How to get business financing after bankruptcy

How To Get Business Financing After Bankruptcy

by Weave Asia

Bankruptcy is a very difficult process for business owners. It not only marks a financial crisis but also serves as a harsh reminder that your business has failed. But, every failure is a chance to get back up, try again, and become wiser and better.

In this blog, we’ll delve into how to get business financing after bankruptcy and other related aspects you should know. You can jump to specific sections by clicking the content list below. Let’s dive in!

How to Get Business Financing After Bankruptcy?

  1. Assess Your Financial Situation

The first step to get business financing is by assessing your financial situation. Take a good look at why you went bankrupt and figure out where your financials stand now. This means reviewing all your debts, expenses, and sources of income. Look for areas where you can improve. For example, cutting unnecessary costs or finding new ways to increase your income.

Make a plan to show lenders you’re trustworthy. This could include paying off small debts first, creating a budget to manage your money better, and showing that you’re taking steps to avoid the same mistakes in the future. By understanding your financial situation and having a solid plan, you’ll be in a better position to get financing.


  1. Create a Detailed Business Plan

Make a thorough plan for your business. It must cover everything. From your goals and how you’ll achieve them to who your customers are and how much money you expect to make.

Start by writing down your business goals. What are your short-term and long-term goals? Explain the steps you’ll take to reach these goals. For example, marketing strategies, product development, and sales tactics. Describe your target customers. Including who they are, what they like, and why they would choose your business over others.

Include detailed financial projections too. It must show your expected income, costs, and profits over the next few years. Support them with research or data. Outline any potential challenges your business might face and how you plan to overcome them.

This shows lenders you’ve thought through everything and are prepared for the future. A well-thought-out business plan helps build trust and confidence with lenders. Hence making it easier to secure business financing.


  1. Improve Your Credit Score

Focus on improving both your personal and business credit scores. This means making sure you pay your bills on time. Like rent, utilities, and loan payments. Try to pay off any debts you have as much as you can. When lenders see that you pay your bills on time and don’t have too much debt, they’re more likely to trust you with their money.

Check your credit report often. This makes sure there are no mistakes or errors that could be dragging your score down. Report them with the credit bureau if you find any. A higher credit score makes it easier to get financing. This is because it shows lenders that you’re responsible with money and are more likely to pay back any loans they give you.

So, by improving your credit score, you increase your chances of getting the funding you need to grow your business.


  1. Explore Different Financing Options

Look into all the different ways you could get money for your business. Such as, loans from banks, borrowing from alternative lenders, government programs, crowdfunding, or peer-to-peer lending platforms. Compare their terms and rates to see what works best for you.

Different financing options


  1. Prepare Collateral or Guarantees

Some lenders might ask for something valuable. For example, personal or business assets, to secure the loan. This means they want to have a backup plan in case you can’t pay back the money you borrowed. It could be something like your house, car, or equipment you own for your business.

By offering collateral, you’re giving the lender assurance that they won’t lose out if you default on the loan.

If you don’t have enough valuable assets to offer as collateral, you can ask someone with good credit to guarantee the loan for you. This person will help you pay the loan if you can’t. It could be a family member, friend, or business partner who trusts you and believes in your ability to repay the loan.

Having a guarantor can reassure lenders and increase your chances of getting approved for financing, even if you don’t have enough collateral on your own.


  1. Build Relationships with Lenders

To improve your chances of getting business financing, focus on building good relationships with lenders. Show them you’re serious about getting your business back on track.

Communicate with them often. Be transparent about your financial situation. Open accounts with them and keep them updated on your business progress.

This demonstrates your commitment and responsibility. Making lenders more willing to work with you and offer better loan terms. Like nurturing a friendship, investing time in building relationships with lenders can benefit your business in the long run.


  1. Demonstrate Business Stability

Prove to lenders that your business is stable now. Show that you’re making a steady income, earning more money than you’re spending, and managing your cash flow wisely. Explain how you’ve learned from any past mistakes and made changes to prevent similar problems in the future.

This could include implementing better financial management practices, diversifying your revenue streams, or improving customer service. By demonstrating your business stability, you reassure lenders that you’re a reliable borrower who can be trusted to repay any loans.

Professional advice


  1. Seek Professional Advice

Don’t be afraid to ask for help from financial experts. Such as from advisors, consultants, or mentors. They can give you advice on how to rebuild your business and guide you through the process of getting financing.


  1. Be Transparent and Honest

When dealing with lenders, it’s crucial to be open about your bankruptcy and how you’ve bounced back from it. Being transparent means sharing all the details about your financial past. Even the tough ones.

This honesty demonstrates that you’re trustworthy and reliable. It can instil confidence in lenders about your ability to handle future financial responsibilities. By laying everything out on the table, you pave the way for a more positive and trusting relationship with lenders. Thus increasing your chances of securing the business financing you need.


  1. Stay Persistent and Patient

Getting financing after bankruptcy can take time. So, don’t give up if things don’t work out right away. Keep trying different options and stay focused on your goal of getting your business back on track.


Where Can You Get Business Financing After Bankruptcy in Singapore?

  1. Banks and Financial Institutions

Banks like DBS, OCBC, or UOB offer loans and lines of credit specifically designed for businesses. You can visit a local branch or apply online for funding.


  1. Government Programs

The Singapore government offers programs to help small businesses. Such as the Enterprise Financing Scheme (EFS) by Enterprise Singapore. They provide loans with lower interest rates and other financial support.


  1. Venture Capitalists and Angel Investors

These are people or firms that invest money in businesses in exchange for a share of ownership. They are interested in businesses with significant growth potential, like startups, and can provide substantial upfront capital. Notable firms in Singapore include Vertex Ventures and Golden Gate Ventures.


  1. Private Equity Firms

Similar to venture capitalists, private equity firms invest in businesses. But, they usually focus on more established companies. They might help with expansion or acquisitions. Examples include firms like TPG Capital and KKR in Singapore.


  1. Crowdfunding Platforms

Websites like FundedHere, MoolahSense, or OurCrowd let you raise money from many people online. It’s a way to get funding for your business idea or project by asking for small contributions from numerous individuals.


  1. Trade Credit and Supplier Financing

Some suppliers allow you to buy goods now and pay for them later. Hence helping with your cash flow. It’s like getting a loan from the supplier to buy their products or services.


  1. Factoring and Invoice Financing

Factoring companies purchase your unpaid invoices at a reduced rate. Hence giving you cash upfront. Invoice financing lets you borrow money using your unpaid invoices as collateral. This can help if you need funds quickly. Companies like Capital Springboard offer these services in Singapore.


  1. Microfinance Institutions

These organisations give small loans to businesses. Especially in areas where traditional banks might not lend money. They often focus on helping entrepreneurs in developing countries or underserved communities.


  1. Peer-to-Peer (P2P) Lending

P2P lending platforms give you direct connection with individual lenders. They often offer more flexible terms than banks. In Singapore, platforms like Funding Societies and MoolahSense are popular options for P2P lending.


  1. Family and Friends

You might turn to your family or friends for financial help. They might be willing to lend you money or invest in your business. But it’s important to set clear terms to avoid misunderstandings.

Man using calculator


What is Bankruptcy?

In Singapore, bankruptcy is a legal procedure used when individuals or businesses can’t repay their debts. When declared bankrupt, their assets are managed by a trustee appointed by the court. They will sell off assets to repay creditors.

Bankrupt individuals face restrictions on various activities. Including travel and borrowing. They may also need to make regular payments to their trustee, known as “contributions”, to distribute to creditors. This process lasts three to five years. During this period of time, they will monitor the bankrupt party’s financial affairs.

Bankruptcy can be initiated voluntarily by the debtor or forced by creditors through a court order. Certain assets may be exempt from liquidation. Such as essential personal items. Bankruptcy provides a mechanism for debt resolution and financial rehabilitation.

Even so, it carries significant consequences. This includes damage to credit ratings and restrictions on certain rights and privileges. As such, individuals or businesses facing financial difficulties should consider their options. Seek professional advice before proceeding with bankruptcy.

Types of Business Bankruptcy in Singapore

  1. Voluntary Bankruptcy

This occurs when an individual or business voluntarily petitions the court to declare them bankrupt. Usually, this is because they are unable to repay their debts. The debtor initiates the process by submitting a bankruptcy application to the Official Assignee (OA) or the High Court. 

Once declared bankrupt, their assets are managed by a trustee appointed by the court. They must also adhere to bankruptcy restrictions and obligations.


  1. Involuntary Bankruptcy

Involuntary bankruptcy happens when creditors apply to the court to declare an individual or business bankrupt. This happens due to unpaid debts. Creditors must demonstrate that the debtor owes them a certain amount of money and has failed to make payments despite receiving statutory demands.

If the court grants the bankruptcy order, the debtor’s assets are similarly managed by a trustee, and they must follow bankruptcy regulations.

Girl using calculator


The Effects of Bankruptcy in Singapore

Listed below are some of the effects of bankruptcy:

  1. Asset Seizure and Management

Upon declaring bankruptcy, your assets are placed under the control of a trustee. The trustee is appointed by the court. The trustee’s role is to sell off these assets to repay creditors as much as possible. Certain assets may be exempt from seizure. They include essential personal items and tools of trade up to a specified value.


  1. Restrictions on Activities

You will face various restrictions on your activities. These may include limitations on travel outside of Singapore without permission from the court, restrictions on borrowing money without informing lenders of your bankruptcy status, and prohibitions on managing or operating a business without permission.


  1. Financial Contributions

You may be required to make regular financial contributions to your trustee. These contributions are used to repay creditors in accordance with the bankruptcy order. Failure to make these contributions may result in further legal consequences.


  1. Credit Rating Impact

Bankruptcy can have a significant impact on your credit rating. A bankruptcy record will be reflected in your credit reports for several years. Thus making it challenging to obtain credit or loans in the future. This can affect various aspects of financial life. Including renting a home, getting a loan, or applying for a credit card.


  1. Professional and Personal Repercussions

Bankruptcy may have professional and personal repercussions. Such as limitations on career advancement or employment opportunities, difficulty obtaining insurance, and social stigma associated with financial failure.



Hence, to get business financing, you must follow a few important steps as explained above. The process can be long and challenging, but persistence can get you through anything. Various channels are available to help you obtain the financing needed to reconstruct and relaunch your business.

For more useful tips and insights into the business and entrepreneurial world, check out our website.

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