Own a business about4 yrs. Need to expand, How can I get a small business loan. I had a bankruptcy 3 yrs ago.?
admin | Mar 30, 2010 | Comments 2
I have had a business for about 4 years and I need to expand it and buy more inventories. I have about $100,000.00 inventory but I can not make a small business loan because I had a personal bankruptcy about 3 years ago. Is there any way that I can make a loan? I do not mind to pay higher interest rate.
Thankfulness in Advance
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Filed Under: Bankruptcy
Rather odd situation you are in, you have been running your business for 4 years and during that time you went bankrupt and the business kept going? I cannot imagine that any bank or institution will lend you money if you can pull an accounting trick like that! Anyway, you need to resolve your bankruptcy situation, then when all your debts in that case are cleared up, you can once again make a loan from a bank. Or use the same accountant that fixed your books the last time and make the loan in the name of the business.
The answer of this question hinges on the circumstances that caused the bankruptcy. If you or a family tree member became ill, or some other family tree tragedy prevented you or your business to perform at top capacity, then that information is calculated in your borrowing character. If you own a home that has equity in it, then you may be able to offset previous defaults using it as collateral and place it in your company’s name – Wachovia does this under thier “Business Equity Line” (BEL) program. BELs can go up to 100% of value of the home, although the rate is usually lower at 80-90 percent values. For example, for favorable tariff, take the amount your home is worth (200k), multiply that by 90% and then subtract the amount you owe on your initially mortgage (100k)
200,000 * .9 – 100,000 = 80,000
80,000 is how much you can borrow in this example.
In order to make an unsecured loan, your credit score generally has to be 700+ and you have to make at smallest amount 5X the line amount in business income OR have at smallest amount 2X the amount of the line in liquidity. For example, to make an unsecured business line of credit (BLOC) for 50k, you need to make 250k in business income or have 100k in cash, cds, or money market accounts. If your credit score is over 700, you may not have to document your income with some institutions. If you do have to document your sources of income (credit scores under 700), then the standard requirements are:
2 years personal and business tariff income with W-2s and all schedules
Bankruptcy ID
Insurance declarations page (if collateral is used)
Bankruptcies are temporary; business relationships with your banker can last a lot longer. Talk to yours.
Frank
Financial Specialist
813-681-2866
Tampa, FL