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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.
Once your company starts making a profit, you'll have many more options. One popular form of debt financing is a credit line secured by your company's accounts receivable. Unlike a loan that requires you to make fixed monthly payments of principal and interest, a credit line allows you to draw down only the money you need and to pay interest only on the amount you borrow.
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