How to Start a Business With Student Loan Debt – Nowadays, obtaining a college education can be a costly affair. If you want to start a business but are concerned that your student loan responsibilities will prevent you from doing so, there is good news: there are many choices available to help you succeed in both areas.
Gaining control of your own money will assist you in creating your new enterprise if you wish to start a business. Your capacity to get finance, attract business partners, and deal with key vendors may be hampered by the condition of your loan repayments. If you haven’t dealt with your student debts in a while, now is the time to do so.
Know What You Owe and Make a Plan
Do you know how much money you owe on student loans? What’s your interest rate like? It’s not enough to have a general concept. Here are some important actions to take:
- To acquire answers to the aforementioned inquiries, as well as any other essential, connected information, contact your loan servicer.
- Once you know how much you owe in total, figure out how much you can afford to pay with your present salary.
- Calculate how long it will take you to pay off your debts at your current salary (there are plenty of online debt calculator options).
- Determine whether there are any steps you may take to increase your monthly payment.
Explore Your Repayment Options
Federal Loan Repayment
If you owe federal student loans, you have numerous alternatives for repayment. There are graduated, prolonged, pay-as-you-earn, income-based, income-contingent, and income-sensitive repayment programs, in addition to the standard repayment plan. However, keep in mind that not all loans are eligible for all repayment options.
Private Loan Repayment
Repayment options are available from many private lending companies. You may be able to delay payments while in school or while serving in the military, or you may be able to make interest-only payments after a time of separation. Consolidating and/or refinancing your loans is another option to examine, as it may be easier to maintain track of one loan than two or three. CommonBond, SoFi, Discover, and College Ave are just a few of the companies that can help you consolidate or refinance your student loans at reasonable rates. Before you make the transfer, double-check everything.
Bolster Your Business Savvy
While you’re striving to pay off your debt, make sure you’re also honing your business skills.
Begin by conducting research to see whether your concept is unique to the industry or if you’re simply offering another alternative to an already crowded field. In any case, it’s worth seeing what the market will bear.
If you’re thinking about creating a product or service, you’ll need to answer a few key questions first, such as:
- What is your unique selling point?
- Will the cost of developing and manufacturing your product be?
- What will you require in terms of equipment?
- Who is your target audience or customer base, if you’re selling something or providing a service?
- What are the chances that your concept will fail?
You should have a much clearer understanding of its feasibility after you have a well-rounded base of knowledge in every part of developing your business or product, including development, production, distribution, supply chains, and tax consequences.
Financing Your Startup
Now that you have all of the information, figure out how much money you’ll need to get your business off the ground. Once again, the SBA offers a free resource to assist you. You’ll need enough money to pay the costs of product development, permits and licenses, insurance, leasing space or equipment, marketing, and taxes, among other things.
Small company loans are accessible through banks and credit unions, but Grants.gov, the U.S. Department of Agriculture (USDA), and other government agencies also offer grants to qualified enterprises.
Additional Tips and Resources for Starting a Business
Starting a business while paying off college loans can be difficult, but you can achieve your goal by educating yourself and taking action. Here are a few more useful resources and tips.
- Contact SCORE, an organization that promotes small business communities via mentorship and education, to find a mentor or coach. It also provides assistance in starting a business on a limited or nonexistent budget.
- Don’t be afraid to start small: Some of the most successful firms, such as Apple, Dell, and Facebook, began in the dorm rooms and homes of their founders, so don’t be scared to start small. Consider starting a home-based or internet business as a first step toward bringing your product or service to market.
- Distribute the burden: Find one or two company partners who can contribute their skills (and, possibly, higher credit scores) to the enterprise.
- Angel investors, crowdfunding, microlending, and startup incubators are among unorthodox funding options to consider.