Filing a bankruptcy is never easy. It is an unpleasant process with several consequences. If you have an open or past bankruptcy and you wish to obtain business loans in Los Angeles, then there are things you must consider.
It is vital to remember that when you file for bankruptcy, you can no longer obtain SBA financing or conventional bank loan. Despite that, there are still several funding options for you after filing for bankruptcy.
Accounts Receivable financing is a common option for a business that has filed for bankruptcy. It is a type of business loan that uses accounts receivable of the company as collateral for a line of credit. Your business can use it for operating your business and helping with the cash flow.
Asset Based Loan
It is one of the business loans in Los Angeles. In here, it uses the company’s assets as collateral for funding. This type of financing may use accounts receivable and commercial real estate. The terms could be from one year to three years. And you can borrow up to $2M.
This one has a rate between 0.5 to 2.5%. It is a type of asset-based business loan. It is similar to the AR line of credit. In factoring, a factoring company will buy the AR.
The funder will send you the majority of the invoice’s value. It will only release the remaining amount if you have paid your invoice. The term could be up to 10 years.
How Long to Wait Before Obtaining a Business Loan
The record of bankruptcies will stay on your credit report. It remains there for up to seven years. But it does not mean that you cannot get a loan a year after bankruptcy has been wiped out.
However, the longer you wait, the more likely you can get a loan. There are several lenders who can still work with applicants with bankruptcy in their records. But they require high-interest rates.
If your business bankruptcy prevents you from getting a loan, then you must start rebuilding your credit. One of the strategies that you can do to rebuild your credit is to use your own assets to function as collateral.
You will have better chances of getting a business loan if you have assets that you can use as collateral. Loan collateral lowers your risk and lenders are highly likely to approve your application for a business loan.
Then again, you must separate your business and personal credit. Do not use your house as collateral just to get a business loan only to realize that you do not have a place to live if your business failed.
When finding the best business loans in Los Angeles during and after bankruptcy, it is important to remember that each lender has rules for eligibility. But it does not mean that you cannot have a loan. If you wish to know more about your options when you are in this situation, please contact their business loan experts at ABO Capital. Give them a call at (888) 801-5401.