Lending to formerly bankrupt entrepreneurs

Description

Abstract: An entrepreneur’s bankruptcy may overshadow years, or even decades, of prudent financial behavior. When does it make sense to lend to a formerly bankrupt individual or business? This article offers some guidance on how to determine whether the entrepreneur is a good risk, including the importance of broadening the investigation to gain an appreciation of the entrepreneur’s track record both pre- and post-bankruptcy. The article notes that, even if a lender decides not to approve a loan, the entrepreneur’s circumstances, as well as the bank’s loan guidelines, might change and allow for an approval at some point in the future. A sidebar notes the different types of bankruptcy protections.