We are in an era that is in need of creative and innovative new talent to embark upon starting businesses. However, it only takes a moment to see how business owners can be held back by credit ratings that are intended to provide a sanity check to the entrepreneur's natural enthusiasm.
My personal experience with credit ratings is frustrating to say the least. For many years my partner and I ran a successful training company. Twelve years ago we merged with friends who ran a much smaller enterprise to keep up with the pace of growth. But, within 18 months of the merger, it went very wrong and we were forced into being bought out for a pitiful amount.
We re-mortgaged and then sold our home to clear the debts and start a new business. A delay in our house sale going through meant we were paying both mortgage and rent for several months while getting the new venture off the ground and the debt grew. Eventually we had to admit we could not manage the debt and signed up to a debt management plan, which led to our poor credit rating.
Today the "new" company is trading well and manages to house us, feed us, clothe us and repay our debts. However the company is held to ransom by our personal poor credit rating. This is despite the fact that we successfully ran a company for many years and our new business is doing well. We cannot change banks if we want to - though we have an extremely good working relationship with our bank, having a choice would be nice. Our business can't change mobile phone providers or get credit for large equipment purchases because as soon as a personal credit check is done (not a company credit check), it's a case of "computer says no".
Annoyingly, if we had declared bankruptcy we would be clear of debt by now and in a position to rebuild our credit rating, however we are penalised because we chose to do the right and honourable thing. This reflects the unfortunate attitude which prevails in the UK. In the US business owners are not taken seriously unless they have at least one failure to their credit as it is seen as a major learning experience. I'd dearly love to see the culture in the UK shift to embrace the US attitude of encouraging entrepreneurial spirit and not to fear failure.
It is a lesson we would do well to learn if we want the next generation of business people to reach out and aspire to greater things. The traditional British way has been for our entrepreneurs to rely on family for financial support, but this is no longer realistic. People with bright ideas and a viable business plan should be able to access the finance they need to make their businesses a success. We need to do everything we can to support them in that endeavour.
Judi Brazkiewicz runs a training company with her partner. She is also regional secretary for the Federation of Small Businesses in Shropshire, Herefordshire and Worcestershire.
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