It isn’t easy to get accepted for a loan after bankruptcy. There was a time when banks would not even consider giving you a loan for a minimum of 10 years after your debts were discharged by bankruptcy court. But nowadays, you may get a loan merely an year after bankruptcy discharge, assuming your financial situation is healthier.

Getting a bank loan after bankruptcy

Financial institutions prepared to offer bankruptcy credit will charge an interest rate that is much higher than what you would have paid before bankruptcy. Other related 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 will do this to cover their risk. You don’t have any choice about this if the bank loan is your only funding option.

Getting a merchant cash advance easier than a bank loan

Merchant cash advance (MCA), also called a business cash advance, is a revolutionary financing option that can help businesses that are getting over the bankruptcy blues. The approval terms for MCA are not as stringent as banks, and though the credit history is reviewed, it is definitely not the main qualification. Providers are ready to finance businesses that have been in existence for for about one year, and bringing in a minimum of $5000 or so every month in credit card sales.

The primary advantages in obtaining an MCA are minimal documentation, processing time of less than a week, and most importantly – no need to pledge a guarantee. MCA providers forward you a lump sum to buy a cut of your future credit card sales. The rates charged for the advance are not very different from the rates charged by banks and there is no stress to meet fixed monthly payments. The monthly payment is calculated as a percentage of sales. It goes up or down with monthly sales and gets sent by the credit card processing company to the advance provider. This does away with the need to send monthly payment checks.

Ensure your credit report is error-free

Even though your previous credit obligations have been discharged by bankruptcy, they can still show in your credit history. There could be some lenders who have not reported discharged debts to credit reporting agencies the way they are supposed to. It is your responsibility to have a look at your credit report with Equifax, Experian and TransUnion and in case of inaccuracies, inform them of the discrepancies and get them corrected. Whereas missed or delayed payments will stick to your credit report for 7 years, bankruptcy will stay for 10 years. You should validate the report frequently to make certain it is accurate with all three credit reporting agencies.

How to rebuild credit?

Get a a secure credit cards, avoid late payments, and not keep a high balance as it lowers your credit rating. Consistently pay all bills on time and your credit will increase over time. This would raise the probability of getting approved for bankruptcy credit.

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