• Calla Norman

Why Debt for your Small Business Doesn’t Have to be Scary


Kevin, co-owner of Swedesboro Brewing Company, crowdfunded $120,600 to open his brewery!


Of the fears that small business owners commonly have, going into debt is one of the greatest. We get it - it’s a risk for anyone to take out a loan! However, the opportunities provided by going into debt often outweigh the stresses of debt. Read on to find out reasons why taking on debt for your small business doesn’t have to be as scary or as difficult as you might think.


Debt helps your business grow


If you intend to slowly save your pennies day-by-day to grow your business, the sad fact is that it is going to take significantly longer for you to reach your goals than if you took on debt. What’s more is that you could miss opportunities such as increased demand, or good prices on venues and equipment if you wait until you have enough savings.


Also, taking on and successfully paying off debt at different stages of your business’s life cycle can help pave the way for more and larger loans in the future! So, if big moves are in your future - like purchasing your own facility or retail location, or expanding nationwide, financing the steps to get to that point would be a good strategy to undertake.


Debt can bring your already-successful business to the next level with no stress


One mistake that many successful business owners make is thinking that once they’ve reached a point where they’re finally generating a profit with their business, they shouldn’t take on more debt and just stay where they’re at. And we get it, after all if they took on debt to start their business, they know that it can be stressful keeping track of their monthly payments.


However, when your business is proving successful is the perfect time to take on debt - you’re in a more comfortable position, you have the history to back you up, and it can set you up to get to the next level for your business - whatever that might be.


Debt doesn’t have to come from a bank


Another myth around debt is that when you take on debt, it has to come through some traditional financial institution like a bank. This can be a big turn-off for some entrepreneurs, who perhaps have not had good experiences with banks in the past. After all, banks have a history of turning down small business loans or making entrepreneurs wait for months before being rejected for the loan they applied for.


However, with debt crowdfunding like Honeycomb Credit does, instead of taking out a loan from the bank, you’re taking it out from your community - your customers, family, and friends who love you and your business. Wouldn’t you rather pay those people back than you would a bank?


Debt is manageable with a plan


Another factor about debt that makes people nervous is, “Okay, I just got a loan of $50,000 - now how am I going to use it? How am I going to pay it back?”


This is why it’s important to have a plan for debt when you decide it’s time to take some on. This can be incorporated into your business plan, and will go a long way in getting you approved for a loan. Having a plan looks good to lenders, and often you won’t even get the time of day if you don’t have an idea of what you need the money for and how it’ll help you generate enough revenue to pay back the loan.


A plan is also a valuable tool in reducing the stress around debt. If you know exactly how you’re going to generate revenue and pay back the loan, and you have it written down, there’s one anxiety already taken care of.


Some forms of debt don’t require personal guarantees - you won’t lose your shirt!


One final fear that people have around debt is that they don’t want to put up their valuable assets, like their building, their equipment, or even their own personal property as collateral on a loan. That’s completely understandable!


While most banks will require some sort of collateral or guaranty, Honeycomb does not. It might help in terms of the interest rate you’ll pay back, but it won’t make or break your loan application. That way, you can focus on building up your business with crowdfunding, and not worry about losing your shirt.


When you’re ready to take the leap, we’re here to help


Even with these assurances, taking on debt for your growing small business can be intimidating - we get it! However, with the backing of your community and a Honeycomb loan, we can make the process a whole lot easier and less stressful. Fill out the form below for more information on Honeycomb Credit crowdfunded small business loans.