start-up loans are for people with poor credit ratings or high-risk businesses. It simply means that you need to try to secure funding from your bank first and if unsuccessful, then the start-up loan scheme is there for you. And you do need a good credit rating and eligible business idea to apply.

How to apply

Start-up loan timeframes vary hugely and that’s because there are so many different ways you can apply. From a completely do-it-yourself approach, to working with a broker or advisor, the key to a swift and successful application is to plan thoroughly and carefully.

That’s where Streamlion comes in. To date, we’ve helped our clients with over 500 applications and secured them over £7.7 million of funding. To do this, we partner with the UK’s number one start-up loans provider, Transmit Start-Ups, and we can work with you in different ways including:

  • Have an initial discussion with you about your business idea and the viability of your plans. We have a great deal of experience in many different industries, so can help you create a business model that works for you.
  • Explain about the importance of the credit check and guide you to the secure start-up loans application page so you can begin the process and complete these important checks.
  • Help you submit your business idea, financial forecast, loan expenditure and ‘personal survival budget’ (this is the main loan application process, and we can also check all your documentation to ensure you have the highest chance of success)
  • Work with you through the review of your loan application to approval and receipt of your funds.

If you’d like to know more about accessing funding for your start-up business, why not get in touch for a chat? You can contact Helen, Streamlion’s founder, on 07790 493033 or email helen@streamlionconsulting.com

When it comes to start-up advice, can you afford to take it for free?

When it comes to start-up advice, can you afford to take it for free?

When you want to start a new business, success is dependent on getting off to a good start. It’s a stressful time for entrepreneurs and founders: searching for the right advice, from a trusted source, obtaining the necessary funding and making lots of decisions in a short space of time.

It’s a time when you need your network: knowing you can trust people is of the utmost importance as you navigate the challenges to get your idea off the ground.

If you’re lucky, someone in your network or community will be able to point you in the right direction for those critical factors such as financing, finding a premises and writing your business plan. But you might not have access to the right people and statistics show it really matters who you choose to work with at this stage.

Did you know that the use of paid advice can increase your turnover by 23%?

That’s quite a step up and makes investing in trusted, paid advice well worth it.

At Streamlion Consulting, we work with a wide range of prospective business owners and have an impressive track record in getting people the advice and funding they need. So, what are our tips for entrepreneurs who want to succeed in setting up a thriving business?

  • Make sure you work with someone who has experience in helping new business owners get their idea off the ground. There are many ways to make this process easier than it would be if you decided to go it alone so make sure you tap into this knowledge and achieve the quickest, smoothest route to market that you can, even if you do need to pay to achieve this;
  • It’s also important to get advice from someone who knows what is needed when it comes to funding. Rejection is much less likely if you have the right information and paperwork is completed correctly and in a timely manner. When it comes to business, time is money and every day saved is a day when you could be making money;
  • An experienced advisor like Streamlion might mean you need to make an initial investment, but this will pay you back many times over when you are able to get a faster, successful loan decision first time which avoids all the stress of having to wait and reapply;
  • Seeking external advice can feel counter-intuitive when you already have a trusted network but, in fact, it means you are more likely to receive the right advice, first time. Look for an advisor who has a professional set up with website, LinkedIn profile and other social media channels where you can see the quality and consistency of their work. Check out their reviews and ask to speak to a previous client to find out whether they represent good value;
  • Finally, look for someone who will explain the details of the process in clear, simple language. There shouldn’t be any confusion or misunderstandings. You are the client and you should expect a respectful and professional approach to all your interactions with your advisor.

Taking inexperienced advice or trying to get through this convoluted process by yourself are more stressful and less reliable ways to start your business. In an ideal world, you should be up and running as quickly as possible and making the most of your great business idea. By working with a trusted, professional advisor, you’ll guarantee this and will also have a supporter and ally who can help with your business as it grows too.

The Entrepreneur Handbook

The Entrepreneur Handbook

We often think of entrepreneurialism as a solo endeavour, but it doesn’t have to be that way. Many successful partnerships – or bigger groups – launch and run businesses. However, as with anything in business, relationships are key and working with others inevitably adds another dimension to be considered and nurtured as you build and grow. The Entrepreneur Handbook has a useful article covering what they see as the three main things to consider when looking for a business partner.

It’s an essential read if you’re starting a journey of discovery for the perfect partner.

The best business ideas – 2021

The best business ideas – 2021

A regular feature in Streamlion’s blog, the best business ideas are out for 2021. Published by Startups.co.uk they are definitely of a slightly different ilk than before with, as you might expect, a heavy influence from tech, virtual and….. dogs.

These, though, are the trends of lockdown Britain. We’re now used to operating in an online world (although the first idea on the list takes this to a new extreme….) and, apparently, a massive number of us took on a dog for the first time and now need support.

At Streamlion, we can really identify with number 8 on this list: localisation. We’ve seen a huge increase in small, local businesses – lots of them in the catering space – making the most of people’s movements being restricted.