Another blow to small businesses came in the form of Advanta's bankruptcy filing this week. This news coupled with CIT's bankruptcy means that getting credit lines and loans that small businesses need will just get harder and harder.

Advanta is a small business credit card lender. They filed for Chapter 11 bankruptcy this past Sunday CNN reports. Its lending arm called Advanta Bank Corp. was not including in this filing.

News of the Advanta bankruptcy is not surprising. It had stopped giving out new loans earlier this year. It has also seen a very sudden rise in defaults on the loans it had already given out to small businesses. Advanta had listed out its assets as valuing $363 million while its debts are $331 million.  

CIT Group entered bankruptcy this past Sunday. The group provides lending to a large number of mid sized and small businesses.

According to the New York Times: "On Sunday, CIT entered what it called a different kind of bankruptcy, one that will let it reemerge from court protection by the end of the year under the ownership of its creditors, who widely supported the reorganization plan."

CIT argued against bankruptcy this past summer by stating that being forced into Chapter 11 protection would be disastrous to the small business sector.

In the excitement of driving a new business off the lot, many entrepreneurs gloss over the different business organization types available.  This is especially true for individuals looking to start a small business or home-based venture who turn to sole proprietorship as a way to get started quickly and avoid the expense of incorporation, legal fees, and other filing considerations.

And for many sole proprietorships, the combination of insurance coverage, keeping overhead costs low, and generating consistent revenue is enough to survive and even flourish.  However, when the economic forecast delivers storms, small businesses may find making ends meet to be an insurmountable challenge.  And many sole proprietors do not realize that, when it comes to bankruptcy for small business, their personal assets can be seized.

Here are some important facts about sole proprietorship and sole proprietorship bankruptcy that you should know:

Your business works hard to perform and deliver.  So what do you do when you don't receive payment for goods delivered or services rendered?  It's a question that takes on a new urgency in times of economic challenge.

Your company has available a variety of options and depending on your size, type of business, and ability to continue operations, what is best for your business may not be the same as what is best for the business next door.

Here are 6 options on how your small business can collect unpaid debt:

Judging by the spike in the number of small business bankruptcies over the summer, it is clear that Main Street is looking for lifelines to stay afloat.  The Small Business Administration (SBA) wants you to know that it is here to help.

And in true Web 2.0 fashion, the SBA has introduced an online course to introduce small businesses to basics in small business finance, resources offered by the SBA, as well as loan guaranty programs it has developed.

The economy may be on the slow mend going forward, but looking back to June paints a very different picture.  Equifax reported that bankruptcy filings for small businesses rose 81% from the previous year for the country's 25 million small businesses.

To be sure--10,399 bankruptcies were filed in June 2009, compared to the 5,712 that were filed in June 2008.  The Golden State was hit the hardest, with 10 California cities making Equifax's list for most commercial bankruptcies filed.  Los Angeles, Oakland, Santa Ana, San Diego were all on the list.  And California wasn't the only site for bankruptcy, other cities showing steep inclines in bankruptcy filings include Dallas, Portland, Atlanta, and Houston.

Equifax analyzed data for both Chapter 7 and Chapter 13 filings to come with its report.

Today is closing day for almost 800 Chrysler dealers nationwide. In response to a last bid challenge by about 300 of the closing dealers, the bankruptcy court ruled today that Chrysler's sloughing off of these dealers may proceed.

As reported by the Detroit Free Press, U.S. Bankruptcy Judge Arthur Gonzalez approved the rejection of 25% of Chrysler's dealer agreements. Tomorrow, these dealerships will no longer sell new Chyslers or Jeeps. Chrysler will also no longer honor agreements to supply parts or warranty repayment, taking away Chrysler repair work those dealerships may have had on vehicles they sold. Chrysler also will not buy back any unsold inventory, but did agree to arrange for sale of these vehicles to dealers within the "New" Chrysler's network.

Some had wondered whether the Supreme Court's pausing of the Chrysler-Fiat deal yesterday would affect the dealer closings. Yesterday, the Supreme Court put the Chrysler deal on hold in a challenge by two Indiana pension funds owning Chrysler bonds. As for why the Supreme Court paused the deal, we cannot say. The order was issue by Justice Ginsburg without explanation of why or what will happen next.

Unfortunately for the dealers, however, trouble with Chrysler's plan has not prevented the rejection of their contracts.

So, why can pension funds owning a fraction of Chrysler's debt cause a time-out in Chrysler's restructuring plan, but hundreds of affected franchisees can't do anything?

Despite the federal recovery efforts to increase lending to small businesses, the loans many small businesses have waited on are the Small Business Administration (SBA) emergency ARC loans designed to help struggling businesses temporarily bridge the financial gap. The SBA has released more details about which businesses will be eligible for the loans, set to become available next week.

As discussed previously, the ARC loans, to come from private lenders, will be for up to $35,000. Borrowers will not have to make any payments for a year after disbursement. After that, they'll have 5 years to pay off the loan. Recipients may use the funds to pay down debt (except other SBA loans made before February 17, 2009). The SBA will pay lenders prime plus 2% interest on the loans, but borrowers will need to repay only the principal.

In terms of eligibility, these loans are designed for small "viable" businesses with "immediate economic hardship." The first thing to know is that ARC loans are not for new businesses. Even if a start-up seems "viable," businesses must have been in operation for at least 2 years to qualify.

So, what exactly do "viable" and "immediate financial hardship" mean?

GM's reorganization appears to pose some tough choices for all of its dealers -- those who will be cut and also those who wish to be part of the "new GM." Though dealers on the chopping block appear to be receiving better treatment than their Chrysler counterparts, the changes any continuing GM dealerships must make may cause some to choose closing up shop.

In the wake of Chrysler's and GM's respective bankruptcies, we've discussed the terrible fate that franchise agreements can meet when the franchisor declares bankruptcy.

Details of GM's reorganization strategy illustrate the incredible bargaining power bankruptcy allows a franchisor. In addition to simply rejecting franchise agreements, Chapter 11 bankruptcy allows a franchisor to dictate new terms to the franchisees it wants to keep around. Franchisees can either accept the new agreement or see their old one rejected by the franchisor in the bankruptcy process.

As reported by CNN, the lucky GM dealers who aren't amongst those already slated to end will have to either accept some heavy handed new terms or hit the road. The new terms include:

• Heightened sales targets (yet) to be set by GM, which GM may change in the future, and which if not met would allow GM to back out of the agreement;
• No selling non-GM cars in the same showrooms;
• No right to protest the movement of other dealerships; and
• Required upgrades (or even relocation) of dealerships.