student loan

Does Student Loan Debt Impact Small Business Formation?

Consider the following scenario: you go to school, work hard, finish your degree, and are ready to hit the ground running. You have a killer business idea that you are certain will be successful and provide you with a significant return on your investment in your education. There is one problem, however: you used student loans to get through school and now the bank is telling you that they will lend to you because of your student loan debt. Suddenly, the very thing that is supposed to allow you to get ahead (your education) is keeping you from realizing your dreams.

According to a working paper published by researchers at the Federal Reserve Bank of Philadelphia, more and more would-be entrepreneurs are finding themselves in this situation. Their findings indicate that high levels of student loan debt are making it difficult for many entrepreneurs to obtain financing through traditional banks. The authors go on to state that “given the importance of an entrepreneur’s personal debt capacity in financing a startup business, personal debt that is incurred early in life and that restricts a person’s ability to take on future debt can have profound implications for the growth in small businesses.”

Incorporation may Help Entrepreneurs Raise Capital

If you are a potential entrepreneur who is having trouble obtaining financing due to your student loan debt, an attorney may be able to help. While businesses like LLCs and partnerships often rely on their founders’ credit-worthiness to qualify for financing, corporations have their own legal identity and are able to issue securities in order to raise capital. Unfortunately, forming a corporation is generally much more complicated than forming other business entities and there are laws and regulations with which you must comply if you choose to operate as a corporation. Fortunately, when you retain a New Jersey business formation lawyer to help you incorporate, you can rest assured that your company will be formed quickly, efficiently, and in accordance with the relevant state law.

Call 732-422-1000 today for a consultation.

If you are considering forming a small business, you should speak to a lawyer regardless of your student loan debt load. In many instances, a lawyer can help you avoid experiencing legal problems that could have a negative effect on the success of your business. To learn more, call Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, PC today to schedule a consultation with a business law attorney.