Do you have an internet business idea that you feel is out of reach because you are already in debt? Debt does not have to be a barrier to starting a web based business. While you may face challenges that others with easy access to a bigger cash flow and better credit do not, there are many things you can do to get the financing you need.
Refinancing Student Loans
You might ask why people would refinance education debt if they want to become an entrepreneur? Student loan debt is the largest debt many people carry, and it can be crippling paying back the high interest for decades. Refinancing a student loan means that you take out another loan with a lower interest rate and pay off the existing loan. This can free up cash that you can use to put toward your business.
Seek Alternative Loans and Investments
In some cases, even after you have lowered your debt, you still might not look like a good risk as far as banks are concerned. However, this is not the only place you can go to get a loan to help start your company. The Small Business Administration is one resource you can try. You may be able to get funding from private investors or micro-lenders. You could also consider taking on a partner who can help with funding. Creating a business plan can help get this financing. There are also more unusual methods of raising money to start a company, such as crowdfunding. Some communities have what is known as a lending circle, which offers loans that are interest-free to small businesses and individuals.
Look into Asset-Based Loans
If what you need is equipment or short-term financing while invoices are outstanding, you may be able to get an equipment loan or accounts receivable financing. These loans differ from other types of business loans because they are tied to the specific asset they are being loaned to help with. If an equipment loan is not repaid, the equipment can be repossessed, and in the case of accounts receivable financing, money can be recovered from customers. This means there is less risk for the lender, so if you have debt, it might not disqualify you.
Seek Out Low-Cost and Free Resources
In addition to the Small Business Administration, there are a number of organizations and resources that can help low-income people and people who are in debt become entrepreneurs. SCORE is a network of voluntary mentors that partners with the SBA and offers workshops, classes and more. Libraries have many free resources related to entrepreneurship, and there are also free and low-cost tools online that can help with everything from email to websites, setting up conference calls, faxes and more. Although most businesses require high budgets to get going, there are many types of businesses you can start today, for relatively low cost.
The company can be grown by reinvesting profits into the areas that will give the greatest return on investment. In many cases, this might be marketing. Once profits and performance become more consistent, you can start paying off your debts. Slow, conservative growth can help ensure that you do not fall deeper into debt and that the business is built up steadily.