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Can I Get a Small Business Loan After Bankruptcy? An Orange County Bankruptcy Attorney Explains

    An Orange County bankruptcy attorney answers the question “Can I get a small business loan after bankruptcy?”

    The simple answer is that with the correct preparation, and a willingness to shop around, it is absolutely possible for a small business owner to get a loan after bankruptcy. Typically a personal bankruptcy will remain on a credit report for 7 to 10 years which will make it far more difficult to obtain credit. However, after bankruptcy, it may be possible that getting a small business loan becomes easier.

    As an Orange County bankruptcy attorney, we explain that once a person files for bankruptcy, they are not allowed to file for bankruptcy again for a certain number of years. Thus, the individual becomes a credit risk to some lenders. In trying to answer the question “can I get a small business loan after bankruptcy?” People need to prepare to find those lenders that are willing to lend money and consider them less of a credit risk.

    Keeping debts low

    The most important way that to answer the question “can I get a small business loan after bankruptcy?” is to organize your business so that the debts are extremely low. A person can increase the chances of getting a business loan if they are able to demonstrate to the lender that they have been able to keep their debt to a minimum after the bankruptcy.

    An additional step is demonstrating financial responsibility which may actually convince the lender to offer the small business a loan. The important thing to do is to prepare evidence, such a statement showing consistency in their payment of mortgages, rent payments or other bills in order to demonstrate to the lender that the business will repay the loan.

    Show a plan

    One of the most important pieces of advice an Orange County bankruptcy attorney can give a small business owner who is trying to get a small business loan after bankruptcy is to make sure that they have a solid, organized and detailed business plan to present to potential lenders.  In many respects, despite the age and experience of the business, it is recommended to treat any lender as though the business were approaching them from a start-up point of view. Essentially, while bankruptcy will wipe out all debts, it also creates a situation where being able to demonstrate organization, sales, return-on-investment and all of those important elements in a business plan become critically important in order to secure a loan.

    Explain the bankruptcy

    Very often, the simplest steps can help to create a sense of camaraderie and trust which is important in trying to secure a loan. Instead of trying to hide the bankruptcy, it may be advisable to create a short statement that explains the reason for the bankruptcy and demonstrate clearly to the lender that financial circumstances are different now.

    There is no guarantee that the lender is going to read the document. By printing out several copies and making sure that every lender has it, the small business can maximize the potential that at least one lender will, in fact, read the statement and give the business loan that they need.

    For help with your bankruptcy, call and schedule a consultation with our office.

    Note: This is for information purposes only and does not constitute legal advice.