We can declare war or declare independence and face the consequences, but if you have declared bankruptcy, you must still be wondering if you can still get a bank loan for small business for the consequences can be horrendous but it does not end of days for your business. You can pick yourself and start from rags. The bankruptcy declaration can reflect on the credit report of yours for a period of 7 to 10 years. There are numerous people filing for bankruptcy every year, so you definitely are not alone. There are times when declaring bankruptcy is the only way out to clear off all the debts and start off again in the clean state. It can, however, make things difficult for you. It will make it difficult to get credit for your business but it is not going to be impossible. You also have to remember that you cannot file for bankruptcy for a certain number of years. But lenders might consider you of lesser risk than you might think. Hence, one shall anticipate knocking doors of various lenders to avail loans and what exactly caused you to file for a bankruptcy, and explaining that your financial position has changed and you now are good credit risk you should anticipate having to shop around for loans, explaining what caused you to file bankruptcy, and you are now at good credit risk.
One shall make sure that he has a stable and organized business plan to present to the lender before applying for a business loan or you might end up being rejected for a loan. The industry in which you are seeking loans is also might make a difference. So, you need to consider all the factors that can impact your loan application.
Following are the few avenues you can consider for getting a small business loan:
- Separate business and personal credit
The most important step is to separate the personal and business credit. If you start a new business, then you need to use your own name at first but after your business is established, it can take a loan in its own name. Your personal credit won’t affect the business in securing credit.
- Use assets as collateral
Secured loans are good for loan seekers with bad credit history and bad credit score. You should consider this option but think properly while choosing this option as it is risky. You can also use personal assets for this. If you have just gone through bankruptcy, then you might not be able to use this option.
- Seek investors
You can also go for external funding by seeking investors. The best way is to have collateral for backing for the money you are demanding. They will not expect you to repay the debt, and they will often engage in riskier loans than standard, primary lenders.
- Start small
After you go bankrupt, there is no harm in starting small. You can resume your business again. Starting small and working your way up to more permanent financing solutions will help build your credit. It will also provide you with financial statements to show future borrowers so you can prove the viability of your business plan.