Are you eager to start your own business but feel hobbled by your student loan repayments? Student loans can introduce a number of obstacles to entrepreneurship. Your monthly payments could prevent you from being able to put your own money toward the company. Lenders might consider you a less attractive prospect. You may simply feel unable to start a business given the debt you are carrying. Despite this, it’s still possible to start a business even if you have student loans. The best strategy for your situation will depend in part on how you plan to finance the company.
If you want to free up some cash that you can put toward your business, you might want to consider refinancing. Refinancing your student loans at a lower interest rate can mean that your monthly payments are lower, and you can use what you save to invest in your company. Both brick and mortar and online lenders may offer options. If your income and credit are not great, this might still be a possibility if there is someone who can cosign for you.
Deferral or Income-Based Repayment
If you are worried about how you are going to keep up with payments while making a minimal amount on your business, you may want to think about getting on an income-based repayment program. This can help ensure that as long as your income remains low, your payments will be low as well. Deferral may be another option, allowing you to take a break from paying. However, a deferral can be particularly difficult to get, and your loans may continue acquiring interest during the unpaid period.
Another option is starting your company while keeping your day job. This helps ensure that you still have an income coming in. You may want to combine this with refinancing. Your initial efforts may pay for themselves and give you more flexibility to cut hours at your day job. You may also have more credibility in seeking additional funding. A strong business plan and concrete evidence of success could make lenders more interested in your proposal even if you are carrying some debt.
Some people manage to scrape together the money to finance their business although it can take a great deal of determination. It can be tough to keep living like a student after you’ve graduated from college and started a professional career, but some entrepreneurs have financed their startups using just this approach, living with roommates and avoiding any extravagances.
Traditional lenders are not the only way to finance a small business. Venture capitalists, angel investors, crowdfunding and grants may all be possibilities for funding. If you can get some investors excited enough about your ideas, your personal financial situation may be less important. Networking within your industry and finding a mentor may open doors that you were unaware of. Keep in mind as well that some people are serial entrepreneurs, starting and selling businesses and using the profit to fund a new venture. You could start with something small and work your way up to your big idea.