Filing for Bankruptcy
Filing for bankruptcy might make it seem as if your world has stopped, but the truth is it hasn’t. Life goes on, even after bankruptcy, and before you know it you’ll be thinking about your future and the opportunities that are ahead of you.
As a matter of fact, many people opt for bankruptcy to open the door to these opportunities.
However, it’s important to understand that as much as bankruptcy can help you, it’s also possible it will interfere with some of your plans, at least on a temporary basis. Bankruptcy will have an effect on your ability to borrow money and do some things you might otherwise have been able to do had you experienced no financial struggles.
In some cases, launching a small business might be one of these things.
Filing for personal bankruptcy could have a bearing on your ability to secure a small business loan in the future.
What do you need to know if you are considering business ownership – or you already are a business owner – but right now you’re struggling financially and considering bankruptcy?
Bankruptcy Timing is Important
Filing for bankruptcy has a long-term effect on your finances and credit, but it isn’t permanent.
If you filed for bankruptcy several years ago and you’re considering a small business loan, you’re likely better off waiting until the bankruptcy has dropped from your credit. In most cases, this is 10 years after the bankruptcy was completed.
Of course, 10 years is a long time and not everyone with business aspirations is willing or able to wait that long. If this applies to you and you’re ready to take the leap into business ownership, but you have concerns about a previous bankruptcy, you might want to consider:
- Applying for a loan with a financial institution with which you’ve already established a relationship. If you have a checking or savings account at a bank that offers small business loans, this is the way to go. It’s no guarantee you’ll be approved, but being an existing customer improves your chances because you won’t be judged strictly by your credit report.
- Securing asset-based financing. This non-traditional means of financing is secured by your business property, so lenders are more willing to work with you because they can reduce their risk. This puts your business at risk if you struggle financially, but it allows you to get the money you need to start or grow your business, assuming you have assets you can use as collateral. To learn more about the variety of lending options available to business owners, check out this information from Entrepreneur.com.
- Creating a solid business plan. The more detailed the better. Make sure the plan includes information for how it will operate, what it will cost to open or expand, and how much profit it is expected to make and when.
Unfortunately, there’s no guarantee that you’ll be approved for a small business loan after bankruptcy, but there’s no guarantee of approval even without a bankruptcy on your credit history. It’s still important to speak to your bankruptcy attorney and be open and honest about your plans to one day open a business or to expand your existing business. Your attorney can take these aspirations into account and help you plan your best bankruptcy strategy.
For more information or to speak to someone about questions you have related to bankruptcy and business ownership, contact the Law Office of Robert M. Geller at 813.254.5696 to schedule a consultation.