By Meeta Vengapally
Loans can be kind, or punishing, but there are also creative ways around them.
Debt is what everyone, and no one, wants to talk about. As an entrepreneur, I know that taking on debt as a tool to grow your business can be helpful, if not fundamental. Debt is sometimes necessary for artists, too. As a mother of two young performers in Hollywood, I know just how expensive it is to get them the right training, mentorship, wardrobe, and other necessities.
Let’s face it—to make money, you need money. It’s a hard reality for many of us in pursuit of anything—especially those endeavors that require creativity, as entrepreneurship does. We need training, capital, goods and services, and a team to accomplish any worthwhile venture. Also, with our current climate, it’s obvious that many need to take on student loan debt to even be competitive in their field.
Professionals suggest that there is such a thing as “bad” and “good” debt. Does this hold up for artists and entrepreneurs?
Let’s begin with entrepreneurs. The point of borrowing is to help your business grow while anticipating those loans will yield returns that repay whatever was borrowed. The intention is to gain upon your investment, with interest, long after the loan is taken out. Keep in mind that this is the goal. There are no guarantees, but if others are contributing to your business with confidence, that’s a good indication that you have something to give.
Any entrepreneur reading this will understand that much upfront legwork is necessary before you can get the funding you need. You have to pitch your idea, find funding options with realistic repayment plans, and also—the holy grail—search for grants. Now let’s look at this from the perspective of artists and performers. My children Winston and Sitara put so much effort and dedication into their art form, but their dream doesn’t come cheap. Many young artists in Hollywood are shocked by the financial capital necessary to get their foot in the door—even after investing their hard work and passion.
The word “debt” fills everyone with anxiety. If you attended a school for the arts, went into debt, and never enjoyed the career that might have paid that debt, it can cause profound internal stress—even shame. If you’re an entrepreneur who secured several loans for your big new idea and that idea never took off, you’re also left with financial and emotional consequences. This leads us back to the big question: should any of us be taking out debt at all?
There is “good” debt, in my opinion—debt for the higher cause of achieving your dream. Those who dream big and take on student or business loans use that money to make their vision come to life. Those who are charging luxury shopping bills to their credit cards without a plan for paying them off will have a serious problem. As I’m sure you know, this comes down to interest rate, but it also comes down to the fact that a hefty purchase on a credit card has nothing to do with what you want to build in the future.
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Debt isn’t good or bad in and of itself, and taking it on is about priorities and what matters to you. If debt has fueled your business, art, or passion, and you pay it off over the years, then you used that money to achieve something amazing! If you took those funds and struggled to pay them off, you’ll still not regret your arts education, your push to create something great in the world, or whatever life-changing experience you received funding for. However, you’ll feel the financial pain.
In the end, the money you choose to borrow or not borrow is about you. Every circumstance is different. If going to that art school or receiving that coaching from a top mentor will be the time of your life, then get a loan. If my children wanted to go to a fancy theatrical school with a high price tag, I’d first consider grants, scholarships, or even a more affordable school. That’s because there’s always another path you can choose to take. Loans can be kind, or punishing, but there are also creative ways around them.
What’s fundamental here is that you do not simply take out a loan because you feel like you have no other option. Just as I’d shop around if someone came to my company offering excellent services at a steep cost, it’s wise to take some time to explore all available funding alternatives. The point is—never borrow money out of desperation when pursuing your dreams. Slow down, breathe, and always know that there are countless possibilities out there.
Have a vision for your business and career, and go bare bones in your personal life when borrowing money to achieve your future. As a good rule of thumb: borrow as little as possible, look for the lowest interest rate, and only accrue debt geared toward your advancement—not personal debt for things you don’t need. If the option is available to you, seek out loans from friends and family. Of course, make sure these are secure connections and you’re able to pay the money back if you need to. A family loan that you can’t repay will have repercussions on relationships.
If you choose to take out a loan, deeply investigate every lender, their interest rate, and what those payments will look like realistically. Getting caught up in your passion and not wanting to analyze the numbers is easy. The aftermath is hard. I highly recommend a financial planner—this is a must for entrepreneurs—or if you’re a young artist just starting out, speak to a trusted mentor or family member to understand the logistics of what being a lendee looks like for your future.
Crowdfunding is another option that is more popular than ever. Yes, we all want an angel investor (for my kids, that’s me!), but crowdfunding is a great option when you don’t want to accrue debt and need some excited individuals to give to a cause they believe in. With social media, it’s easier than ever to put your big dream out there and get support from those who want to contribute. Should this be your avenue for gaining funds, be sure to use it wisely and keep those who have contributed informed of your progress. Another option is grants—which you should always pursue if they apply to what you’re doing.
When borrowing to pursue your dreams, know that there’s no shame in it, and you might seriously benefit. Be focused, understand how these loans will affect you in the years to come, and never be afraid to ask for help or advice. “Good” debt—which exists—propels your vision, and those around you are enriched by your enthusiasm. This means that if you have a fantastic idea for a company or an artistic talent that will light up the world, go get that funding. If you want to achieve that goal without taking out a loan, the sky is still the limit. If you’re creative, you’ll find that there’s always a way.
About the Author
Meeta Vengapally is founder and CEO of Garnysh and a Top Influencer on social media, where she is a spokesperson for over 700 brands. Follow Meeta on Instagram, read her profile on Forbes, and see her articles and full bio at AllBusiness.com.
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