starting a business after BK?

[JayJay]

Hi, I haven't filed yet but was wondering who here has successfully started a business, on credit of course, LLC or sole proprietorship, after a BK?

Basically, I want to start a small business network consulting business or maybe open a small brick & mortar for computer repairs / training.

Just worried about how much harder it would be for a business entity to get credit..

[rickisbroke]

I came here looking for an answer to the same question today! If anybody has been through this, please let us know. I'm afraid of getting in too much debt ever again, but need to borrow some for my business idea, too. I would rather not have to wait 7 years.
And I know...save, save, save...but with my luck, even if I think I have all of my ducks in a row, there will be some unforseeable expenses that I will need to take care of immediately to get the ball rolling.

[Flamingo]

Anything after filing BK is a guessing game when it comes to credit. There are some folks who are able to obtain credit with no problem whatsoever at great rates and then there are those folks who just keep getting rejection after rejection. One thing for certain, that BK, if a Chapter 7, is on your credit reports for 10 years and it all depends how that is all viewed by whoever you are applying to for credit. It may be also how you sell yourself and your ambition to get a business going that could give you an edge; however, as we all know, this economy is in the bowels of hell and anyone trying to start a business right now may not get credit even with an excellent credit record and if they do get started, there is no guarantee it will succeed because everyone has zipped up the wallet and just not buying. You may want to wait until things start to improve economy-wise, which is expected sometime late next year into 2010, but we all know how those projections go....

[PoorGrammyinBK7]

Anything after filing BK is a guessing game when it comes to credit. There are some folks who are able to obtain credit with no problem whatsoever at great rates and then there are those folks who just keep getting rejection after rejection. One thing for certain, that BK, if a Chapter 7, is on your credit reports for 10 years and it all depends how that is all viewed by whoever you are applying to for credit. It may be also how you sell yourself and your ambition to get a business going that could give you an edge; however, as we all know, this economy is in the bowels of hell and anyone trying to start a business right now may not get credit even with an excellent credit record and if they do get started, there is no guarantee it will succeed because everyone has zipped up the wallet and just not buying. You may want to wait until things start to improve economy-wise, which is expected sometime late next year into 2010, but we all know how those projections go....

I would add to that - even established businesses can't get credit right now (of course maybe its partly because of the huge amounts they are asking for).

I would also say, please take your time and do your research well before starting ANY business, especially in this economy. Be careful not to get too caught up in the "romance" of the business idea as a lot of people do when they want to start a new business. Figure the worst case scenario - not just the best. And have a well-thought out, detailed business plan.

I am all for small businesses and sometimes if you can't find a job, you have to "create" one for yourself! Just be careful - and good luck!

[HHM]

I recently spoke to a business broker...the broker is about to go bankrupt because no bank is lending for business purchases or financing. The banks are simply not going to take the risk in this economy.

Also, no offense, I have to question your judgment about your intention to start a business solely using credit. This forum and others are littered with individuals who started a business that way and here they are filing BK. The number one cause of failure of a business is under capitalization...and I don't mean simply lack of money, but also a bad balance sheet (i.e. liabilities exceed assets).

[rickisbroke]

Thanks for all of the input.
I am just hoping for sooner, like the next couple years, than later, 7-10 years from now.
I want to raise as much money as I can before starting anything. The last thing I want to do is have to file BK ever again. I want to be successful, have a good life, and not be stressed about money.

[fltoo]

Also, brick and mortar is so darn risky these days. Too many factors involved.

I do not agree with HHM on under cap being number one reason for failure. I think it is having NO business plan.

A good business plan will tell you up front if you should even be opening up the business.

I plan to start another business but I have a seed capitalist in place. I agree with others that a small business loan or bank loan is going to be almost impossible to get over the next few years.

Grammy is right when she says that even established businesses are having a hard time. Friend of mine owns a hardware store, been in the family business for 40 years. The minute the economy went bust, he withdrew his entire credit line and put it in the bank to insure that he could purchase inventory. He always borrowed and paid back every month, but he was afraid they would cut his line.

[hindsight2020]

This might be too late to reply to this thread, but yeah the economy stinks, and it's worse today than when you started this thread. But, I survived BK and was able to get my business financed. It takes alot of work and alot of letter-writing (explaining business plan, advertising, BK info, all that). Once you answer that question on the loan application it's like they move into a different mode. BUT, it is out there. Here's what I'd try.

Get an SBA broker. These kind of loans are a PITA, trust me. All those narratives I wrote, yikes. But they did it. The thing about SBA is they will pair you up with someone in the SBDC (Small Business Development Center) at a local community college, at least they did this with me. That contact will meet with you and really help you alot. You'll make a business and marketing plan, Cash Flow projection worksheets, etc. Those documents aren't that hard to write or understand once you get into them. Yes they will help you present your case for a loan, but way more importantly they will cause you to research your proposed business and understand where your money is coming from and where it's gonna go.

It's simple to think "oh, I'll need 200 a week in transportation, 200 a week in supplies, 100 a month for the business cellphone, etc, etc. and then I think I'll bring in 10k a month, so that leaves me like 9500 a month. I can live on that!"

Owning a business and operating a business is a tough thing to do, in all honesty. But it's fun too. You just have to get the right idea and really hammer it out.

Other than SBA, I hear that credit unions are still lending, but I don't know for sure. If you have a credit union that's convenient, I'd open an account. usually only takes $5 to open an account. If it's possible, just move your accounts over there and start getting a reputation at the local branch. That will help alot.

Hope that helps!