Deep financial woes are no stranger to the American small business owner. In fact, statistics from the AACER (Automated Access to Court Electronic Records) tell us that over 6,000 people file for bankruptcy on a daily basis. If you are one of the unfortunate small business owners who have suffered loss from a bankruptcy, you know first hand how difficult it can be to recover.
The good news is that while many people suffer a blow to their business finances, personal finances, and credit history during a bankruptcy, it’s not impossible to get a small business loan after bankruptcy. You just have to be a little creative, and look in the right places for the small business financing you need. Here are some tips to help you repair your credit and acquire funding, even through the most difficult of financial times.
1. Forget about traditional banks for a while
Truth be told, if you’ve filed for bankruptcy, the worst place you can begin to look for a small business is a traditional bank. Traditional banks have high criteria for giving out any type of loans, and usually require a credit score of at least 640 for you to even qualify, making bad credit business loans an impossibility. To top it off, the lower your credit score, the higher your interest rate will be. This means applying for a small business loan at a bank after bankruptcy will be a waste of your time.
While applying for a loan at a bank may be a waste of time post-bankruptcy, keep in mind that you shouldn’t forget about banks all together. Keep an active business checking and savings account open, and if possible, keep an active debit card open as well. Keeping an active bank account open is an integral step in helping you build up your credit again.
2. Don’t run away and hide
The worst thing you can do after bankruptcy is to give up and take yourself out of the financial game completely. After 7 to 10 years, depending on which type of bankruptcy you filled for, your bankruptcy will be taken off of your credit. Additionally, lenders like to see that you are continuing to make an effort by applying for credit elsewhere, and paying your bills on time. Start slowly if necessary, but keep paying your bills on time, rather than burying your head in the sand.
3. Try a bad credit business loan
Did you know that there are companies that are 100% dedicated to helping people out who find themselves in a bad credit situation? If you are looking to apply for a small business loan, consider a bad credit business loan, instead of a traditional bank business loan. For companies like Shield Funding, a private business loan company, your credit history is not the deciding factor when determining whether or not you receive a loan. Instead, they look at your business operation time frame (should be at least 2 months) and your minimum gross monthly revenue should be at least $8,000.
A bad credit business loan is a great option if you just have poor credit and there is also a business loan after bankruptcy option which is the perfect place to start if you’re looking to get a loan after a bankruptcy.