Getting a Small Business Loan After Personal Bankruptcy

If you are thinking about filing for personal bankruptcy in Illinois, there are many factors to consider. For some residents of the Chicago area, the relationship between consumer bankruptcy and small business loans may be one of those factors. Obtaining credit for your business after you have declared bankruptcy is similar in many ways to getting credit for other purchases—potentially difficult in the time period immediately following bankruptcy, but certainly within the realm of possibility once you have rebuilt your credit. However, there are other significant considerations for Illinoisans who are seeking financing for business purposes. According to a recent article in The Wall Street Transcript, small business owners should consider a number of issues in relation to their personal finances.
Keeping Your Business Profile and Personal Credit History Separate
Generally speaking, if you have a small business, it is a good idea to keep your business credit history separate from your own personal credit history. This way, if you make the decision to file for Chapter 7 or Chapter 13 bankruptcy given your personal financial circumstances, it may not have a significant impact on your business credit score.
How can you know whether you have taken the right steps to keep your financial histories separate from one another? You can check to see if you have a business credit file by contacting the three major credit reporting agencies. In other words, your business will have its own credit score that is separate from your personal credit score.
Drafting Your Business Plan and Seeking Alternate Financing
What if you do not actually have a small business yet and are seeking financing? It may be difficult to secure funding immediately after seeking personal bankruptcy protection, but having a solid business plan can help immensely. If you have data to show that you possess the knowledge and skills to run a successful business, lenders are more likely to be willing to provide financing for your endeavor.
When you are drafting your business plan, it is important to consider what specific lenders may be seeking when they evaluate your proposal. This brings us to the issue of alternative lenders. It can be difficult to secure a small business loan from the bank, even when you have good credit. In the period immediately after you have declared personal bankruptcy, seeking financing from a bank can be frustrating. In some cases, it may be useful to consider an alternative lender. Depending on the lender, you may be able to secure a lender through asset-based financing, invoice factoring, or invoice discounting.
Consider Your Timing
The more time that passes from your personal bankruptcy, the more time you will have had to rebuild your credit. The better your credit profile looks, the more likely you are to secure financing for your small business. If you are in the process of considering personal bankruptcy and do not need a small business loan immediately, it may be a good idea to wait. An experienced Chicago bankruptcy lawyer can discuss your options with you and help you to consider ways of managing your current personal and business finances.
Whether you have already filed for personal bankruptcy or are currently considering it, you should always work with a dedicated Oak Park bankruptcy lawyer. Consumer bankruptcy is complicated, and it is important to have an experienced advocate on your side. Contact the Emerson Law Firm today to learn more about how we can assist you.
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