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We fund business owners nationwide, regardless of industry, credit, or time in business. We fund it all.

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We have a lot of different financing options available to our clients. Regardless of your situation, we’ll have a solution for you.

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We get you funding. It's that simple. Regardless of credit, income, or time in business - we'll fund you.


Use our online form or call toll-free anytime to get started. There's no cost, and the application takes only three minutes.


Receive application approval in as little as 24 hours. There is no credit check required.

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Review and return your signed agreement and get your money in as little as 24 hours.

Recent Business Loans Funded

100K Term Loan

Ambulance Service

Our client bought a new ambulance.
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55K Advance

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85K Term Loan

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Our client used the funds for restaurant equipment.
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How Delancey Street Works

Fill Out Our Application

Answer basic questions about yourself and fill out our entirely online application. Each loan has its own online process.

Meet Your Concierge

We'll pair you with an experienced Delancey Street specialist who will reach out to you, and understand your needs. We'll try to determine which financial product is right for you.

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We give you a few different loan offers based on your scenario and what options you qualify for.

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Once you've chosen a loan that works for you, we finalize it and start getting the documents needed.

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After you get funded, your Delancey Street concierge specialist will keep in touch to make sure you're happy and doing well.

Business Loans

Get business loans ranging from 3 months to 18 months
No credit score requirement, we have a program for everyone
We can fund up to $5 million in virtually 24 hours

How Does Small Business Bankruptcy Work?


How Does Small Business Bankruptcy Work?

Filing for bankruptcy can be a complicated process for any business owner. But it doesn’t have to be! This article will explain in simple terms how small business bankruptcy works, so you can understand your options.

What is Business Bankruptcy?

Business bankruptcy is a legal process that allows a business to get relief from overwhelming debt. It involves filing a petition in federal bankruptcy court that allows the business to:

  • Get protection from creditors demanding repayment
  • Cancel contracts and leases
  • Obtain new financing
  • Sell assets to pay off debts
  • Reorganize the business to try to keep operating

The goal is to either liquidate company assets to pay off as much debt as possible, or create a reorganization plan so the business can continue operating and pay off debts over time. Either way, it gives the business a chance to hit the reset button on its finances.

What Bankruptcy Chapters Can a Small Business File Under?

There are three main chapters of the bankruptcy code that a small business can file under:

  • Chapter 7 – Liquidation bankruptcy. The business stops operating and a trustee sells its assets to pay creditors.
  • Chapter 11 – Reorganization bankruptcy. The business continues operating and proposes a repayment plan to creditors.
  • Chapter 13 – Only available to sole proprietors or freelancers. Similar to Chapter 11 but with lower costs.

The chapter a business files under depends on its goals and financial situation. Many small businesses file Chapter 7 to close down operations and liquidate. Others file Chapter 11 to reorganize and keep operating.

Should My Small Business File for Bankruptcy?

Deciding whether to file bankruptcy is a big decision that requires careful thought. Here are some signs it may be time for your small business to consider bankruptcy:

  • You’re struggling with overwhelming business debt
  • You can’t pay employees, vendors, rent, etc.
  • Creditors are suing you or aggressively collecting
  • Revenue is sharply declining with no turnaround in sight
  • The business has been losing money for a long time

Bankruptcy provides relief from creditor harassment and debt collection lawsuits. It also wipes out many types of business debt and provides a clean slate. For businesses in distress, it can be the lifeline they need.

What Will Bankruptcy Cost My Small Business?

The main costs of small business bankruptcy include:

  • Court filing fees – $335 for Chapter 7, $1,167 for Chapter 11
  • Attorney fees – Average of $1,500-$5,000 for Chapter 7, $10,000-$30,000 for Chapter 11
  • Trustee fees – Around 3% of liquidated assets in Chapter 7
  • Financial advisors – If hiring for reorganization in Chapter 11

While bankruptcy has costs upfront, it allows the business to eliminate debt, stop lawsuits, and get back on solid financial ground. For many small businesses, it ends up saving money in the long run.

What Debts Can Be Eliminated in Small Business Bankruptcy?

Some debts that can potentially be wiped out in small business bankruptcy include:

  • Credit card balances
  • Past due vendor bills
  • Personal loans to the business
  • Lines of credit
  • Unpaid rent
  • Business loans without collateral
  • Court judgments

Even debts that can’t be eliminated, such as secured debt, can be restructured to make repayment more affordable. This provides major financial relief.

What Are the Steps in the Small Business Bankruptcy Process?

Filing small business bankruptcy involves the following key steps:

  1. Consult an attorney – Have a consultation to discuss your options and strategy.
  2. File paperwork – Formally file a bankruptcy petition and other required documents.
  3. Attend creditors meeting – You will be called to appear at a meeting with your creditors.
  4. Liquidate assets (Chapter 7) – Assets will be sold to pay off eligible debts.
  5. File reorganization plan (Chapter 11) – If reorganizing, propose a debt repayment plan.
  6. Obtain discharge – Get court order eliminating eligible business debts.

An experienced bankruptcy attorney can help make the process smooth and effective. It typically takes 3-6 months from start to finish.

What Happens to My Assets in Small Business Bankruptcy?

What happens to your assets depends on whether you file Chapter 7 or Chapter 11:

  • Chapter 7 – A court-appointed trustee sells your nonexempt assets and distributes proceeds to creditors. You are able to keep exempt property.
  • Chapter 11 – You generally keep operating assets so you can continue running the business. Non-essential assets may be sold.

Talk to your attorney to understand exactly what assets could potentially be liquidated or retained in your specific situation.

Can I Keep Operating My Small Business in Bankruptcy?

Whether you keep operating depends on the chapter you file:

  • Chapter 7 – No, the business must cease operations and liquidate assets. But you can start a new business later.
  • Chapter 11 – Yes, the business can continue operating throughout the bankruptcy.
  • Chapter 13 – Yes, sole proprietors and freelancers can keep operating.

The ability to keep running your business is a major advantage of filing Chapter 11 rather than Chapter 7 bankruptcy.

What Will Happen to My Employees if My Business Files Bankruptcy?

If you file Chapter 7 and liquidate, employees will lose their jobs as you shut down operations. If you file Chapter 11 and reorganize, employees can generally keep their jobs as you continue operating. However, the business may need to cut staff to reduce expenses.

Employees typically get first priority for unpaid wages owed before bankruptcy. Otherwise, they will have to file claims along with other unsecured creditors.

Can Filing Bankruptcy Protect My Personal Assets?

Generally, your personal assets are not at risk when your business files bankruptcy. Business debts stay business debts and personal debts stay personal. But there are a couple exceptions:

  • If you personally guaranteed business loans, the lender can still come after you for repayment.
  • If you commingled personal and business funds, creditors may dispute what’s business vs. personal money.

Talk to your attorney about strategies to best protect your personal assets and accounts.

What Will Bankruptcy Do to My Business’s Credit Score?

Business bankruptcy will negatively impact your business credit scores. The severity depends on the chapter:

  • Chapter 7 – Scores could drop 100-300 points and stay low for years.
  • Chapter 11 – Scores may drop less if debts are restructured and paid.

Your personal credit will not be affected by the business bankruptcy. Be prepared for business credit damage, and know that scores will gradually recover over time as you rebuild credit.

Can My Small Business Get Financing After Bankruptcy?

Obtaining financing will be more challenging after bankruptcy. But there are lenders who specialize in financing for businesses post-bankruptcy. Options include:

  • Merchant cash advances
  • Factoring accounts receivable
  • Equipment leasing
  • Hard money loans
  • Private investors

Look for financing through a lender familiar with bankrupt businesses. Be prepared to pledge collateral and expect higher rates.

Are There Any Tax Implications for My Small Business Bankruptcy?

Yes, business bankruptcy can create some tax headaches. Common tax issues include:

  • Any debts discharged are considered taxable income.
  • Net operating losses may be eliminated.
  • Tax attributes like credits may be reduced.
  • Liquidated property may generate capital gains taxes.

Consult a tax professional to understand the potential tax consequences before filing bankruptcy.

What Will My Suppliers and Customers Think if I File Bankruptcy?

Suppliers may be reluctant to extend credit post-bankruptcy. Be upfront and demonstrate you have a solid business plan going forward. Customers likely won’t care as long as you continue providing good service.

The bankruptcy stigma has faded over the years. Many businesses file Chapter 11 to restructure and come out stronger than before. Just focus on reassuring suppliers and maintaining relationships.

Should I Hire an Attorney for My Small Business Bankruptcy?

Yes, you should always hire a qualified bankruptcy attorney to handle your business bankruptcy case. An experienced lawyer will help you:

  • Determine which chapter to file under
  • Ensure proper paperwork preparation
  • Protect your assets
  • Negotiate with creditors
  • Increase chances of a successful outcome

Navigating the complex legal process on your own is extremely difficult. The attorney fees are well worth it.

Key Takeaways

The prospect of bankruptcy can be scary for small business owners. But it can also be a lifeline that saves a distressed business. Keep these takeaways in mind:

  • Bankruptcy stops threats from creditors and wipes out eligible debt.
  • Chapter 7 liquidates while Chapter 11 reorganizes.
  • Costs include court fees, attorney fees, and advisors.
  • The process takes several months from start to finish.
  • Personal assets are generally protected from business bankruptcy.
  • Be prepared for business credit score impacts.
  • Hire an experienced bankruptcy attorney for guidance.

While not ideal, bankruptcy can be a practical business survival tool if used strategically. Don’t be afraid to explore it as an option if your business is struggling with overwhelming debt.


Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

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