Finance

Should I clear current debt before pursuing a business venture?

Guest Writer
Head of Financial Partnerships, Xero Americas
min read
Opinions expressed by Entrepreneur contributors are their own.
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!

More from Entrepreneur

Kathleen, Founder and CEO of Grayce & Co, a media and marketing consultancy, can help you develop a brand strategy, build marketing campaigns and learn how to balance work and life.
Book Your Session

For a limited time only, get this bundle of Entrepreneur PressĀ® titles for less than $30 (60% OFF) on our bookstore when you use "LEAP" at checkout.
Buy Now

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.