Trina asked:

I am a managing partner in the start-up phase of an Internet Radio Station. Due to circumstances beyond my control, I had to declare bankruptcy in January of this year. It turns out that once my case was presented to those I owed to, they are now looking to cancel all debt against me. This will come into effect when I come out of my 1-year grace period in December. My question is how or will this effect my chances of qualifying for business loan(s)? This station has so much potential – it's not something I wish to give up on – any suggestions?

Julie King answered:

"Having declared bankruptcy will likely create problems for you when you go to a bank for financing. However, that does not mean that you will never successfully secure financing; there are other financing channels that you can look into. Here are some of the capital sources that you can investigate:

• Funders of "last resort": these are funds established for people who cannot get a traditional bank loan, and often these funders insist that you have been turned down by a bank. Going to one of these funders does not guarantee you will get a loan, but for anyone who is having difficulties securing financing, this is a route where you are more likely to achieve success. We would need to know where you are located to point you towards specific funds, but a good starting place is the Calmeadow Foundation. You will find their website at: http://www.calmeadow.com/. Another option is to find the Community Futures office in your area to find out if they have a community loan fund in place.

• Angel investors: these are private investors, often people who have successfully run their own company, who may be willing to invest in your business start-up. Angels are hard to find, and as with any investor will want to protect their investment by going with a good idea that is backed by a strong management team. One of the key advantages of the angel investor is that they are often very well connected in the business world, and can offer good advice based on their knowledge and experience. Accountant and lawyers often have good links to angel investors.

• Venture capital: if your business plan is excellent, showing a high rate of return and a strong management team, you may be able to tap into venture capital. These funds typically look at investing $500,000 or more; getting venture capital is difficult for most, with a US stat indicating that only 1 out of every 1000 plans submitted is actually approved for funding.

• Alternative plans: many entrepreneurs, determined to start their business, use "bootstrapping" to get started. This is the process of trimming your expenses to the absolute minimum needed to get started, starting your business at a grassroots level, and slowly "pulling yourself up by your bootstraps" by generating some cash, and then reinvesting that cash back into your business to take it to the level where you want it to be.

• Strategic partners: lacking some of the funds and resources needed to launch your business, you may want to look for and leverage strategic partnerships where the partner is able to provide expertise, access to a market, and possibly even technology. When you look at your start-up costs, look for areas, such as marketing and technology investments, where a partner could off-set some of your costs.

• As well, you may find some useful information in this past Ask-an-Expert question, which looked at online resources for loans and grants: http://www.canadaone.com/ezine/expert/expert01.html

I hope that helps, and wish you success in your search for financing.

Yours truly,
Julie King"

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