Ask Entrepreneur

Should I clear current debt before pursuing a business venture?

I have an idea and location for a small business. There is no such business in this neighborhood, but I'm also currently in debt.
The answer depends on the type of debt you are talking about.

If it is a mortgage, I would say there's no need to pay off the debt as long as you believe you will be able to make your monthly mortgage payments based on your income or expected income.

If it is credit card debt or personal loans, I would say it is best to pay them off before you go into business - it would look better on your credit report if you are a sole proprietor and in case you need to apply for a business loan.

If you don't need a business loan or definitely think you can make strong, consistent income in the business, some debt would be acceptable as long as you stay committed to paying (securing a low finance rate wouldn't hurt either).

For more information on small business loans, visit the Small Business Administration at http://www.sba.gov/. There's a great assessment tool there that will help you gauge whether or not you're ready to start a new business (http://www.sba.gov/assessmenttool/index.html. Good luck to you in your new endeavor!

Share Your Thoughts

Today's Editor's Picks

About ASK ENTREPRENEUR

Ask Entrepreneur is a question-and-answer forum for and by the Entrepreneur.com community. Send in your burning business question, or comment on someone else's now. Have a Question? Ask Now

Topics (over 1000+ answers)

Ask Entrepreneur Q&A Hangouts

Google + Hangout With Shark Tank
Google + Hangout With Jason Falls
Google + Hangout With Angela Jia Kim
Google + Hangout With Grant Cardone

ASK Quick Tips