There aren’t many people who can consider themselves absolutely debt free these days, with the burden of mortgages, student loan debt and/or medical bills so common. That’s why those who dream of starting a business often wonder if personal financial obligations can stand in the way of your entrepreneurial ambitions. Luckily, you won’t have to pay off every penny you owe before starting your new business venture. Still, personal debt can have an effect. Let’s look at the impact of personal debt on business loans and future success. 

How Personal Debts Affect Your New Business Start Up

  • Personal debt can impact your business funding options. Specifically, your existing debts can affect (or limit) which small business loans you might qualify for. You may have to choose a loan option that carries a higher interest rate or requires quicker repayment than you might if you had zero personal debt.
  • Personal debt could discourage business partners from coming on board. Make sure the people you’d like to found your business with understand that you can and will meet all obligations.
  • Personal debt plus business debt complicate your financial picture. In a perfect world, your financial situation would be simple and easy to manage.
  • Personal debt might dissuade potential investors. Angel investors, investment firms or family/friend investors may lose confidence when they learn of your personal debt.
  • Personal debt and business debt, combined, can bring on extra stress and worry. This high level of stress can affect your health and your business performance–so make sure you are confident you can manage your business and personal debts before you start up your startup. Put a plan in place to help dismiss any doubts. 

Bottom line, you can start a business when you have personal debt, provided you consider the consequences in advance and make sure you have a solid plan to meet payment obligations. You’ll also need to show your lender that you can realistically manage your finances and fulfill your promise to pay.

Learn how we can help with starting a business, despite personal debt, by providing financing options that suit your needs. Contact Integrity Financial Capital today.