Getting a Small Business Loan After Bankruptcy
Getting a small business loan after filing business bankruptcy
Although it may difficult to obtain a small business loan after bankruptcy, but it is not impossible. Your bankruptcy discharge has wiped out all your unsecured debt and you are not eligible file for bankruptcy within a certain number of years. As such, you may be considered less of a risk by certain lenders.You will have to approach lenders and explain the circumstances of your bankruptcy and demonstrate to them that your current finances poses less of a credit risk. Our experienced business debt relief lawyers at ZocLaw.com provide a few tip pertaining to obtaining a small business loan after bankruptcy.
Present a good business plan
A well planned, comprehensive and organized business plan is essential to securing a business loan. The nature of your business can make a big difference in getting a business loan. If you want to start a business that is considered high risk, be prepared with thorough and organized answers to crucial questions that may be put forward.
Keeping your debt low after bankruptcy
You have a clean slate after bankruptcy. Make sure that you do not make the same mistakes that you made previously. Keep your finances stable and in good stead after bankruptcy. Furthermore, keep your debt to a minimum – this is a good indication to the lender that you are financially responsible. Following your bankruptcy filing, keep records to prove that you are meeting your regular debt payments on time. Such documents may include receipts from rent payments and car installments.
Regular and consistent income
You need to have a consistent income in order to secure a loan. The lender must be assured that you will be able to make payments regularly and on time.
Explanations need to be factual
You can submit a brief statement with your credit report. Lenders may consider circumstances that led to your financial situation, for example car accident, divorce, illness, injury etc. In a short statement you can explain what caused your financial problems and that currently your circumstances have improved and you will be able to repay the loan on time. Do not add emotional or negative comments on your statement . Be factual and explain clearly that your circumstances have changed. Make copies of your statement and submit to lenders and be prepared with solid and factual answers if questioned about it.
Further tips to get a loan small business loan after bankruptcy
There are different types of lenders. Find out which lenders are most likely to provide entrepreneurs with small business loans after bankruptcy and what criteria you need to fulfill in order to obtain a loan from them.Different lenders may have different criteria when considering loan applications. Credit unions or your local chamber of commerce may be able to suggest possible lenders who issue loans after bankruptcy.
Please be aware that your credit history may be low after bankruptcy and you will most likely be charged a higher interest rate if you are granted a loan. Lenders may ask for collateral such as equipment purchased by the loan, a house or a car.
If you have been turned down after multiple attempts, consider approaching someone with a good credit history to cosign for you.