Multiple reasons are there to push a small business to go out of the venture. The vivid memory of COVID-19 is still fresh in our memory, and during that phase, many companies ran out of time and, therefore, needed to shut the store.
One of the core needs of a business is the infusion of capital and that can make or break a business. However, when a company gets shut down, it needs to go through multiple phases of litigation, and therefore, the entity is dismantled, and all the accounts of the business need to be closed. To get a business loan, the promoters can get help from the One Andro DSA app, and there, they can get the help of an agent to get a loan from the stringent criteria.
In this blog, we will learn about the process involved in bankruptcy and how a company can plan for a turnaround strategy to ensure that they get financial assistance to restart the venture.
What is Bankruptcy and How It’s Filed
In India, a business can file for bankruptcy as it’s a legal process that helps a business to dissolve. A company can file for bankruptcy, and therefore it needs to find ways to repay the debts which is due to the lenders.
In India, a company can make financial restructuring through the Insolvency and Bankruptcy Code of 2016. Through that, one can make a debt relief program through which a company can resolve the older debts of the lenders and can bring a positive outcome for the companies.
Steps to Build a Positive Credit History After Bankruptcy
A company that wants to revive the business credit needs to follow certain suit so that they can ensure that the company can again be revived after the recent setback. A business that wants to revive itself can ensure that it maintains certain protocols to regain the trust of the lenders.
Keeping Secured Credit Cards
The first thing the company can do is to ensure that it again has the chance to build the credit score from where it has fallen. The first thing a person can do is to set the credit line by depositing cash for the credit limit. It will secure the credit card limit of the individual.
From that, a person or the company can get the chance to again build back their credit score by developing healthy financial habits. It will again help the organization or the promoters of it have the flexibility of credit which the group used to have earlier.
Paying Out the Bills on Time
The next aspect is to develop a stringent financial habit, and through that, one can secure the payment option for the company. Here, after the bankruptcy, the firm must pay the bill on time and choose to pay whenever it’s necessary. It’s a check on behalf of the lenders to find whether the promoter group or the company has become serious on this matter or not.
Finding Other Lending Alternatives
The role of the alternatives is that it helps a person to get loans or funding from alternative sources. Different institutions, such as private equity or VC firms, can again reinstate the lending alternatives as it allows the brand to raise capital from these institutions further.
These firms help a company to take asset-based loans through which a firm that has filed for bankruptcy can get a loan based on the assets the company previously had. Even one can find lending options from the potential partners of the business who want to create a turnover story out of the business.
Keeping Cosigners for a Loan
The next thing that the promoter of the business can do is to keep a cosigner of the loan, and through that, one can get the benefit of the loan. In this process, one can find the right loan amount with the help of a cosigner.
A cosigner allows a promoter to get a loan on their behalf. Here, both parties can look at the One Andro app, which can help the promoters keep the loans and rebuild their business or start a new venture.
These are some of the core aspects through which one can increase the credit score of their business by practicing good credit habits even after bankruptcy.