3 THINGS YOU MUST DO BEFORE APPLYING FOR BUSINESS FINANCE Funding and Business Growth Playbook T: 0330 350 3356 @: hello@GrowingYourNumbers.com www: growingyournumbers.com
Unexpected Ramifications – Utility Costs
All gas and electricity suppliers routinely check their customers credit rating before renewing contracts and they’re even more cautious when reviewing new clients. The threshold rating for renewal and acquisition offers has been substantially raised. As we all know utility costs are going up by between 100% to 200%, so a business that paid £30,000 for their utilities last year, will need to budget an additional £30,000 to £60,000 for next year’s supply.
Now consider this situation: What would happen if without you knowing it, your credit rating had been downgraded, this may not impact you immediately, so you are likely to be totally unaware.
When the time comes to renew your gas and/or electricity contract, your supplier will conduct a credit search and conclude you are not a safe risk…
Your current supplier may turn you down, forcing you to find a new supplier. Energy providers will demand a 6-month deposit, payable in advance and held in Escrow until the end of the contract.
If that is your business, and the bill for utilities is likely to be £90,000 next year, you will potentially need to find an additional £45,000, just to pay the deposit, and that is on top of the higher bills… Ouch!
What happens if you can’t immediately lay you r hands on the cash you need to pay the deposit, what are your options? Y ou can’t continue to run your business without power…
To raise the money needed to pay the deposit, you may need to borrow, but the only reason you are in this position in the first place is because your credit rating is poor, so you are likely to find it hard to borrow, or at best you will have to accept adverse terms… which could potentially be catastrophic, but don’t panic…
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