Startups and the Challenges They Face

Small business owners and start-ups often apply for loans to finance the purchase of vehicles, machinery, plants, and more. Banks, credit unions, and finance companies offer different types of financing.

Bad Credit Loans

Individual lenders and peer-to-peer platforms offer plenty of financing options. Online platforms offer business loans through a network of microfinance partners. The interest rates are based on the economic environment, loan term and amount, and other factors. Borrowers benefit from no early prepayment fees and personalized quotes. There are online tools that help customers to calculate the monthly payments. For example, a loan of $15,000 with a 3-year term will cost you $475 in monthly payments. Women also apply for financing in the form of business loans and grants. Microloans are offered through different programs to help non-for-profits and small businesses to expand. The terms of repayment depend on factors such as the planned use or purpose, amount required, and others. Business customers are offered loans such as equipment financing and franchise and start-up loans. business_manBorrowers with high credit scores are offered excellent rates while applicants with poor credit get higher rates. Businesses also apply for government financing in the form of economic development and scientific grants and benefit from low interest rates. Other types of financing include venture capital and equity financing. Small business owners also resort to loans from family and friends as well as equipment and real estate loans. Other options for financing include business lines of credit and equipment sale-lease backs.

Bank Loans and Vendor and Supplier Financing

Supplier and vendor financing and SBA loans are also options. In addition to government programs and grants, there are other types of loans such as supplier and vendor financing. A standard bank loan is another option, but the application process may take several weeks, and applicants with poor credit are often turned down. They also consider the borrower’s payment history, revenues, ownership structure, experience, and other factors. Collateral may be required as well if you apply for a large loan.

Business Plan and Documents Required

Banks require documents such as personal resumes, home and business utility bills, and bank statements for business and personal accounts. Other documents include copies of statements, office leases, and agreements with customers and suppliers. Business licenses and certificates as well as bank statements are also required. Regardless of your credit score, financial institutions also require a solid business plan that includes a cash flow statement, mission statement, marketing strategies, revenue projections, as well as analysis of your competitors, niche, and company’s weaknesses, strengths, and business opportunities.

How to Declare Bankruptcy and Live with It

In Canada, filing personal bankruptcy allows borrowers who are knee deep in debt to get a fresh start by eliminating most of their debts. Once you have filed bankruptcy, wage garnishments and collection calls will stop, and you will be able to plan for your financial future. Given that bankruptcy represents a legal process, legal action against you is not allowed.

How to declare bankruptcy and live with it? The first part pertains to a procedure while the second requires some effort and learning on your part. To declare bankruptcy, debtors basically surrender or assign what they own to a so called trustee in bankruptcy as to have their debts eliminated. In order to be eligible to declare bankruptcy, the debtor should do business or live in the country. The second requirement is that this person is insolvent, meaning that they owe $1,000 or more and are unable to pay back their debts.

An automatic discharge may occur in nine months, which is the minimum timeframe established by the court. The debtor is bankrupt over this period and not longer, but only if they have never been bankrupt in the past and have completed different responsibilities and duties.

While the process is relatively straightforward, how do you live with the consequences of bankruptcy? For one thing, bankruptcy stays on your credit report for a period of several years, and you are unlikely to obtain credit from traditional financial institutions. Moreover, not all debts are erased by filing bankruptcy, meaning that only unsecured debts will be. These include overdrafts, income taxes, personal loans and personal credit cards, and the like. After declaring bankruptcy, the borrower is allowed to keep exempt items, which would include personal items, which are up to a certain value, their automobile, furniture, etc. There are certain non-exempt items, which include certificates of deposit, cash, and other liquid assets that have to be turned over to a trustee, appointed by the court.

While your financial situation is not one to envy, there are a couple of things you can do to put it under control – maintain a job, keep a bank balance, and pay your bills on time. For obvious reasons, you have to pay your bills regularly and on time so that your credit record stays clean post-bankruptcy. Another important condition is to get a job as soon as you can, in case you are unemployed. To that, you have to find a good place for you and your family to live. Having a stable employment and residential history is important because it proves to potential lenders that you are (have become) a reliable person. Finally, it is important that you keep a bank balance. Open and maintain a savings or checking account and keep a positive balance. This will show potential employers and lenders that you are responsible, now that you have a reliable cash flow. After you do all this, you can start rebuilding credit by obtaining a credit card and using it responsibly.





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