3 Ways Toxic Debts Could Be Holding Your Business Back

Business Insights

If you want to start your own business or want to expand your current company, you might already be aware of just how much being in personal debt can hold you back. You want to be able to invest your own money into your company and grow your brand but right now, that’s impossible because you need to focus on making regular monthly repayments to loans, credit cards and other forms of debt that you have accumulated over the years.

Of course, there’s nothing wrong with being in debt - sometimes, borrowing money is absolutely necessary and it can be a convenient way to reduce stress and help you be able to cover emergency expenses immediately. However, if you have gotten to a point where you feel like your debts are taking over your life and holding you back from running the business of your dreams, it’s time to do something about it.

How Being in Debt Can Affect Your Business

Being in debt might not only hold you back from being able to afford the things that you want for your own life, but this obstruction can also spill over into any business that you start. Of course, you can also successfully start a business and use the money that you earn to pay off your personal debts, but growth is going to be harder when you have the weight of repayments holding you down. Being in debt can affect your business in several ways including:

1. Less Chance of Business Funding

New business owners often have to apply for a personal loan to get their business started or obtain the funds that they need to grow their business if the company has little to no financial records. Or, you might be able to apply for a small business loan or similar, but since your company has little history, your personal credit score will be taken into account - and being in debt can hold you back from getting accepted.

2. Inability to Invest

Perhaps you need to invest in new equipment, a more professional website, a better storefront, or new product lines to grow your business. And if your business itself isn’t bringing in these funds, you may be willing to invest your personal cash - but there’s one thing holding you back; your debt. When you are focused on repaying your debts and a huge chunk of your income is going towards making repayments, you don’t have much free to invest in your business, which can leave you stuck in a rut.

3. More Stress

Being in a lot of toxic debts can be stressful. Every month you work hard, earn money and put it towards making debt repayments only to feel like you’ve barely made a dent in the amount of money that you owe. Add accumulating interest on top, and it really can feel like you are fighting a losing battle. And running your own business is stressful too! Being in debt can be an unnecessary source of stress for you if you want to make the switch from a reliable income from employment to running your own business, with no guarantee that you are going to make enough money to cover your debt repayments. The stress can easily spill over into other aspects of your life and make it really difficult to make calm and informed decisions.

What Are Your Options?

Whether you’re just starting out with a new business or have started a business already and want the funds to expand, the good news is that you don’t have to let your debt get in the way of getting to where you want to be as an entrepreneur. There are several options to consider which can help you reduce the amount that you are paying towards your debts or even clear them off faster. You may want to consider consolidating your debts, negotiating with lenders to reduce your payments or freeze interest, or using the debt snowball method, where you continue paying the minimum payment while repaying your debts in order of size.

Debt Consolidation

Debt consolidation is an ideal option to consider as it allows you to use just one loan to repay all of your debts. Once you’ve done this, you only need to worry about making one monthly repayment to the consolidation loan, rather than several. If you can afford to do so, you can even take out a short-term loan to repay your debts so that once it’s paid off, you can be debt-free in very little time. Payday UK is a broker that will help you find a guaranteed payday loan direct lender; these guaranteed loans allow you to borrow enough money to clear all your debts at once leaving you with just one to deal with.

Being in debt is often unavoidable these days, but don’t let owing money get in the way of running a successful, thriving business.