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Should You Take on Business Debt? Here’s What You Need to Know First

Money coach Ciara Stockeland shares how to use debt wisely—and what to do if it’s already weighing you down

Let’s talk about something that keeps a lot of store owners up at night: debt. It’s one of the most common questions we hear:

“Should I take out a loan to grow?”
“How do I know if debt is helping—or hurting me?”
“Is it even possible to get out of this hole?”

On the podcast, I sat down with Ciara Stockeland, money and inventory coach for ecommerce store owners, to get real about what debt actually means for small businesses. The truth?

Debt isn’t good or bad—it’s just a tool.

But like any tool, it’s dangerous if you’re using it without a plan. If you’ve ever had debt stress,  keep reading.

Not All Debt Is Created Equal

One of the biggest mistakes store owners make is treating all debt the same. But lumping everything together—credit cards, loans, lines of credit—just makes it harder to make smart decisions.

Ciara broke it down for us. There are five primary types of debt most product-based business owners encounter, and each one comes with different levels of risk, flexibility, and long-term impact.

“Debt has no moral authority. It’s a tool—but you have to understand why you’re using it.”

Here’s how they stack up:

1. Conventional Debt

These are your traditional, bank-issued term loans, Small Business Administration (SBA) loans, or even a home equity line of credit (HELOC). They typically have lower interest rates and predictable payment terms over several years.

When it’s good: You have strong financials, a solid plan, and need capital for long-term investment (like equipment, expansion, or a bulk inventory buy).

Watch out for: Approval can be slow. You’ll likely need a good credit score, and possibly collateral. And if you’re not confident in your repayment timeline, it can become a burden fast.

2. Shark Loans

These are the quick-cash offers from platforms like Shopify Capital, PayPal Working Capital, or Square Loans. They’re fast and easy—usually based on your sales history. But they take a daily percentage of your sales until the loan is repaid.

When it’s good: Rarely. These can be helpful in very short-term, high-margin scenarios if you absolutely know the ROI.

Watch out for: These loans siphon your cash every day—which means your bank balance might never rise even when sales do. Many store owners feel stuck in a cycle they can’t get out of.

3. Credit Cards

We all know them—and most of us have used them. They’re flexible, accessible, and easy to use for emergencies or shortfalls.

When it’s good: If you pay them off monthly and use rewards strategically, they can be helpful for cash flow.

Watch out for: High interest rates, creeping balances, and the temptation to spend money you don’t actually have. They often become a catch-all for “I’ll figure it out later” spending.

4. Owner or Family Loans

These are informal loans from yourself, a spouse, or a supportive relative. They’re often interest-free and come with emotional strings.

When it’s good: If documented and repaid with intention, they can be a great source of startup capital.

Watch out for: Guilt. Resentment. Avoiding repayment because “it’s just family.” These should be formalized with terms so they’re treated like any other loan.

5. Lines of Credit

A line of credit gives you access to funds up to a limit that you can draw from and repay repeatedly—similar to a credit card, but usually with lower interest and more structure.

When it’s good: For managing seasonal swings or buying inventory when you know the sales are coming. Great for businesses with predictable needs and repayment plans.

Watch out for: Treating it like free money or using it to plug holes you haven’t actually fixed. A LOC works best with discipline and a clear cash flow plan.

By understanding the purpose and impact of each type of debt, you can make better decisions—not just about how to borrow, but whether to borrow at all.

Don’t Ask “Which Loan?”—Ask “Why Now?”

Here’s the real game-changer: before you even think about what kind of loan to take, you need to understand why you need the money.

Because sometimes, the problem isn’t a cash shortage—it’s a margin problem. Or a growth problem. Or a pricing problem.

“If you don’t understand why you’re short on cash flow, you’re just going to end up with more problems—plus the debt.”

So before you click “accept” on that Shopify Capital offer, ask yourself:

• Am I borrowing to fuel healthy growth—or cover a hole?
  
• Is my pricing and margin set up to support this expansion?
  
• What’s the plan to repay this?

If you can’t answer those questions confidently, hit pause.

The Quick Math Problem That Tells You If You’re Ready

Before taking on debt, Ciara recommends a quick but powerful exercise:

1. Write down last month’s sales
   
2. Subtract your cost of goods sold and all expenses (including what you pay yourself)
   
3. What’s left over?
   
4. Now look at your projected debt payment. Can you cover it with what’s left?

If the answer is no—or if you’re already using debt to pay debt—that’s your red flag.

When Debt Does Make Sense

Not all debt is bad. In fact, some of Ciara’s most successful clients use debt as a tool—with a very clear plan.

She shared the story of a skincare brand owner who used a line of credit once a year to buy all of her inventory in bulk. The margin was strong. The plan to sell was in place. And the payback strategy was rock solid. After a few years, she transitioned to using her own cash.

“She never has to go to the bank again. And she’s making money on her money.”

That’s the goal—not never borrowing, but building a business that doesn’t rely on borrowing.

Already in Debt? Here’s What to Do

If you’re already juggling multiple loans, credit cards, or lines of credit, Ciara laid out a 5-step strategy to start untangling it:

1. Pay off shark loans first. These hurt your cash flow the most because they take a chunk of your sales every single day.
   
2. Formalize any owner/family loans. Put them on paper. Make them feel real.
   
3. Start building an inventory savings account. Even $50/month helps.
   
4. Consolidate or refinance remaining debt into one manageable term loan, if possible.
   
5. Tackle credit cards last. Why? Because credit cards are usually a symptom—not the root problem.

“Once you change your behavior, the credit card takes care of itself.”

Peace of Mind Starts With a Plan

This conversation wasn’t about fear or shame—it was about clarity.

Debt can feel heavy and confusing. But when you understand the numbers, the options, and the why behind your decisions, you stop reacting—and start leading.

You don’t need to be debt-free tomorrow. You just need to make your next move on purpose.

RELATED LINKS:

Check out Ciara’s Website: https://www.ciarastockeland.com/

How to get control of your $

https://thesocialsalesgirls.com/how-to-get-control-of-your-episode-158/

Frustrated by wasting time and money? A new approach for getting ROI

https://thesocialsalesgirls.com/frustrated-by-wasting-time-and-money-a-new-approach-for-getting-roi-episode-183/

How to Create Profit Goals

https://thesocialsalesgirls.com/how-to-create-profit-goals-episode-209/

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