Corporate loans are the foundation upon which many businesses are built. The flow of money is what drives the business world and, in many cases, a corporate loan aids in the process. Basically, a corporate loan is a loan used by a business. They are most often used for financial investments to build the business and recently there has been a move by banks to rely less on credit bureaus before granting a loan.
Credit Reports and Retail Businesses
In the midst of the 2008 financial crisis, many retail businesses experienced delinquencies in their loan payments, which resulted in lower credit scores. Going forward, most banks began using credit reports when retail businesses applied for a loan. This helped them see whether the company was making payments on other loans and making payments on time.
Why Not Corporate Loans?
Despite the rise in credit reports being used in consumer situations, the same isn't true of corporate loans. Reports are available for corporate institutions that apply for a loan, but other factors are more important in these cases. When a large corporation is being evaluated for a loan, the credit score plays a very small role. The industry and government lending in that sector play a much larger role in securing a corporate loan.
All loan companies check and report to the credit bureaus, regardless of the type of loan. However, when corporate loans are reported, it has to do with a lot more than the financial numbers. Director and partner information as well as data on subsidiaries and holding companies are also taken into consideration. It takes more time to report this data, but it is still being reported.
Reporting to credit bureaus is part of what keeps the economy running smoothly. Though reporting is different for corporate loans, it still occurs and therefore, businesses must be diligent in making payments on time.