I Took Out $90,000 In Business Debt And It Didn't Work Out

Summary

Podcast Summary: I Took Out $90,000 In Business Debt And It Didn't Work Out

The Ramsey Show Highlights | March 26, 2026
Hosted by: Dave Ramsey & Rachel Cruze
Caller: Steve

---

Episode Overview

This episode centers around Steve, a small business owner in the deck and carpentry industry, who took out $90,000 in business loans hoping to scale his business through a slow season. With revenues falling short and loan payments becoming unsustainable, Steve calls Dave Ramsey and Rachel Cruze for advice. The discussion covers the dangers of borrowing to expand, the realities of debt consolidation, and practical, tough-love steps to work out of the debt.

---

Key Discussion Points

Steve’s Situation (00:08 – 01:42)

• Steve borrowed $90,000 to grow his carpentry business and get through a seasonal slump.
• The strategy: use the funds for marketing, home shows, and hiring a sales rep.
• The reality: business didn’t grow as planned, sales slumped, and weekly loan payments ($2,400) became overwhelming.

“I intended to spend that money on marketing, doing some home shows... just ramping up the sales and kind of muscling through the slow season with still bringing in revenue. But the weekly payments were just more than what we could handle.”
— Steve (01:05)

The Hard Truth About Debt for Small Business (01:42 – 03:20)

• Dave emphasizes the added stress that debt brings and its negative impact on running a business.
• Steve’s business saw decent growth:
  • $250,000 revenue in 2024
  • $350,000 in 2025
  • $440,000 by end of 2025
• Dave underscores the lesson: Borrowing money to expand a small business is a “dumb idea.”

“I hope that you’ve learned your lesson that borrowing money to expand your business is a dumb idea.”
— Dave Ramsey (02:41)

Income and Budget Discussion (02:52 – 03:20)

• Steve and his wife have household incomes of $170k and $115k.
• Brief exchange highlighting past cycles of borrowing.

Dave’s and Rachel’s Approach to Expansion and Debt (03:20 – 06:44)

• Rachel and Dave stress using profits, not loans, to expand.
• Dave credits Steve as the “magic sauce”—the driving force behind business growth.
• Steve’s path forward is to double down on production, not seek financial shortcuts.
• Discussion on the types of loans Steve took—micro-advances and short-term business loans with high risk.

“The magic sauce you thought was marketing and some sales guy was. When it turns out, listening to your sales numbers, you were the magic sauce. You took a business from $250 to $450 in 12 months. That’s pretty freaking incredible.”
— Dave Ramsey (03:22)

Exploring Debt Consolidation (And Why It’s a Bad Fit) (06:44 – 08:02)

• Steve considered debt consolidation with “Coastal Debt Consolidation” but hasn’t signed anything.
• Dave explains debt consolidation usually isn’t set up for small business loans but consumer debt.
• Debt consolidation companies often drive loans into default to negotiate, trashing your credit—effectively similar to bankruptcy.
• Dave’s advice: Don’t use debt consolidation or bankruptcy; instead, dig out through work and revenue.

“They typically take credit card debt or consumer-based debt, not small business rip-off debt and don’t pay the payments for a period of time destroying your credit...and that’s the only way this is going to happen.”
— Dave Ramsey (06:26)

“Bankruptcy and the debt consolidation—in this case—the way this is laid out, I wouldn’t do it.”
— Dave Ramsey (06:36)

---

Practical Advice to Turn Things Around

1. Focus on Generating Revenue—Rapidly

• Spring and summer are busy seasons for the deck business (07:00).
• Steve should push to fill his production pipeline, take deposits, and pay the debt aggressively.

“I want you to work all the time. I want you to work so much you're about to collapse. And that is your answer.”
— Dave Ramsey (07:07)

2. Avoid Debt Consolidation and Bankruptcy

• Both options would devastate his credit, with minimal net benefit.

3. Owner’s Mindset: YOU are the Secret Sauce

• Steve’s hands-on effort and hustle drove past growth—return to that formula.

4. Settle Directly if Needed

• If default is inevitable, Dave suggests Steve could negotiate directly with creditors for lump-sum settlements to minimize damage.

“If you want to quit paying them, pick out one and let it go into default, then save up a lump sum and settle with them.”
— Dave Ramsey (08:02)

---

Notable Quotes & Memorable Moments

• On borrowing to expand:
  “Borrowing money very seldom works, especially in these scenarios.”
  — Dave Ramsey (03:22)

• On recognizing what truly drives the business:
  “The secret sauce to my business’s rapid growth and success has always been me. Not something I can buy with $90,000.”
  — Dave Ramsey (06:36)

• On the reality of debt consolidation companies:
  “It’s good for America to hear these names because if you hear these names—run.”
  — Dave Ramsey (04:59)

---

Important Timestamps

• 00:08 – Steve explains his business debt situation
• 01:42 – Dave discusses the impact of debt and correlates with Steve’s business revenue
• 03:22 – Dave: Borrowing money seldom works for expansion
• 04:34 – Steve lists specific creditors
• 06:26 – Dave critiques the debt consolidation option
• 07:07 – Advice to aggressively work out of debt during peak season
• 08:02 – Direct settling advice if default is unavoidable

---

Summary

Dave and Rachel give Steve no-nonsense advice: using debt to fund business growth is risky and usually backfires, as it did in Steve’s case. The path to recovery? Hard work, focus on sales, and paying down debt quickly—NOT debt consolidation or bankruptcy. Steve’s best asset is his drive and hands-on involvement, not borrowed money.

Listeners are urged to learn from Steve’s experience: if you’re tempted to borrow to grow your business, don’t. Build slow, use profits, and keep control.

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Steve]

I took out some loans for my business last year totaling about 90,000. And I am unable to afford the payments now, of course, went through the slow season, being that we are in the deck and carpentry business. And so that was pre taxing on funds. And so I'm looking to join a debt consolidation program here that will reduce my weekly payments 2,400 down to $1,200. I'd like to do that, but my wife asked me to call you, so.

[Rachel]

Oh, man, what a motivation. Call Steve.

[Dave Ramsey]

Yeah. So you borrowed $90,000 for what?

[Steve]

The deck business. I was looking to scale it.

[Dave Ramsey]

And you didn't?

[Steve]

No. Going into the slow season here, we did not.

[Dave Ramsey]

Well, I mean, you knew it was a slow season when you borrowed the $90,000.

[Steve]

Yes, that's correct. I intended to spend that money on marketing, doing some home shows, upping our marketing budget through that time, bringing on a salesperson, just ramping up the sales and kind of muscling through the slow season with still bringing in revenue. But the weekly payments were just more than what we could handle. The sales didn't go in the same trajectory that I had planned on, and we did very poorly these last couple months in sales.

[Dave Ramsey]

Okay, well, there's a correlation between doing poorly in sales and the slow time and the fact that you dumped $90,000 in stress on top of your own head, and that affects you running your business. Well, I've been there. I remember. And it's not. It's not a fun thing. So you're really feeling this pinch hard. So what does your business make? What's your gross revenues on your business in a year?

[Steve]

So we're in year. We're going into year four now. We went from 250,000 in 2024 to 350,000 in 2025. I'm sorry, that was around September. Here we got to 440,000 at the end of 2025. We did about 100k in sales in September.

[Dave Ramsey]

Okay, so the first thing is, I hope that you've learned your lesson that borrowing money to expand your business is a dumb idea.

[Carlos]

How much money do you have to make where budgeting is just optional if you chose c. Watch this.

[Steve]

She makes about 170. I make about 115. Hold on.

[Carlos]

Did you go back after you paid off everything, borrow some more money?

[Steve]

Oh, yeah.

[Carlos]

Oh, no.

[Steve]

Carlos who like to go here and there and get this Mercedes and.

[Rachel]

Oh, no, you went full South Beach.

[Carlos]

It's not just about how much you make. It's about having a place plan for what you've got. So start budgeting with every dollar for free today.

[Dave Ramsey]

It's a dumb idea.

[Steve]

Yeah, I don't, I do not intend

[Dave Ramsey]

to do that ever again. Okay, so the next time you get ready to expand, expand. Use your profits to expand and don't take as much home or don't expand. One of the two. Okay. Those are your two options. Borrowing money very seldom works, especially in these scenarios. What you described here. So you, the magic sauce you thought was marketing and some sales guy was. When it turns out, listening to your sales numbers, you were the magic sauce. You took a business from 250 to 450 in 12 months. That's pretty freaking incredible. And so that's your answer to get out of this debt is for you to take the business and kick it in the butt and get it going. And if you hire more people to do more decks during the season, that's fine. The debt consolidation loan, I do not know. How did you borrow the 90,000? What kind of debt is it? Credit cards?

[Steve]

No, it's. They were micro advance kind of loans. They were a. It was a short term loan is what it was. So they were short term loans.

[Dave Ramsey]

Who do you owe the money to?

[Steve]

There's three different creditors. One is. You want me to name the creditors on here?

[Dave Ramsey]

Yeah, yeah.

[Steve]

Okay. Yeah, we had micro advance forward financing and then we had what I thought was a debt consolidation loan, Fratello Capital.

[Dave Ramsey]

Okay. So it's good for the, it's good for America to hear these names because if you hear these names run.

[Rachel]

Yeah. Have you contacted a debt consolidation company already, Steve?

[Steve]

Yeah, yeah, there's one that I plan to work with called. It's a Coastal debt consolidation.

[Rachel]

Okay. How far along are you in the process?

[Steve]

Haven't signed anything yet.

[Rachel]

Okay, good.

[Dave Ramsey]

I don't think it'll work. Okay. Because what debt consolidation companies do is they typically take credit card debt or consumer based debt, not small business rip off debt and don't pay the payments for a period of time destroying your credit and then renegotiate based on the fact that the loans are in default and get a lower rate or a better payment rate. And that's the only way this is going to happen. They're going to put you into default. And so it's going to do to your credit the same thing a Chapter 13 would do to your credit. Chapter 13 bankruptcy would do the exact same thing. It'll let you renegotiate the debt payments and put them on a five year plan and, and get it where you can breathe. But it's bankruptcy and the debt consolidation. In this case. The way this is laid out, the way these loans are laid out is that way I wouldn't do it. Instead what I would do is say I'm gonna look in the mirror and say the secret sauce to my business's rapid growth and success has always been me. Not something I can buy with $90,000 and I'm gonna strap a tool belt on me and about six other people and I'm gonna go build a whole bunch of decks and I'm gonn and rice and I'm gonna pay the whole thing off quickly and get rid of it.

[Rachel]

Do you have any retained earnings in the business, Steve? Any cash?

[Steve]

No, hardly. Not at this point. Not after a few months of making those payments.

[Dave Ramsey]

Yeah, yeah.

[Rachel]

When does season pick up for you? I'm assuming spring, summer?

[Steve]

That's correct. Yep.

[Rachel]

Okay, so we're almost there. I mean it's March, so. Yes, here in the next six months, I'm start booking.

[Dave Ramsey]

I'm gonna start booking stuff left and right, taking deposits and start slamming down money on this 90k and getting rid of it. And I want you to be rid of it in a year. I want you to work all the time. I want you to work so much you're about to collapse. And that is your answer. Because filing bankruptcy or using a debt consolidation company, which in this case is going to sound, look exactly like bankruptcy on your credit. And it does for most of you, by the way. You go into one of these, you know, worn out, tired, retired actors telling you to get debt consolidation on some cable TV thing and then you go do it. And basically they don't pay the payments for about six months. You pay them and then they start settling the debts and. Or they start paying a payment plan on the debts, but by then you're in default on almost everything. And so it trashes your credit.

[Rachel]

And if you're already at that point that you can't pay the payments and you go in default, then you could be the one to negotiate if you need to. Especially with credit card companies.

[Dave Ramsey]

Yeah, if you want to quit paying them, you could quit paying them, pick out one of the three and quit paying them and let it go into default and then save up a lump sum and settle with them. But these are, these were horrible loans. The whole thing, as you can tell, was a horrible idea. But the way out of it is you, I think you have a golden hammer and I'd swing it. Create your free every dollar budget today the simplest way to budget for your life.