factoring and bankruptcyWhen business owners are seeking new sources of working capital, they may not have perfect credit histories, either in their personal accounts or business accounts. When a businessperson has a bankruptcy on record, he or she may have few resources as traditional lenders may reject their applications for a loan or line of credit.

As some company owners reorganize their finances and seek new funds, their most immediate cash needs can sometimes be addressed by a good factoring company. When these owners who are coming out of bankruptcy consider working with a factoring company to speed up their cash flow, they often ask if their companies will qualify for factoring. The good news is that bankruptcy accounts receivable lending is available for people who are currently in Chapter 11 or Chapter 9 bankruptcy proceedings or have previously had to declare bankruptcy.

Bankruptcy accounts receivable

There are different schools of thought about how an individual’s credit situation affects factoring qualification. It is reasonable to expect certain “surprises” when performing due diligence and background investigation on potential factoring clients. As many are entrepreneurs, it is not uncommon to find bankruptcies stemming from past business closures. A  bankruptcy business loan offers new hope for business people in this situation.

Traditional financing like bank loans call for you to have superior credit, without recent bankruptcies. Invoice factoring is an alternate, debt-free source of financing through bankruptcy accounts receivable programs.  You don’t need to go to last-resort, high-interest online lenders or disreputable loan companies.

Bankruptcy business loan

factoring and bankruptcyGenerally speaking, a bankruptcy should disqualify a factoring candidate. However, the circumstances that gave rise to financial problems are often important to consider. For example, many factoring companies will disregard a bankruptcy caused by an un-insured or under-insured applicant’s inability to pay high bills to a medical care provider. Past business bankruptcies may result from a myriad of sources, including poor business practices and judgment, over-reliance on debt, poor sales, mismanagement, and a host of other causes. A factoring company can work with financially troubled companies to offer them a business loan after bankruptcy.

The critical variables in working with bankruptcies include whether or not a court decides to hold your invoices as assets for your creditors to claim. You may have delinquent taxes to pay or court judgments to settle before you will regain eligibility for factoring. If your case in open in the court system, you may need to wait until the bankruptcy has been discharged or the case has been closed.  Your factoring specialists will be able to work with you on these situations.

Business loan after bankruptcy

At Interstate Capital, one of North America’s leading invoice factoring companies since 1993, an applicant for factoring is not necessarily disqualified because that person has filed for bankruptcy protection in the past. A bankruptcy filing does not, in our view, equate to future business failure. When our clients submit invoices from creditworthy customers, all our teams, from account managers to collections professionals, work hard to support our clients and get those invoices paid. When we purchase viable invoices and do our part, we know we can expect to be paid by our clients’ customers.

Working with Interstate Capital opens the doors to business success. Even if you are in a position of high debt and limited assets, you could still be able to improve your cash flow in spite of bankruptcy. You can use your advances to keep operating and get your business on a solid foundation. Factoring is not a loan, so you will not be accruing more debt.

Any debtor-in-possession financing will typically be reviewed in bankruptcy courts. Under the U.S. Bankruptcy Code’s Chapter 11, you can re-organize your company and repay your debts while you’re under this protection. Having financing from a strong invoice factoring company will get you on the road to business stability. Factoring your invoices is a flexible, tried-and-true avenue to gain working capital fast.

If your business has faced bankruptcy, you still have funding options to revitalize your company. When you’re ready to explore financial options with a top factoring company, contact the professionals at Interstate Capital. Click here for a no-obligation factoring rate quote.

About Interstate Capital

The Interstate Capital Group of Companies operates businesses in the factoring, freight brokerage, freight matching, and payable discounting industries.