Rejected for finance with bad credit, but you own property

What the presenter says

The Short is aimed at a particular person: someone an unsecured cash flow lender has turned down, who happens to own property. The presenter's argument is that whatever reasons that lender gave, they were reasons an unsecured lender has to care about, and a lender secured on property weighs them differently. No perfect credit score, no income hoops, money in the account quickly, nothing to repay for half a year, and more time if it is needed. The published terms behind those last three promises are in the box below.

Why the unsecured lender said no

An unsecured cash flow lender has two things to go on: the credit file and the bank statements. With nothing behind the loan, every default, every arrears listing and every dip in turnover is a direct measure of its risk, and a scorecard can turn those into a decline in minutes. For an unsecured loan that is a sensible policy. It tells you nothing about whether a loan secured on property would work, which is the point the video is making.

What a property-secured lender looks at instead

Three things carry the decision. The property: what it is worth at today's market, what is owed on it and who owns it. The purpose: the money has to be for the business. The exit: the sale, receivable or refinance that will repay the loan, including a refinance once the credit file has had time to recover. The file is still read, with your explanation beside it, but a listing from three years ago does not outweigh a property with plenty of equity and a clear way out.

The written guide to bad credit business loans goes through what each kind of credit event changes, from late payments to an ATO judgment. If the file shows defaults in particular, a business loan with defaults on your credit file covers how long they stay listed and what to say about them.

What equity does not fix

Owning property is not a way round every problem, and it is worth being honest about where it stops. If the debts that damaged the file are still growing and nothing on the horizon will change that, borrowing against property only moves the problem onto the property and adds interest to it. A loan works when it buys time for something specific: a debt cleared in one payment so trading can carry on, a contract that will pay, a refinance once the record has recovered. Where the no came from a cash flow lender in particular, Paul covers that case in a video of its own.