How to Get the Financing You Need
Are you trying to get business loans with a previous bankruptcy on your history? Sometimes it just makes sense to file for bankruptcy, especially in certain economic times, and it is not always a sign of failure. A personal bankruptcy, however, can continue to show up on your credit report for up to ten years. While it does make it harder to secure a loan afterward, in some situations it is still possible to get a business loan after filing for bankruptcy. You will, however, have to be more prudent in shopping around for financing.
If bankruptcy is the only tarnished mark on your credit history, and you do not have a history of any other kind of bad credit, you may not actually be seen as the credit risk you think you will. Lenders know that you cannot file bankruptcy again for a specific amount of time and some lenders view this as a great opportunity to extend credit to a business that is growing and that can show the ability to repay the financing that is offered.
How to Increase Your Chances of Getting Financing
There are things that you can do to make getting a business loan after a bankruptcy a little easier. To start with, know that you will have to check with more lenders in order to get a good idea of what is available. You can also show that your financial situation has changed, placing you in a better situation in which to pay back loans. You can also explain what forced you to choose bankruptcy as an option in the first place.
Bankruptcy: Personal or Business?
Having a bankruptcy on your personal credit history may not ultimately affect whether or not you can get a business loan. If you own a business, and established a line of credit through that business, based on that business credit alone you can get a loan. Your personal score, in that situation, will not even come into play.
If your business is still new, however, lenders do take your personal credit history into consideration. Although you may need to spend some time building your credit back up first before attempting to apply for a loan. One way to accomplish this is to have credit for your business that is separate from your personal ventures.
Knowing what to do after filing for bankruptcy is very important, especially if you look to apply for a business loan or any type of credit at some point. The first thing you will want to do is keep your debt to a minimum. Bankruptcy is a way of attaining a fresh start, wiping out all of your unsecured debt. The last thing you want to do afterward is to continue on the same path that ultimately brought you to a position of bankruptcy in the first place.
If possible, have a record showing your prudent sense of financial responsibility after filing. It can prove that you are not planning to end up there again. And it is something that you can show to a prospective lender. One example is receipts that show that you are paying your mortgage or other necessary payments in a timely fashion. You will soon see offers for credit cards, yes they might be higher rates and for lower amounts, but you need to build your credit at some point. Even a secured credit card is an option, you should review all offers and do your research on who’s offer best suits your current financial situation.
Another important factor that a lender will look at, should you decide to apply for a business loan, is your income. You must have a consistent, reliable income in order for you to be able to pay back any loan for which you apply. In addition, it’s also not likely for reduction for the duration of the loan payback time. By providing strong bank statements the lender can feel comfortable with possibly extending credit. Typically, strong bank statements are those without NSF’s (non-sufficient funds), and include a stable daily average balance.
Take The Opportunity To Explain
It is perfectly acceptable to explain each item that affects your credit score. It might be that your less-than-perfect credit was directly impacted by events that were completely beyond your control. This could mean divorce, an event with your health that was beyond your control, or an accident of some sort.
In the case of bankruptcy, being able to attach that explanation can work to your advantage. It will give you the opportunity to explain why you had to file as well as the chance to show that your situation has changed for the better. Keep these explanations short and simple, stating only the facts and how those facts have changed.
Be sure to commit important notes about the situation to memory in case you asked to elaborate further. Even in verbal explanations, keep it factual, brief and specifically on point for the loan for which you are applying.
When you do decide to apply for business loans with previous bankruptcy, do not immediately seek out an excessively high loan. Start out by applying for the smallest loan you can possibly get by with and have a plan in place for paying it off as quickly as possible. This will create proof that you are willing and able to make your payments and, in the meantime, provides a history of good credit that future lenders can look at.
It may take some time to rebuild in this manner. It is a work in progress that will be well worth the effort. Instead of obtaining a large loan to cover all the aspects of what you need to be done, instead, break the job down into smaller projects. When one finishes, you can then apply for another loan with the history of paying off the prior on good terms.
It might also take some time to find the right lender for your own particular situation. Finding one that works primarily with small businesses is the best situation. If that does not work out for you, however, you can always try applying for a business loan through a credit union.
Contact First Capital for Business Loans with a Previous Bankruptcy
Coming back after a bankruptcy can be hard. While not impossible, you’ll probably find that terms will be different compared to traditional financing. So, you’ll have to expect this as to their policies are more lenient. It can also be to your benefit to have some assets that can be used as collateral. Luckily, First Capital Business Finance offers another program that allows you to use your collateral to obtain working capital. Call us today at 888-565-6692 or contact us online to discuss collateral-based financing. This can also offset any risk that the lender may be taking as well as verifying that you are serious in your intent to pay back the loan.
Business Loans With Previous Bankruptcy | First Capital business Finance, USA