Your personal credit history determines whether you qualify for a personal loan. Your personal credit history will also affect whether you qualify for a business loan.
Potential lenders will be most concerned about: (a) late payments, (b) missed payments, and (c) previously filed bankruptcies made during the past 7 to 10 years. While the occasional late payment will not concern most lenders, regularly missed payments and bankruptcies must be explained. If a life threatening illness is what led to the filing of a bankruptcy petition, most lenders will not hold this against you.
These types of circumstances are best explained in a letter accompanying your loan request. The letter should not only explain what occurred, but also the steps you have taken to assure it will not occur again.
Although, banks generally will not grant a conventional loan or SBA guaranteed loan to applicants with a bankruptcy in the past 3 years, that does not mean you should forgo applying for a loan. Banks are your best financing source, but there are alternatives, including revolving-loan-fund programs and micro-loan programs available through certified development companies. Some of these programs, however, require you to have been turned down by a bank first before you can apply.
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