How to Manage your Credit Score

Priority Lending can approve almost all credit profiles – challenged or strong. But naturally, the higher your credit score is, the more options are available to you, and you are likely to be approved for higher amounts of money. Improving your credit score can be a slow process but has many benefits in the long run. The following are a few tips that can help.

Pay your bills on time

Paying credit card bills on time goes a long way in improving the credit score. Not many people know that almost 35% of the credit score is based on their payment history. Therefore, making timely payments can turn around their credit score substantially.

Avoid applying for a loan at too many places

When you apply for a loan, your credit score gets checked. This process is known as a ‘Hard Check’ and it reduces your credit score. While this process does reset every month, large numbers of requests, especially over longer periods of time take more time to reset. Priority Lending is responsible with your credit application – we learn about what your profile is before we even check it, and only send it to a few lenders who are likely to give you an approval that works for you.

Maintain Low Debt Utilization Percentage

Debt utilization ratio is another factor that affects the credit score. A high percentage in your account indicates that you are having issues managing your current debts and will affect your credit score.

Check your Credit Report Periodically

You should ask for your credit report from time to time from agencies like Equifax. By looking at the report, you will be able to understand your financial mistakes and correct them before they snowball into a big problem. When you check your own credit, it is considered a ‘Soft Check’ and does not reduce your credit score.

Understanding Alternative Lending

Alternative Lending is the process of lending done by institutions other than banks. Broadly, any business lender, who isn’t associated with a bank is known as an alternative lender in Canada. A rough estimation in the lending industry claims that almost 80% of business loan applications are rejected by the bank. This is where the option of alternative lending emerged and has been helping business owners meet their financial needs.

Banks have a strict procedure that needs large amounts of documentation and some security to ensure there is no risk in a deal. Most banks prefer to work only with larger companies that have a proven track record and minimal risk in terms of losing money. On the other hand, alternative lenders offer financing products even to the smallest of businesses that have failed to qualify on the terms and conditions of a traditional bank.

Advantages of Alternative Lending

High Approval Rates– Alterative lending has a high approval rate for business financing as compared to banks.

Flexible Products – Alternative lenders are flexible with the amount of loan as well as the interest rates.

Quick Loans – Alternative lenders use faster methods to offer quick loans as compared to the banks. Priority Lending can take you from a complete credit application to funds in your account within 2 business days.

Less Paperwork – Unlike banks, some alternative lenders can issue approvas based only on a credit application and three months’ bank statements.

How to Fund a Startup

Starting a company can be a stressful process given that you will have to secure funding for all your needs. From equipment to office space, to hiring staff, every process involves money. Not everyone who wants to start their own business and be their own boss has the cash on hand to do all this. So, where will the money come from? There are many funding processes in Canada that are ideal to find the much-needed cash for a startup. Each one of the processes is different and suitable for different business types. Following are some of the most popular startup financing methods in Canada.

Bootstrapping

Bootstrapping is the process of funding your startup company from your own pocket. As already discussed, this is not possible for every individual. Only ones who have enough funds in their savings or assets can bootstrap their startup.

Bank Loans

Bank loans are one of the most preferred funding options for startup owners but unfortunately banks prefer to work only with established brands or individuals with a spectacular credit history.

Equipment Lease

To secure the equipment you need, Priority Lending can help with a range of equipment lease-to-own options to get you the equipment you need, whether you are a restaurant, trucker, print shop, or spa… or just about any other kind of business!

Venture Capital

Venture capital is the name given to companies that make the initial investment in the startups with strong growth prospects. In exchange, they get equity ownership in the startup.

Angel Investors

Angel investors are wealthy individuals or retired management professionals who invest in smaller companies in exchange for a management role in the company along with financial returns.

Crowdfunding

Crowdfunding is the method of building funds using donation. Startups can turn to crowdfunding websites to fix a financial goal and achieve it through donations from family and friends.

Government Grants

In Canada, government offers various subsidies and grants to small businesses based on their industry. Getting funds through can be difficult because similar to banks, government also has quite strict rules and regulations when it comes to small business loans.

Advantages of Invoice Factoring

Invoice factoring is the process of selling your invoices to a company on lower rates in order to get nearly instant cash. This method is mostly used by small businesses to arrange cash for their short term working capital or other sudden needs. When you sell an invoice to a company, they may pay you over 90% of the invoice value, based on their terms and will then get the invoices cleared directly.

Pros of Invoice Factoring

Easy Approvals

Invoice factoring is easily approved because the buying company does not have to consider your credit score for the transaction (though they do have to consider the credit of the company that will be paying the invoice). You invoices are proof of the money you have already ‘earned’, therefore the process is smooth and quick.

Creates Consistent Cash Flow

Invoice factoring is one very good method of creating a consistent cash flow in a business. Using this method businesses do not have to wait for invoices to clear to manage their routine expenses.

Short Term Solution

Invoice factoring is a very short-term financial commitment therefore it does not burden a business financially.

Minimum Risk

Invoice factoring is one of the lowest risk methods for all the parties involved in the deal, unless your client who has given the invoices fails to make payment.

Non-Notification and Notification Factoring

If you don’t want your clients to know you are factoring, Priority Lending can arrange “non-notification” factoring in which you will collect the funds on your invoice. By contrast, if you are in an industry where factoring is common, like trucking/transportation, Priority Lending can arrange typical, “notification” factoring, in which the factoring company will collect.