When you’ve been issued with a CCJ (County Court Judgment), getting business finance might seem unlikely. In reality, although it might be harder it is not impossible. There are ways you can help lessen the effect of a CCJ on your business, potentially making it easier to find a lender.
Even though a CCJ can be a red flag, it doesn’t mean you’re out of the running when sourcing finance. Let’s take a look at what a County Court Judgement is, and what you can do about it.
CCJs: what they are and how they can affect your business
A CCJ is issued when a court decides you have failed to pay money you owe. Generally, a creditor will apply to the County Court to register the judgment, so that they can get their money back from you. Once the court issues the CCJ you must pay the amount set.
The most worrying part for businesses issued with a CCJ is that the judgment is recorded on your credit profile – and it can remain there for up to six years, making it harder to get finance. If you pay the total amount within 30 days of the judgment, however, you’ll be spared the CCJ record.
Sometimes a CCJ can come out of the blue – perhaps as a result of an admin oversight, or a creditor changing its contact details – but whatever the cause it’s essential that you deal with it as soon as possible to try to limit any long-term effects. Even if you disagree with the amount owed it’s often best to pay off the debt as unsatisfied (unpaid) CCJs will rule out the vast majority of lenders when looking to obtain credit.
Applying for business finance: what about your credit score?
Your business’s credit rating is one of the main factors when securing a loan – and a CCJ will lower your credit score. Lenders will check for CCJs when any business applies for finance – loan underwriters can see the judgment on your record, as well as the amount it was for.
But although it can ‘look’ bad, how can you help yourself? Here are a few ways to mitigate the effects of a CCJ when looking for finance:
- Deal with a CCJ immediately: pay the money you owe, as it show’s you’ve dealt with the issue (and if you pay it immediately, you won’t have the longer judgment record)
- Be prepared to show how you’re keeping on top of your existing debts to creditors, so that a financer can see that you won’t get into a similar situation again
- Help lower the risk to a lender by listing your business’s valuable assets as security against the loan
- Use a broker like BIZL to find finance: we have robust relationships with a range of lenders, and know the right ones to approach once we understand the full facts around your CCJ circumstances
What kind of finance you can get with a CCJ
Getting unsecured business finance
Unsecured finance can be harder to get, but not impossible. Lenders will look carefully at why you got a CCJ, and when – for example, if it was a few years back at a time when your business was having difficulties, but you’re now thriving, you may have a good chance.
Getting a secured loan
Secured lending is easier to obtain – but you’ll need to demonstrate that circumstances have changed significantly since the time you got your CCJ. With a secured loan, consider all valuable assets, as these will lower the risk to the lender. Assets can include property, but also equipment and machinery, and even invoices with major customers.
If you’re seeking business finance with a CCJ on your profile, contact us at BIZL to discuss how we can help.
Contact BIZL on 0203 167 8767 or get in touch via our contact page.