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Forbes
2 hours ago
- Business
- Forbes
How To Start A Business While Having Personal Debt In 2025
How To Start A Business While Having Personal Debt In 2025 Americans are still betting on themselves in 2025, starting thousands of new businesses even as personal debt remains a heavy burden. According to the U.S. Census Bureau, more than 28,000 new business applications filed in April 2025 are expected to evolve into employer businesses (those with payroll tax obligations) within the following year. However, for many, this leap into entrepreneurship occurs while juggling credit card balances, student loans, or mortgage payments. In fact, a growing share is funding their ventures with personal debt. According to the 2024 Bank of America Small Business Owner Report, 28% of small business owners plan to fund their businesses using personal credit cards. This may be an alternative funding method, but one that carries a high financial risk. For instance, in the excitement of a promising idea, a new entrepreneur could launch an online shop (buying a domain, paying for web design, and hiring a photographer) all on her personal credit card. She might hope to hit the ground running and generate her first sales within a month. However, if delays arise and early revenue falls short, she may struggle to make minimum payments, potentially damaging her credit just as she begins seeking business financing. While entrepreneurial spirit remains strong, many are taking financial risks without a safety net. Can you realistically start a business while still carrying personal debt? The answer is yes, but it requires financial awareness, strategic planning, and intentional execution. Here are five expert-backed steps to help you build a business even if you're still paying off personal debt. Before you can map a path forward, you need to understand exactly where you stand. 'The first financial step is to perform a comprehensive review of personal finances and the business idea,' says Chris Heerlein, CEO of REAP Financial. 'You should review all current debt obligations, monthly income, and your monthly living costs.' This involves identifying your debt-to-income ratio, understanding and eliminating unnecessary spending, and determining whether you can safely allocate funds toward your business idea without jeopardizing essential financial obligations. Starting a business often requires a lifestyle shift and a reorganization of your financial priorities. When you are already managing personal debt (especially if it is high-interest or weighing down your cash flow), launching a business without a financial plan can quickly backfire. A business built without financial clarity risks becomes another liability instead of a source of freedom. Understanding the personal systems that support your entrepreneurial goals is just as critical as setting up business systems. This is where financial strategy becomes your foundation and not just another task in your business. Blending personal and business money may be the reality for new entrepreneurs. Still, while it can seem harmless in the early days, it is one of the fastest ways to create confusion, tax challenges, and long-term credit damage. 'You will want to have a plan of action to reduce your higher interest rate debt first,' says Heerlein, CEO of REAP Financial. 'It will also be important to have allocated your emergency fund for personal use and calendar in seed money for the business.' And I agree. Most of the entrepreneurs I work with have a mix of personal and business accounts and expenses that prevent them from separating, analyzing, and strategizing around their financial priorities. This kind of separation can begin by identifying the purpose of each purchase. If an expense benefits personal life (like groceries, streaming services, or household items), it should be logged and paid from a personal budget. Business-related expenses such as marketing, software, or inventory belong in a separate business budget. For example, a founder using the same credit card for both business supplies and weekend shopping might believe it is efficient, but over time, it creates confusion. Even when the payment method is shared, the budgets must remain distinct. That means maintaining two separate spending plans, each with its own starting balance, cash flow tracking, expense categories, and short-term financial goals. When personal living costs and debt obligations are prioritized first, whatever remains can be allocated for business growth. This separation helps clarify how much the business can truly afford to spend, and what needs to wait. Developing a Minimum Viable Product (MVP) is one of the most viable ways to balance launching a business with managing personal debt. While the MVP concept is often associated with tech startups or venture-backed companies, it is just as critical, if not more so, for founders who are self-funded or seeking to minimize financial risk. Launching lean is often a smarter path when personal debt is already part of your financial picture. It helps you validate your idea without making a big investment upfront. 'You may also experiment and pursue a strategy to set reasonable goals for the business and start very small with no major expense commitments,' says Heerlein. 'Thus, you will not burn too much cash and can shift your mindset and business approach as your financial position gets better.' This is the mindset behind an MVP: the simplest and most cost-effective version of your offering for a specific problem is the one you should go with to find your first funding, sales, or proof of concept. Before spending thousands on branding or infrastructure, you may ask: Can I offer a service version of my product? Can I sell through an existing marketplace? Can I build demand locally through referrals or small events? Some of the people who now have six-figure side hustles have achieved this with great results to show for it. Many entrepreneurs start by wanting to grow quickly, and so they allocate their expenses with that goal in mind. But when you are managing personal debt, that mindset must be balanced with intentional prioritization, covering your financial essentials while giving your business room to grow. 'In any case, you should maintain personal living expenses first before paying down debts,' says Heerlein. 'This ensures you don't adversely impact your credit status and incur penalty fees.' That means making sure your basics, like housing, food, transportation, and ideally more than just the minimum payments on your debt, are covered before directing funds into your business. Once those essentials are accounted for, you can begin to allocate cash toward startup costs. However, your focus should remain on preserving short-term solvency, ensuring you have enough liquidity to meet near-term obligations without relying on credit cards or triggering new financial stress. Whether you are paying yourself a small founder's draw or bootstrapping operations, the goal is to maintain access to working capital while avoiding premature cash depletion even if this may mean temporarily scaling back on discretionary spending in both your personal life and inside your business. When capital is limited, it can be tempting to rely on personal credit cards or take out high-interest personal loans to fund your business. But doing so often compounds your debt burden, making it harder to gain financial traction. 'At all costs, avoid high-interest personal loans and do not pay personal credit card debts with business expenses,' warns Heerlein. 'It creates more personal financial burden and will not give you further leverage in your business.' If additional funding is necessary, the goal is not just to access capital, but to access it strategically. Look for low-interest, flexible financing options like SBA microloans, community lenders, or CDFIs that support early-stage entrepreneurs, particularly those from underserved communities. Other funding alternatives may also be viable. For example, grants can serve as a strong source of non-dilutive capital, particularly for mission-aligned businesses or founders from underrepresented groups. Additionally, crowdfunding could be a feasible path if you offer a tangible product with clear value. For founders in high-growth industries, equity-based funding should be considered; however, proceed with caution. Giving up ownership too early or under pressure may limit your control in the future. The bottom line is that personal debt remains a significant aspect of the financial equation for many. To succeed and avoid harming your personal financial health, a clear structure and commitment to intentional financial actions are essential. From assessing your financial situation to choosing funding wisely, these five steps provide a roadmap for those looking to start a new business while managing personal debt.
Yahoo
9 hours ago
- Business
- Yahoo
2 Large Regional Bank Stocks That Could Get Acquired During the Trump Administration
Mergers and acquisitions (M&A) could pick up in the banking sector under the Trump administration, which plans to deregulate the sector. Large regional banks could experience consolidation. The large regional players need to scale if they want to compete with the likes of JPMorgan Chase and Bank of America. 10 stocks we like better than Comerica › The banking industry is ripe for consolidation. Although there were more than 4,500 banks in the U.S., as of last year, four, in particular, collectively control trillions in assets: JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup. While smaller banks will keep gobbling each other up and merging to obtain scale, this could also take place in the large regional banking market, among banks with $75 billion to $700 billion in assets. Regulators under President Donald Trump's administration have given the sector the green light for mergers and acquisitions, a stance that wasn't embraced under former President Joe Biden's administration. If the large regional banks truly want to compete against the big four, they're going to have to get bigger. Acquisition candidates typically can command a nice premium for shareholders. Here are two banks that could get acquired during the next four years. At the end of the first quarter of 2025, Comerica (NYSE: CMA) had about $78 billion in assets and operates in attractive U.S. banking markets like Texas and states in the fast-growing Southeast of the U.S. This is an awkward size for a regional bank these days, because it is too big to be a local bank, but not nearly big enough to compete with the bigger players. Furthermore, $100 billion has previously been a battleground for banking regulators under various administrations when thinking about the size threshold they consider too big to fail -- meaning they're so crucial to the financial system that regulators will bail them out if they are at risk of failing. As such, investors frequently have to reassess regulations and capital requirements for banks around this size. Last year, Comerica announced it will not be extending a banking relationship with the U.S. Treasury Department that provided it with $3 billion in noninterest-bearing deposits, which is essentially a free funding source, although the agreement will continue for the next few years before the transition, which could partly explain its low valuation relative to peers. When looking at acquisitions, it's important to look at a bank's price-to-tangible book value (TBV), which shows its price relative to its tangible equity, or what the bank might be worth if it were liquidated. The higher a bank's price-to-TBV, the more likely it is to be a buyer because its stock currency is more valuable, so it could buy banks with smaller price-to-TBVs and see less dilution in an all-stock or part-stock deal. Here is the price-to-TBV of several major U.S. regional banks. Now, just because Comerica sits at the bottom of the group doesn't mean it will automatically be acquired. However, it makes an acquisition more palatable for a buyer. At the end of the day, banks are sold and not bought, meaning Comerica is going to have to raise its hand if it wants to sell. Interestingly, though, Chief Executive Officer Curtis Farmer is 62 and has a change-in-control (CIC) agreement with the bank that would earn him a payout of more than $35 million in the event that the bank changes hands, among other potential benefits that could be lucrative. KeyCorp (NYSE: KEY) is another bank that could be gone by the time the Trump administration ends. As you can see in the chart, the bank also falls lower in the pack in terms of price-to-TBV. However, KeyCorp could be attractive, due to its strong capital light, fee-based businesses, including investment banking and trust. Any bank that wants to compete with the big four needs to bulk up in investment banking, and acquiring KeyCorp would be a step in that direction. Additionally, KeyCorp last year sold a 14.9% stake to the Canadian-based lender Scotiabank for $2.8 billion in order to obtain more capital flexibility. This helped it restructure its bond portfolio, which fell underwater amid the higher-interest rate environment during the past few years. The agreement with Scotiabank only allows it to increase its stake in KeyCorp to 19.9% for the next five years, although some analysts have speculated on whether a full acquisition could be in Scotiabank's future. Still, I don't believe this prevents another bank from buying KeyCorp if the bank were to be interested in selling. KeyCorp's CEO Chris Gorman is 64 and also stands to make a lot of money if the bank is acquired, with a CIC agreement that would pay out close to $35.7 million. Before you buy stock in Comerica, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Comerica wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $853,108!* Now, it's worth noting Stock Advisor's total average return is 978% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, JPMorgan Chase, PNC Financial Services, and U.S. Bancorp. The Motley Fool recommends Bank Of Nova Scotia and Regions Financial. The Motley Fool has a disclosure policy. 2 Large Regional Bank Stocks That Could Get Acquired During the Trump Administration was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17 hours ago
- Business
- Yahoo
Trump's policies risk inflating a new market bubble, BofA says
The Trump administration's policies risk fueling a bubble in parts of the market, BofA said Friday. The firm cites the combination of lower taxes, lower tariffs, and lower rates being pursued by the White House. BofA says the policies could incentivize a pronounced rotation out of bonds into crypto and AI. Bank of America said on Friday that a policy trifecta of lower taxes, lower tariffs, and lower interest rates could fuel a new speculative bubble in markets. The prediction comes as Donald Trump's "big beautiful bill," which would lower taxes among other fiscal measures, sits with the Senate after passing the House of Representatives last week. Meanwhile, Trump continues to pursue trade deals and has ramped up calls for the Fed to lower interest rates. BofA investment strategist Michael Hartnett said that policy could fuel a "deeper" rotation out of bonds and into a handful of areas of the stock market — most notably AI and the high-flying tech names that make up the Magnificent Seven — as well as crypto. Hartnett flagged the relationship between the stock and bond markets as a telltale sign of a bubble forming. An inversion of the classic "bonds master, stocks servant" dynamic has been a mark of past speculative frenzies, with this kind of market behavior seen in 12 of the last 14 bubbles, he noted. The 30-year Treasury touched the highest level since 2008 last week as markets tumbled over fears about the GOP budget bill adding to the US deficit. "Nothing screams bubble more than equities driving nominal/real yields higher," Hartnett wrote. The analysts added that based on past market manias, the Magnificent Seven could see a fresh gain of 30% before the group peaks. The speculation mentioned by Hartnett may already be underway, with so-called low-quality stocks outperforming the broader market over the past few weeks. This dynamic was first pointed out by Bloomberg in a story published Thursday. Illustrating this dynamic, a basket of low-quality stocks compiled by UBS — which counts meme stocks like GameStop and AMC among its components — has handily beaten the S&P 500 since its recent bottom on April 8. Crypto has also seen gains in recent weeks, highlighting the speculative, risk-on mood that's returned as investors work past the tariff chaos that sparked April's big sell-off. Bitcoin is trading at fresh records, hitting an all-time high above $112,000 last week. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
18 hours ago
- Business
- Yahoo
Trump's policies risk inflating a new market bubble, BofA says
The Trump administration's policies risk fueling a bubble in parts of the market, BofA said Friday. The firm cites the combination of lower taxes, lower tariffs, and lower rates being pursued by the White House. BofA says the policies could incentivize a pronounced rotation out of bonds into crypto and AI. Bank of America said on Friday that a policy trifecta of lower taxes, lower tariffs, and lower interest rates could fuel a new speculative bubble in markets. The prediction comes as Donald Trump's "big beautiful bill," which would lower taxes among other fiscal measures, sits with the Senate after passing the House of Representatives last week. Meanwhile, Trump continues to pursue trade deals and has ramped up calls for the Fed to lower interest rates. BofA investment strategist Michael Hartnett said that policy could fuel a "deeper" rotation out of bonds and into a handful of areas of the stock market — most notably AI and the high-flying tech names that make up the Magnificent Seven — as well as crypto. Hartnett flagged the relationship between the stock and bond markets as a telltale sign of a bubble forming. An inversion of the classic "bonds master, stocks servant" dynamic has been a mark of past speculative frenzies, with this kind of market behavior seen in 12 of the last 14 bubbles, he noted. The 30-year Treasury touched the highest level since 2008 last week as markets tumbled over fears about the GOP budget bill adding to the US deficit. "Nothing screams bubble more than equities driving nominal/real yields higher," Hartnett wrote. The analysts added that based on past market manias, the Magnificent Seven could see a fresh gain of 30% before the group peaks. The speculation mentioned by Hartnett may already be underway, with so-called low-quality stocks outperforming the broader market over the past few weeks. This dynamic was first pointed out by Bloomberg in a story published Thursday. Illustrating this dynamic, a basket of low-quality stocks compiled by UBS — which counts meme stocks like GameStop and AMC among its components — has handily beaten the S&P 500 since its recent bottom on April 8. This embedded content is not available in your region. Crypto has also seen gains in recent weeks, highlighting the speculative, risk-on mood that's returned as investors work past the tariff chaos that sparked April's big sell-off. Bitcoin is trading at fresh records, hitting an all-time high above $112,000 last week. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Fast Company
2 days ago
- Business
- Fast Company
How To Embrace Enterprise AI: A Conversation with Bank of America's Hari Gopalkrishnan
While consumer tools like ChatGPT dominate headlines, IT leaders face an even tougher challenge: keeping pace with an explosion of data demands while making the right infrastructure bets to support enterprise‑scale AI. Strategy is key; and there's no better way to implement the right AI strategy than hearing directly from the pros who have successfully made artificial intelligence work for them and their teams, and ultimately their clients. In this virtual discussion, Hari Gopalkrishnan, head of consumer, business, and wealth management technology, Bank of America, shares how to incorporate security, compliance, and resilience into your corporation's AI infrastructure. '
