In a leaseback transaction, is the leaseback reported on the business credit?
In most cases it is not reported on the business credit. The largest business credit reporting agencies, Dun & Bradstreet and Experian business credit report have a history of not reporting traditional bank loans and leases. The reasons why are both a mystery and proprietary. The result is that businesses that have taking out significant loans, a lease, or leaseback, do not always get the benefit of it reporting on their business credit.
The exception seems to be the business reporting agency Paynet. Paynet eports many types of bank loans, leases and a leaseback, and as a result, the reporting automatically provides a reference for businesses that have taken out this type of financing. However, many companies that review the references or business credit of a business, will not review the Paynet report and will miss this trade reference information.
Businesses should have this trade reference information ready when they inquire or apply for a business loan, lease or a leaseback. The company name, account number and high credit should be provided in order for the company to get the benefit of the financing they are applying for.
If a business has a Dun & Bradstreet report and an Experian business credit report, the business should take the same loan, lease or leaseback information, call up these business credit reporting agencies and ask if these are being reported. There is a strong possibility they are not being reported because these are loans and leases and some of these companies only report trade references, which are often different than loans and leases. Since the representatives of these business credit reporting agencies say they do not know the companies that are reporting trade lines to them, they will not be able to say whether or not the loan, lease or leaseback is being reported.
A copy, or access to the report should be requested and reviewed. The best way to match up the leaseback, loan or lease to the trade lines being reported is to look at the business credit report under industry type and also in the trade line section which reports the dollar amounts. This information should be used to attempt to match up accounts and determine if the leaseback, loan or lease is being reported.
If so, no further action is required. If not, the information should be given to the business credit reporting agency and the agency should be asked to report it for the business. If this is not done, the snapshot of any company’s business credit report at the business credit reporting agency will be underrepresented and may hinder their ability to obtain financing or as much financing as they wish to obtain. The process of the business credit reporting agency reporting updated accounts may take a few weeks.
The reports should be checked once a week to determine if the business credit file has been updated. Until it has been updated, the loan, lease, or leaseback documentation taken out at the time of the transaction should be provided in lie of the report.
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