Can I Get A Business Loan After Bankruptcy?

author-img By Mashum Mollah 5 Mins Read 11 September 2023

Business Loan

It is a question that keeps on lingering around the small business owners and aspiring entrepreneurs. When you are starting to venture into a new field, you need money. But can you get a loan after bankruptcy?

Well, there are ways in which you can start a new life with a new loan. Realistically speaking, to make this idea come true, you have to put your heart and soul into practically applicable strategies. The whole process will take some time, but if you are willing to invest your time into it, slowly but eventually, you will come out of the crisis.

A bankruptcy is like a red mark for your banking history. It might stay on the timeline for 10 years in the case of chapter 7 and 7 years in the case of chapter 13. And also, expect that your credit score will take severe damage.

Nevertheless, even after facing these circumstances, there are other ways that might help you improve the chances of a loan after bankruptcy.

How Do I Get A Business Loan After Bankruptcy?

Getting a business loan right after being bankrupt following chapters 7 or 13 can be very tricky. However, if you can follow these steps, you can remove that red mark.

Get A Secured Credit Card

Secured credit cards can be the very first step you take to build your lost credit score. Secured cards use cash as collateral. This is why they are called “Secured.” Well, this might not be an ideal method for credit cards, but it sure helps to boost your credit score.

Pay Your Utility Bills On Time

Nobody can overstate the importance of paying the utility bills on time. It has a direct influence on your credit score. If you can do this, it will act as your attorney and convince the lender that you are capable enough to manage all your finances. If your lender can trust that you will give them their money back on time, they will happily provide you with a loan.

Consider Alternative Options

When your business is in its last steps, and you have completely gone bankrupt, it is very hard to get a loan after bankruptcy. However, that does not mean that there are no other options. The banks and federal regulators might have tied their hands from giving your loans. However, if you are willing to take help from an alternative lender, you can always ask for a loan from third parties with a high-interest rate. Though this method might be risky, at least it is giving you an option to come out of the life of bankruptcy.

Get A Cosigner

Some lenders are willing to provide you a loan after bankruptcy only if you have a guarantor or a consigner. This method might help you get the loan, but it comes with its fair share of risks. If you fail to pay your loan on time, then the guarantor or the cosigner will be held responsible.

Present A Business Plan

Some experts believe that having a business plan will boost your credit score and directly help you with the loan after bankruptcy. There is always a chance that the business you have come up with will not be related to your previous bankruptcy event. This might make a difference in your success.

Avoid Reaffirmation Agreements

You may volunteer to pay back creditors part of the contract, a Reaffirmation agreement. However, according to some experts, this might be the last thing you should be doing. Bankruptcy can come anytime, and once you are bankrupt, there is nothing left with you to pay back. So avoid reaffirmation agreement. Yes, you can always give them when you have the money, but don’t have a contract for that.

Keep Your Credit Debt Low

Keep your credit debt as low as possible. This way, you will convince the lenders that you are not expending more than you could ever give back. Also, you need to know that your credit score also affects your business loans.

The Bottom Line

Although bankruptcy might affect your credit score, that does not mean that you do not have any other option. If you are wary enough and follow the things we have mentioned above, you will get a loan after bankruptcy.

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Mashum Mollah

Mashum Mollah is an entrepreneur, founder and CEO at Viacon, a digital marketing agency that drive visibility, engagement, and proven results. He blogs at

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