How to Sustain a Financial Crisis During the Sluggish Economy?

Posted by Brenda Miller on August 26th, 2019

According to a recent report by World Bank, the global economic growth is expected to slow down to 2.6% in the year 2019 and will increase slightly up to 2.7% in 2020. The reason cited by the group is sluggish investment in emerging and developing economies.

Due to the sluggish economic growth many companies and businesses have to face funding issues when they are in need of financing. Some businesses find themselves in dire need of money, otherwise, they have to liquidate their company.

The truth is that handling a business is not easy. If it was, everyone would have their own company. Any type of business can come to a standstill where they cannot afford to make required payments, which in some situation may bring up a CCJ (County Court Judgement).

Some CCJs are more dreadful than others, but it doesn’t have to blacken the image of the organization in the long run, or becoming a hurdle in getting funds- business financing with CCJ loans with no guarantor from direct lenders is still possible to arrange.

However, it is not easy to get funding with a CCJ and it does have a negative impact on your finance. The main point is what matters to lenders who are providing this type of loans and what you should do to raise money with a troubled credit history.

Will a CCJ Harm Your Application?

One of the main factors lenders looks while providing loans is the credit ratings of the business. A CCJ will reduce your credit score and show on your credit history. When a lender goes through your application or if they search for your business, they will be able to see the CCJ with the amount. Hence, based on that evaluation they will decide whether or not to give you a loan.

Naturally, a CCJ gives a bad impression about your business. Lenders think that: “if your business has a history of unhealthy financial handling why you should be trusted to make repayments to them”.

However, it doesn’t mean that you are outcasted by all lenders for a loan. There are many direct lenders in the UK loan market who provide loans despite a CCJ. So, you have options left for you.

Mystery Unfolded

Many lenders look at the whole business situation and having a CCJ is just one part. This means that you have a chance to explain to them the reason behind your CCJ- very often, it can be because of insufficient cash inflow or you didn’t receive payment from your clients, etc. You can also show them how you have planned to recover from CCJ and your future strategy about business. Lenders take all these things into account while making any final decision. Hence, give them a chance to trust you and your business.

How to Increase Your Chance of Securing a Loan?

• The best way to increase your chance of getting a loan is to get rid of your CCJ as soon as possible by paying it off immediately. It will give a positive impression to the lenders that you have tackled your financial obligations very quickly and the probability of getting a loan will increase.
• Be ready to show to the creditors that you have learned from your past mistake and are making all payments on time.
• The more recent a CCJ, the more difficult it becomes to get a loan. Hence, wait for a while before looking for a loan.
• You should take a CCJ very seriously and avoid getting any CCJ in the future because it gives a negative impact on your credit score which will be very harmful to your business.
• If possible, use security or collateral to secure a loan. This will give some confidence to lenders, making your application getting approved.

Conclusion

Even the most skilled business owners may not know when his financial condition can go from good to bad in the current market situation and since traditional lenders and banks hesitate to facilitate financing, the only option left for you is marketplace lenders. Even if you have a bad credit score, a CCJ, or another type of issues in the past, still you can get financing for your business in the turbulent economic scenario.  Although CCJs are bad they don’t ruin your chance of getting a loan.

Overall, you should understand the graveness of a CCJ and its bad impact on your business. Always try to make repayments on time to avoid any difficulty in the future.