Can You Start A Business With Unpaid Student Loans?

For many younger entrepreneurs, student loans loom large. Now the largest type of debt for people under 40, student loans have a massive impact on the finances of new college graduates. 2018 grads were saddled with a whopping $39k on average, meaning most students enter the workforce with a fairly fancy new car worth of debt. Does this mean that recent college graduates can’t start a business? With a bit of planning, good financial sense, and just the right amount of luck, it’s still possible to start a business with a mountain of personal student loan debt. Here are the basics you’ll need to know in order to succeed.

Have a Plan

The most important step to starting any business is having a solid idea of the numbers involved. Having a and financial plan will help you refine your idea and make finding investors in future steps much easier. The US Small Business Administration offers lots of free resources and courses that can help you with the process of coming up with a business plan and understanding the financial realities of typical small businesses.

Finance Your Dream

While it’s certainly easier to start a business with a big pile of personal cash, it’s not the only way to do things. Business financing exists in many forms, including normal bank loans, microloans, SBA loans, and alternative lending. If you’ve got a solid business plan, try marketing it to angel investors and even venture capitalists. While you’ll give up a portion of your profits, these investors will have a financial stake in your business’ success. They can be a valuable source of advice, insights, and help. Be sure to fully research all types of loans and investments before you settle on the right one for your business.

Examine Your Student Loan Debt

Carefully Just because you owe lots of money on your student loans doesn’t mean you have to pay it all back today. Consider reaching out to your loan provider and asking about your options. Federal loans can usually be consolidated, giving you one smaller monthly payment on a slightly higher interest rate. Many private loaners can offer similar options that will reduce your monthly payment temporarily at the cost of a higher total payment. Keep both your long-term and your short-term goals in mind here, if a few dollars will help your business a lot, it might be worth paying more on your loans.

Learn From The Community Businesses

Rather than trying to foolishly forge your own path, consider reaching out to successful business people and asking for advice or support. You’re not necessarily looking for investors. Instead, ask for contacts that you can use to build your network and ideas that you can use to deliver your products or services better, cheaper, and faster. Whether you find a mentor or a network of supportive individuals, your business will be much more successful.

Find A Partner With Cash

Just because you’re saddled with student loan debt doesn’t mean everyone else is If you can find a like-minded business-savvy partner who’s loaded with cash, consider bringing them on board. Be sure to get a fair agreement in writing that details who’s responsible for what and how any profits will be divided. There’s nothing that can sour a friendship faster than money.

Cut Personal Costs

Having good financial management skills won’t just help your business’ bottom line. It can also save you hundreds of dollars a month in your personal life. Many people use software to keep track of their budget, but you can still do things the old-fashioned way with pen and paper. Look for opportunities to cut costs as well as opportunities to improve your life by spending an appropriate amount of money. You’ll often find a few outlying expenses that can be trimmed, giving you more money to funnel into your business or paying off your loans faster.

Starting the business of your dreams while on student loans founding your own business isn’t easy. It’s a risk-filled venture that will suck up lots of time, money, and effort. If you keep your wits about you, however, you’ll be able to navigate your way to having a profitable business that pays your bills. While having student loan debt can be a big obstacle in your path, it’s definitely not insurmountable. Use the tips above to find the money and expertise you need to get your business off the ground and pay off your student loan debt.