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Debtor, Beware

Make sure you're spending wisely at startup.

This story appears in the June 2006 issue of Start Up.

Question: How much debt is safe to get into when starting a business?

Answer: No more than you can handle without going broke. While many entrepreneurs launch businesses on their credit cards or by taking out home equity loans, it's risky to pile on too much debt before your company starts making a profit. If your business can't kick off enough cash to cover your monthly interest expenses, you risk defaulting on the loan and putting your home and business in jeopardy.

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