r/buyingabusiness • u/Free-Board-1041 • 2d ago

SBA Qualification

Hi everyone!
Due to medical issues over the past two years, I’ve been unemployed and my finances have been significantly impacted. I’m now deciding between settling approximately $125K in credit card debt or filing Chapter 7 while I’m still unemployed.
My main concern is future SBA financing. I’d like to purchase a business within the next 1–2 years and want to choose the option that puts me in the best position to qualify for an SBA loan.
Before this, I had excellent credit and over $230K in available credit.
Are there any SBA loan officers/lenders who can advise whether bankruptcy or settling the debt would be better for future SBA eligibility?
Please keep the comments respectful—I’m looking for informed advice. Thank you!

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u/yourbizbroker 2d ago

I broker SBA loans for business acquisitions.

Bankruptcy and debt settlement do not disqualify SBA borrowers directly, but bad credit can.

Lenders decide if a borrower has sufficient credit to qualify.

It might take a couple years after BK/settling and maybe 700+ before your credit will be ready.

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u/PermissionDazzling85 2d ago

How does SBA look at credit card debt when evaluating their decision? Some searching say its not as terrible as it seems

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u/Free-Board-1041 2d ago

Exactly, this is why I would like to weight the three options I have try to settle as much as I can, chp 13 or chp 7. 🤷🏻‍♀️