Borrowing After Bankruptcy;
Be Prepared to Finance Your
New Business Venture

After bankruptcy, the bankruptcy will count against you when a financial institution evaluates your new loan application credit worthiness.

Your bankruptcy mark stays on your financial record for 10 years.

Nonetheless, it may not be impossible for you to get a new loan, particularly if you are willing to pay higher interest rates and put up substantial assets as collateral.

Although it is true that loans are often a good option for borrowing money, they are also inflexible, and if you are someone who wants to pay back your loan early then there can be heavy penalties. However, there are some alternatives to loans if you want to borrow money:

Check Your Assets

The Small Business Administration does not make loans directly, but it does guarantee loans for small-business owners through banks or other lending institutions. There is no specific policy that prevents the SBA from guaranteeing loans for companies that have declared bankruptcy.

Check Bank Overdrafts

One of the cheapest ways of borrowing money is through the use of an overdraft, especially if you want to borrow money on a short-term basis. Your bank can agree an amount of excess to the amount you currently have in your account, which you can use but will pay interest on. By authorizing an overdraft you can use this money as a permanent line of credit. Some banks even off interest free overdrafts. However, overdrafts are still not advisable as a long term means of borrowing money, and the amount of credit you can get is often fairly low.

Check Your Mortgage

Mortgages are perhaps the best way to borrow large sums of money over a long period of time. You can add credit to your mortgage by borrowing against the equity in your home and adding that amount to your repayments. The advantages of a mortgage are that the interest rate is low and the payments are spread out so the payments appear small. However, because you are paying back over a long period of time, the interest can still add up, and you will not pay the amount back for a long time.

Check Your Credit Cards

Credit cards are one of the most common alternatives to loans, and can provide you with a good source of extra money when needed. If you can get the level of credit you need and are able to pay off the bill promptly, then you will pay little or no interest. However, the major problem with credit cards is that the interest is usually higher than a loan, and there is a danger of getting too many cards. If you avoid these dangers, then using a credit card as an alternative to loans can work well.

Check Your Friends

If you have a hard time getting a bank to take chance on you, you might consider forming a joint venture or bringing in a partner without a bankruptcy on his or her record.

Check Your Family 

If an unsecured loan, money to be used for intangibles such as advertising, etc., may be hard to get approved. 

You might want to investigate asking family with sufficient net worth to co-sign on the loan.

Deciding if one of these loan alternatives is right for you can be tricky, but to help you decide you should work out what it is you want to borrow money for, how long you want to be paying back the money, and your overall financial situation. If you look at all the options, then you will find the best method of credit for your needs.

It's all about making a fresh start.

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