Why Solopreneurs Get Debt Wrong
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Welcome to Mind Over Money, a weekly newsletter where I share actionable ideas to help women solopreneurs transform your relationship with money to build financial confidence and independence.
Today's topic: Debt Problem for Solopreneurs
Generally speaking, solopreneurs carry one of two debt positions—and both are costing them.
The first solopreneur has been running a profitable consulting practice for 26 months and pride herself in bootstrapping. She has never applied for a business loan or a line of credit because borrowing feels like something she should be able to avoid if she's doing this right. There have been moments where $8,000 in accessible credit would have changed a decision and the direction of her business. But taking on debt, in her internal model, means something went wrong.
The second solopreneur opened a business credit card the month she started her business. There's $11,000 on it. It started with some software, then a course, then a month where two clients paid late and she needed to cover expenses. She's been paying above the minimum, but the balance has barely moved. The interest rate is 21%, and she tells herself she'll clear it when revenue picks up.
Both of them have a debt problem. The problems just point in opposite directions.
What Defines A Debt Problem?
The word "debt" doesn't land the same way for every solopreneur. For some it triggers a clean, almost automatic avoidance response—borrowing is a last resort, something that happens when you couldn't make the numbers work on your own. For others it's practically ambient, a background financial condition that stopped feeling like an active choice somewhere around month five.
Behavioral economists have studied entrepreneur debt for two decades. The finding is consistent: a meaningful share of small business owners avoid debt and credit because of a deep-seated psychological resistance to it that has nothing to do with actual financial risk.
In other words, the decision is frequently driven more by conditioning than by objective risk analysis.
Your Silent Co-Founder—the set of money scripts running beneath every financial decision you make—almost certainly has a position on debt. If you grew up watching adults treat borrowing as a last resort, a sign of failure, something that happened to people who couldn't hold it together, that script is still running.
Dr. Brad Klontz's research on money scripts identifies Money Avoidance as a pattern associated with financial denial, underspending, and excessive risk aversion—a tendency to self-limit financial capacity even when the numbers would support a different move.
That default has a real cost because avoiding strategic leverage is still a financial decision—it just disguises itself as caution.
The opposite distortion is also in the research.
Money Worship scripts—the belief that more resources will solve all problems, that investing in the business always justifies the cost—are associated with carrying revolving credit card debt. But the psychology is only half of it.
The other half is simpler: most solopreneurs aren't actively choosing their financing instrument. They're defaulting to whichever one requires the least friction.
Studies have shown that 55% of small firms used business credit cards in the past 12 months while only 26% took out loans. The card wins because it's fast, accessible, and doesn't require a single conversation with a banker. That's a convenience default, not a capital strategy.
The real issue isn't the card itself but the mismatch between what the card is designed for (short-term, full-payoff spending) vs. how it's actually being used (funding growth with no clear payback timeline). An instrument with 21% interest rate running indefinitely on expenses that don't generate a traceable return is very expensive financing at best.
Now What?
Resetting the psychological frame on debt is step one. The harder problem is knowing what to do with a specific decision when it's in front of you.
In the next two weeks, I'll share a decision framework for exactly that. Not a rule—"credit cards bad, bank loans good"—but a three-question test you can run on any debt decision in your business, regardless of the instrument or the amount.
The test forces clarity on the three conditions that determine whether debt becomes leverage or pressure: what the capital is funding, what it costs, and whether the return arrives before the debt creates pressure on your business operations.
The framework holds whether you're a consultant managing invoice timing gaps, a content creator whose income payoff is still 6 months out, or a professional services provider with a hard capacity ceiling and a specific credential that would unlock a higher rate tier.
The goal isn’t finding one universal answer. It’s learning to diagnose the tradeoffs correctly every time.
Final Thoughts
Debt is a lever.
Not a verdict on whether your business is working. Not a signal that you've failed at bootstrapping. Not an emergency measure. A lever—a tool for moving something that your current revenue base can't move on its own. But only if it's sized correctly, pointed at the right thing, and applied at a moment when the return will arrive before servicing the debt starts constraining the business.
Both solopreneurs at the beginning of this newsletter are operating with faulty mental models. One treats debt like gasoline near a match. The other treats it like free money. Neither has a decision framework—just a position from years of psychological conditioning.
Next week, I'll share the framework that helps move it from instinct into an operating decision.
Note: There won't be a Mind over Money Discussion Group this coming week. I'll be spending quality time with family and attending my nephew's graduation. We'll resume the Group Discussion the following week!