After all, of the average 20% of new businesses that don’t make it past their first year, many cite reasons like a lack of funds for their downfall. If you don’t have money behind you, you simply can’t market and build your business. 

But many business owners also say that debt is a leading cause for their downfall. Of course, this won’t often happen if you’re borrowing reasonable amounts with a clear repayment plan. But small business debt can undeniably spiral out of control, and we’re going to consider why. 

# 1 – Jumping in With Too Many Lines of Credit

While it’s true that you need capital to get your business off the ground, taking out multiple lines of credit at once can see you facing significant debts that aren’t always easy to manage. 

Hence, experts generally state that it’s best to stick with just one or two lines of credit to begin with. This will help you keep track of repayments, and will also slash the interest rates you can expect to pay overall.

# 2 – Failing to Consider Debt Relief

Even if you’ve just taken out two lines of credit, starting a business is unreliable. If your profits don’t match your projections, you could soon struggle with repayments. While you might want to grit your teeth and carry on in the hopes of a turnaround, doing so can lead to escalations that could include bankruptcy in extreme cases. 

And ultimately, there is a better solution. As outlined by National Debt Relief CEO Alex Kleyner, debt relief options play an undeniably important role in situations like these. These mutually beneficial agreements can ease your stress via personalized repayment plans, and satisfy your debtors. As a result, you may be more easily able to manage debt without it closing your business down. 

# 3 – Holding on For Too Long

So far, we’ve talked about how to manage debt while keeping your business afloat, but here’s the thing: if debt is out of control despite your best efforts, then it’s sometimes worth asking whether you would be better off walking away. 

This is especially true if missed loan payments are tarnishing your credit rating, or if you simply don’t see your profits turning things around to ease that financial strain anytime soon. While it will definitely hurt to say goodbye, doing so could allow you to finally clear those debts, brush yourself down, and maybe even consider a secondary business plan with more financial savvy. 

If your startup debt is spiraling out of control right now, then ask yourself if these mistakes are to blame.