Can I Get a Business Loan after Filing for Bankruptcy?

If you’re a business owner who’s declared bankruptcy, you still have a chance at a business loan—but you’ll definitely have to work harder for it.

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For small-business owners facing overwhelming debt, declaring bankruptcy can be the best way to pave a path forward. Yet it can also make it difficult to get a small business loan, which is often essential to facilitating growth. Fortunately, all is not lost. Check out our guide to learn how to get a business loan after filing for bankruptcy.

Table of contents

What is bankruptcy?

Bankruptcy is a legal process that allows small-business owners to eliminate their debts (or set up a repayment plan) when they’re overwhelmed by their finances. Some business owners file for bankruptcy in order to quickly shut down a company or to keep a business operating in the face of mounting debt.

How does bankruptcy affect business credit?

Bankruptcy remains on a business credit report for up to ten years and typically causes a business credit score to drop dramatically. This sudden and significant drop makes it difficult to get approved for small-business loans and unsecured credit cards.

Is it possible to get a business loan after filing for bankruptcy?

Though the outlook may seem glum for a small-business owner who has filed for bankruptcy, we’re here to offer some hope. It is possible to get a business loan after filing for bankruptcy. However, it definitely takes some extra work.

How to obtain a business loan after bankruptcy

Small-business owners who’ve declared bankruptcy still have a chance at qualifying for a business loan. Here are six key steps to increase the chances of getting approved.

1. Wait for bankruptcy to be discharged.

It’s best to wait for your bankruptcy case to be discharged before shopping around for a business loan. Check your credit report to make sure the discharge is official—after this point, you’ll have a better chance of qualifying for a loan. It’s also important to note that bankruptcy stays on your credit report for ten years. The longer it’s been since you filed for bankruptcy, the better your chances of getting a business loan.

2. Avoid debt

Lenders want to see that you’re financially stable, meaning it’s crucial to keep debt to a minimum after you’ve filed for bankruptcy. Apply for a secured credit card if you’re not eligible for an unsecured card. Then pay off debt in a timely manner to rebuild your credit score and show lenders that you’re not a risk.

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3. Shop around

Because you’ve filed for bankruptcy, you can’t expect to qualify for the average business loan. You’ll need to shop around, learning about alternative lenders that may be more lenient on their small business loan requirements.

4. Write a business plan

A business plan is key to the success of any small business—and even more so when you’ve filed for bankruptcy. Take time to outline your financial state, business goals, and operational plans to show that you will be able to repay your loan.

5. Explain your bankruptcy

Naturally, lenders will want to know why you’ve filed for bankruptcy. So beat them to the punch by writing a bankruptcy statement, which gives an honest, brief explanation of what led to the bankruptcy.

6. Find a co-signer (if necessary)

From the perspective of a lender, a cosigner with good credit greatly reduces the risk of lending to someone who has filed for bankruptcy. Keep in mind, though: a co-signer must be prepared to assume liability for any debts you aren’t able to pay.

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The takeaway

Small-business owners who have filed for bankruptcy should take heart. It’s still possible to get a business loan—but it will require some added steps. By keeping debt down, shopping around for a more lenient lender, and finding a cosigner, bankrupt businesses can still get access to the capital they need to thrive.

Would you like to learn more about small business loans and bankruptcy? Check out Best Small-Business Loans with No Credit Check 2022 on

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Want more options? Fund your business with a personal loan.

Business loans after bankruptcy FAQ

Can someone with a bankruptcy get an SBA loan?

It is possible to get a small business loan after filing for bankruptcy—but that doesn’t mean it’s easy. Bankrupt business owners will likely need to shop around for a loan, be prepared to explain the cause of bankruptcy, and show that their finances are in good standing before qualifying for a loan.

Here are other strategies that help business owners obtain an SBA loan after bankruptcy:

  • Keep debt down.
  • Get a secured credit card.
  • Pay bills in a timely manner.
  • Present a detailed business plan.
  • Show consistency of income.
  • Get a cosigner.

Can you start a business after filing for bankruptcy?

Yes, you can start a business after filing for bankruptcy. However, it will probably be more difficult to qualify for a small business loan under these circumstances. If you’ve recently closed a similar type of business, it may also create obstacles in setting up a new business.

The best way to increase the chances of qualifying for an SBA loan is to create a comprehensive business plan, keep debt down, explain the cause of bankruptcy, and get a cosigner.

How hard is it to get a loan after bankruptcy?

It is often difficult to get a loan after bankruptcy—but it isn’t impossible. Business owners seeking a loan after bankruptcy will probably need to shop around for a lender, be prepared to explain the reason for the bankruptcy, and demonstrate financial stability.


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Brooke Kunz
Written by
Brooke Kunz
Brooke is a copywriter and artisan ice cream enthusiast dwelling in California's sunny Central Valley. She's happiest when hiking in the backcountry, baking an overly complex cake recipe, or reading an engrossing new memoir.
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