Tops Tips To Acquire Business Financing After Bankruptcy Discharge

It is difficult to get accepted for a loan after bankruptcy. There was a time when banks would refuse to give you a loan for at least 10 years after a bankruptcy discharge. Nowadays however, you could possibly get a loan merely one year after bankruptcy discharge, as long as your financial situation has improved.

Getting a bank loan after bankruptcy

Banks or lenders likely to offer bankruptcy credit will charge an interest rate that is far more than what you would have paid before bankruptcy. Accompanying expenses are also greater than the normal rate. You are also expected to furnish a co-signer as security and also pledge a collateral. Banks would want this so that they may reduce their risk. You don’t have any choice regarding this if the bank is your only hope for financing.

Getting a merchant cash advance easier than a bank loan

Merchant cash advance (MCA), also called a business cash advance, is a fairly recent and popular financing choice that has helped many businesses in recovering from the bankruptcy blues. The qualifying criteria for MCA are not as stringent as banks, and even though the credit history is reviewed, it is not the chief requirement. Providers look for companies that have been in existence for for at least 9-12 months, and pulling in a at least $5000 or so every month in credit card sales.

The main plus points in taking on MCA are limited documentation, processing time of less than a week, and the biggest benefit of all – no collateral is needed. MCA providers forward you a lump sum in exchange for a percentage of your future credit card sales. The interest rates are not very different from the rates imposed by banks and relieves the business owner from the stress of making fixed monthly payments. The monthly payment is a prefixed fraction of sales. It fluctuates with monthly sales and gets transferred by the credit card processing company to the advance provider. This does away with the need to send checks on due dates every month.

Ensure your credit report is error-free

Even though your past credit liabilities have been discharged by bankruptcy, they may still show in your credit history. There could be some lenders who have not reported discharged debts to credit reporting agencies as they should. You must have a look at your credit report with Equifax, Experian and TransUnion and if inaccurate, inform them of the discrepancies and get them fixed. While missed or delayed payments will remain on your credit report for 7 years, bankruptcy will remain for 10 years. You must verify the report regularly to ensure it is accurate with all three credit reporting agencies.

How to rebuild credit?

The first thing you can do is to get a secure credit cards, pay bills on time, and not keep a high balance as it haves a negative impact on your credit rating. Consistently make timely payments on bills and your credit will get a boost over time. This would boost the probability of qualifying for bankruptcy credit.

After you have rebuilt your credit and cleansed any problems from your credit history, you can apply for the most appropriate funding option for your business. If you need funds immediately then a merchant cash advance could be a good choice.

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