Companies Act Reforms Restrict Access to Credit

Companies Act Reforms Restrict Access to Credit

Companies Act Reforms Restrict Access to CreditBusinesses should update their credit application process now that the Companies Act reforms have been introduced or they may struggle to access finance, credit reference agency Equifax has warned.

In order to cut cases of identity theft, the Companies Act (2006) has been amended so that company directors will no longer be required to publicise their home address at Companies House, but can use their registered office address.

However, according to Equifax, removing this data from the public domain will make it harder for organisations lending credit, such as banks, to run suitable background checks on directors to ensure that they are worthy of the loans.

“Some organisations will want to do a consumer check on small businesses when they apply for credit,”

said Equifax head of commercial products, Wayne Davies.

“They will use the director’s address to carry out that search, but if they haven’t captured the home address they can’t.

It will be harder for organisations to carry out the background checks, and they could get declined for credit if the search reveals that the director is not known at the address given.

For the credit application to run smoothly, small companies need to offer up the director’s home address details at the first opportunity and build this process into all applications, instead of waiting for credit to be declined.”

A spokesman for the Federation of Small Businesses (FSB) said any restrictions to credit access would be a real problem for small firms.

“It is up to the Government to encourage banks to continue lending and not see the new legislation as an opportunity to slow the process down and hold on to money.”

Companies Act Reforms Restrict Access to Credit

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