Although it may sound like an oxymoron to start a business while you still have personal debt; nothing could be further from the truth – it can actually help you get out of debt under the right circumstances. Debt can be converted to creditworthiness if handled correctly; in the following, we’ll explore some of the ways you can use your personal debt to your advantage – as well as some financial vehicles that could help you erase it while simultaneously starting a business.

Small Business Administration Loans Can Help

The federal government has its hands deep in this endeavor to help people start and/or maintain small businesses; if you have personal debt, the SBA loan can work wonders even if you are already in debt. Although these loans have some requirements, they are underwritten by the government and thus provide some leeway for the partner lenders if you cannot repay the loan in full.

Revenue-Based Financing Options

This is another lending opportunity for start-up businesses is the Revenue-Backed Loan; it works especially well for businesses that lack the equity necessary for collateral. As with other loan options, it features well on your credit report if you are able to secure one. However, if your profit margins are less than 50%, it can be difficult to obtain an RBL. Usually, tech companies are eligible for this due to the rarity for non-growth businesses to have such lofty profit margins.

Consider a Microloan While in Personal Debt

Microloans are those that span from about $500 to $35,000, with the average amount released being $2,000. These are marketed as personal loans, debt consolidation loans, etc, and are excellent for people with low creditworthiness as displayed by their FICO credit score. If your business is of the service-oriented variety, then you may want to strongly consider this type to help you with your credit score and business expenses.