Table of contents

    Once you have declared bankruptcy in your business, you are probably left wondering if there is even a possibility to get out of it. The question hanging in your head is whether you can even get past this tough situation, and how you can get back on your feet. You may even want to rebuild your business and finances. But then, you are worried about obtaining a short term business loan because of the fear of being denied.

    So, if you are wondering if you can surpass the difficulties involved after filing for bankruptcy, this post can help you answer some questions in mind. We have also included relevant and practical pieces of advice that may come in handy when you want to start your business once again even after the painful experience that bankruptcy comes with.

    The Basics

    Keep in mind that bankruptcies generally remain on your personal credit report for quite a while. When you apply for a loan before the 7th year of your bankruptcy, there may be some problems with getting approved. However, after this period, you can consider pursuing a business loan as the issue may no longer be a concern to you. As long as this is not anymore visible on your credit reports, then there is no serious impact to your credit worthiness. There are even some instances when applying for a small business loan is possible after you wait for about 2 years. The rule of thumb, however, is that you wait a little longer prior to applying for a loan. By doing so, you can increase your chances of an approval from a financing institution. There may even be several lenders who are willing to help clients with a bankruptcy case in the past. But the only thing is that the interest rates and applicable fees are usually much higher than what other clients pay.

    In case you own your business with an established credit, it is possible for you to receive a loan based on your business credit alone. This is why you can separate the personal bankruptcy issues from your business, which is a good thing. But if you have a relatively new business, then a strong deciding factor and element for a loan approval is your personal credit score. This will impact your chances of qualifying for a loan. Thus, if your business or personal bankruptcy case is stopping you from receiving a loan, rebuilding your credit rating is the best way to go.

    How to Rebuild Your Credit

    Here are ways that you may want to apply when rebuilding your present credit rating. These tips can also help if you are aiming to secure a loan even with a bankruptcy case in your previous records.

    1. Separation of your personal and business credit

      The most important way to begin rebuilding your less-than-perfect credit history is by separating your personal and business finances. But of course, this does not apply to those with a new business. On the other hand, having an established business makes this option quite a risk since you probably have your personal and business credit tied together. The unnecessary risk involved can be very stressful on your part if your goal is to improve your credit. Alternatively, even if you have bad credit score, you can always approach legal money lender in Singapore.

    2. Assets can serve as collateral when applying for a new loan

      So, your credit is not exactly the best right now. But this does not mean that you can no longer obtain a loan. As long as you have assets that may be used as collateral, then there is a possibility of being granted a loan for rebuilding your credit. Having loan collateral can minimize the risk that lenders face whenever an applicant with a bankruptcy case apply for a loan. Thus, they may be less hesitant to approve you of a loan.

      But at the same time, there are things to consider if you go about this route. First, you have to separate your finances on a personal and business level. The last thing you want is to put up your house for your business loan collateral, and then not being able to make payment accordingly. Then, you may find yourself homeless once the business fails. If you have undergone bankruptcy, you may barely have any asset left that can be used as collateral for the loan.

    3. Take it slowly

      You may need a large sum of money to start a business again. But then, you do not want to overdo it and go for a large amount right away. The practical thing to do is to start with a small amount. Do not request immediately for a six-figure loan if you are still trying to get back on your feet. A smaller loan can be less stressful for you, not to mention the ease in repaying this amount according to the scheduled payment date. Once you have settled the loan payment, you can slowly build your credit and have a better reputation for yourself, which will make you more attractive to financing institutions.

    4. Present your story truthfully and comprehensively

      When you reapply for a loan, you want to provide a comprehensive and truthful explanation behind your bankruptcy issue. As there are various situations that can result to massive financial concerns, you have to be more transparent to the lender and present your case well. Moneylenders in Singapore will generally evaluate your application and consider unforeseen and emergencies that often cause one’s finances to go downhill. These include natural disasters, death in the family, divorce, and health problems. If you have undergone these issues, this does not mean right away that you are simply unwilling to repay your loan.

    5. Know eligibility standards set by the lender

      Every moneylender offers its own eligibility standards. This is why if you are declined the first time, this does not mean that you will always be rejected no matter which financial institution you approach for your needs. Never give up since you will always have an opportunity to rebuild and improve your credit. If you have to, there are experts whom you can consult for professional advice and lending options to help your business.

    Just because you have filed for bankruptcy in the past, this does not mean your business should stop completely. If you still have dreams of managing a business, then by all means make this happen. There is a possibility for you to obtain a loan, as long as you work hard to rebuild your credit rating. It may not happen instantly, and there are some hoops you need to go through, but it is ultimately possible. It all requires some careful research and professional guidance that can lead you towards potential success in your business the second time around.

    The main thing is for you to rebuild your credit, then the rest happens from there. But to make this happen, this involves specific steps that must be made with proper guidance and discipline. Loaning smaller amounts, keeping your personal and business finances separate, and telling the actual reason behind your bankruptcy can help tremendously when you want to rise back from a terrible fall.

    Also, never give up if you are denied once when you apply for a business loan even with a bankruptcy case. The varied eligibility standards set by lenders just prove to show that you may have a chance with other financing institutions, as long as you meet their criteria. You just need to be more resourceful in checking which standards apply to you, so you can boost your chances of an approval. Once you have a chance to start your business the second time, just work hard in it. Although managing a business is a big risk, there are also chances of success that you need to keep in mind. This should empower you and motivate you further to continue working towards that elusive success.