After filing a personal bankruptcy, your debt is wiped out, and you can begin rebuilding your finances. Many mistakenly assume that it is impossible to get a small business loan after bankruptcy, but that is simply not true. Here is what you need to know in order to secure a small business loan after filing for bankruptcy.
Prepare a Detailed Business Plan
First, you need more than just an idea. Any lender will expect an organized, thoughtful business plan. There are countless resources online you can use including templates, calendars, and more. Be aware that starting a business in an industry with a high rate of failure attracts additional scrutiny from potential lenders. Your business plan and presentation should be flexibile enough to respond to the tough questions.
Demonstrate Financial Responsibility
Bankruptcy is a chance for you to start over, financially speaking. Take advantage of this opportunity to demonstrate responsible financial behavior. When you apply for a small business loan, a post-bankruptcy record of minimal debt will go a long way toward demonstrating your financial responsibility. Keep a portfolio of documents showing that you’ve paid your bills–such as car and mortgage payments–on time since filing and that you are receiving a consistent income that can be used to pay down future debt.
Be Proactive With The Facts
Any item on your credit report can be appended with a brief explanation. If your bankruptcy is a direct result of illness, accident, divorce, or other event, lenders may consider your situation differently. Another thing you can do is to write a short statement that explains the background of your financial situation and why things are different now. In preparing these statements, it is important to stay professional and neutral in tone. Simply state the sequence of life events that explain your bankruptcy and why your financial circumstances are now more stable. Print out copies of this statement and attach to your loan application.
Small Business Specialists and Credit Unions
There is no standard set of loan eligibility criteria. If you’re shopping for a small business loan following bankruptcy, the best strategy is to contact a lender that specializes in small business loans and find out how they determine eligibility. If lenders specializing in small business loans continue to deny you a loan, consider working with a local credit union.
Bankruptcy should be the beginning of something new. Although it may take a bit of time and effort to rebuild your credit history, it is possible to come back from bankruptcy financially stronger than ever.
If you’re thinking about filing for bankruptcy, contact DeLuca & Associates at (702) 252-4673 to schedule your free consultation today.