Which funding products does this apply to?

Merchant Cash Advance, Working Capital, Term Loan, SBA Loan. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Are the figures here quotes?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What a particular lender charges is on that lender's page, where it publishes it at all.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

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Quote a paragraph with a link back. Do not republish whole articles.

Can you file bankruptcy on a business loan?

A company can file. Whether that touches the debt you personally guaranteed is a separate question with a mostly unwelcome answer.

By Find Me Funders research desk Updated 14 September 2026 1068 words 5 min read

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

Can I file bankruptcy on a business loan?

A business can file, but which chapter matters and the guarantee is usually the point people miss. A corporation or LLC filing chapter 7 receives no discharge at all — under 11 U.S.C. §727(a)(1) only individuals do — so it is a liquidation rather than a fresh start. The automatic stay under §362 protects the debtor that filed and does not generally stop a creditor pursuing you personally on a guarantee. Reaching a guaranteed obligation normally requires an individual filing, which is a separate case with separate consequences.

The chapters, and what each is for

Chapter 7.Liquidation. A trustee sells non-exempt assets and distributes proceeds. An individual can receive a discharge; an entity cannot, because §727(a)(1) limits discharge to individuals. A corporate chapter 7 is therefore an orderly wind-down, not debt relief for the owners.

Chapter 11.Reorganisation, with the business usually continuing to operate. Subchapter V, added by the Small Business Reorganization Act, provides a streamlined route for smaller business debtors; its debt eligibility cap has been changed more than once and adjusts, so check the current figure rather than a number you read somewhere.

Chapter 13.Individuals with regular income, repaying from future earnings under a plan. A sole proprietor's business debts can be included, because a sole proprietorship is not a separate legal person. Debt limits apply and are adjusted periodically.

Chapter 12.Family farmers and fishermen.

The statutory text is available at law.cornell.edu/uscode/text/11.

The guarantee problem

The automatic stay under §362 stops most collection activity against the debtor that filed and against property of the estate. It does not generally stop a creditor from suing a non-filing guarantor. Co-debtor stays exist in chapters 12 and 13 and are limited to consumer debts. As of 2026, the Supreme Court's 2024 decision on nonconsensual third-party releases means a chapter 11 plan generally cannot release claims against a non-debtor guarantor without consent.

The consequence is straightforward: filing for the company does not, by itself, deal with what you personally guaranteed.

Things that surprise owners

Payments made before filing can be clawed back.Preference rules allow a trustee to recover certain payments made to creditors before the filing, with defined lookback periods that are longer for insiders.

Purchased receivables are contested ground.Where an advance is papered as a sale rather than a loan, whether the receivables are property of the bankruptcy estate has been litigated and the results are not uniform. Do not assume either way.

Leases and contracts have to be dealt with.Assumption or rejection of executory contracts and unexpired leases is a decision with consequences, including claims for damages.

It is a court process with costs.Filing fees, counsel, and in reorganisation cases ongoing reporting. Chapter 11 in particular is not cheap, which is why Subchapter V exists.

What a corporate liquidation actually returns

Illustrative only —the company's assets realise $260,000 in a chapter 7. A secured lender owed $150,000 takes its collateral proceeds first. Administrative costs of the case come to $35,000 and priority claims, such as certain unpaid wages, to $20,000. That leaves $55,000 for unsecured creditors holding $610,000 of claims — a distribution of about 9 cents on the dollar.

An unsecured creditor owed $120,000 receives about $10,820 from the estate. If you guaranteed that debt, the claim against you is the remaining $109,180. The company's bankruptcy reduced your personal exposure by about 9%.

That is the shape of the arithmetic, and it is why the guarantee rather than the entity is usually the thing that has to be solved.

Filing personally does not discharge everything

Where an individual does file, some debts survive the discharge. The exceptions are at 11 U.S.C. §523, and two of them matter here.

A written false financial statement.A debt obtained by use of a materially false written statement respecting financial condition, made with intent to deceive and reasonably relied on by the creditor, can be excepted from discharge. Every application, debt schedule and set of statements you submitted is a written statement.

Taxes.Trust fund amounts and recent taxes are treated differently from ordinary unsecured debt, and payroll withholding in particular follows the responsible individual.

There is a consequence for the years before any filing. The accuracy of what goes into a funding application is not only a contract question — it can decide whether the resulting debt is dischargeable at all.

Timing, and what the creditor does while you decide

Filing for the company frequently accelerates the claim against the guarantor rather than delaying it. A creditor that sees a corporate petition files a proof of claim in that case and, in the same month, sues the guarantor in state court, because the stay does not reach you.

Preference exposure runs the other way and catches owners by surprise. A trustee can recover certain payments made to creditors before the filing — under 11 U.S.C. §547 the ordinary lookback is 90 days, and one year for insiders. Repaying a shareholder loan, or clearing the one supplier you cannot operate without, inside those windows is exactly what gets examined afterwards.

What to have ready before the first meeting with counsel

A current balance sheet and the last two years of financial statements.
A complete debt schedule, marking every obligation you personally guaranteed and every one that is secured.
A UCC search on the entity, so you know who holds what and in what order.
Twelve months of bank statements, plus a list of payments to insiders, related parties and any creditor paid ahead of others.
Copies of leases and any contract the business cannot operate without.
The last filed returns for the business and for you, and the status of any tax debt.

Two decisions to hold until you have advice: do not transfer assets out of the business, and do not choose which creditors get paid. Both are reviewed afterwards, both have statutory consequences, and both can be more damaging than the position you are trying to escape.

What is actually worth doing first

Get the numbers together — assets, secured claims, unsecured claims, guarantees, and the last twelve months of payments to creditors. Then take them to a bankruptcy lawyer for an assessment. That conversation frequently identifies options short of filing, and where filing is right, the sequencing and the chapter matter enormously.

Two things to avoid in the meantime: transferring assets out of the business, and paying selected creditors ahead of others. Both are examined closely afterwards, and both can turn a manageable situation into a worse one.

This is general information rather than legal advice, and bankruptcy is an area where general information is particularly dangerous to act on. The chapters, exemptions and outcomes turn on federal law applied with state exemption rules and on your specific facts, so a bankruptcy lawyer licensed in your state is the person to advise you.