Contributing Author & Editorial Review
This article was authored and professionally reviewed to provide accurate, actionable financial insights.
GHC Funding
Contributing Author
Alyssa writes about real estate investing, debt-free strategies, and emerging trends in small business finance with a focus on practical insights.
Samantha Reyes
Senior Content Editor
Samantha specializes in editorial strategy, compliance review, and refining complex finance topics into accessible, reader-friendly guidance.
SBA 7(a) & 504 Highlights
- Loan amounts from $100,000 up to $15 million+ (program-dependent).
- Up to 90% financing for eligible acquisitions, real estate, and equipment.
- Use funds for working capital, refinance, expansion, and partner buyout.
- Longer terms (up to 25 years on real estate) to keep payments manageable.
Debt Snowball vs. Debt Avalanche: Which Strategy is Best for Utah Businesses?
Running a business in Utah can be both challenging and rewarding. From managing day to day operations to dealing with market fluctuations, business owners have a lot on their plate. One of the biggest concerns for Utah businesses is managing debt. Many business owners struggle with multiple debts, including loans, credit card balances, and lines of credit. This can not only cause stress and affect cash flow, but it can also hinder the growth and success of the business. To tackle this issue, many business owners in Utah turn to debt consolidation strategies like Debt Snowball and Debt Avalanche. In this blog post, we will discuss the differences between these two strategies and help you determine which one is best suited for your business in Utah.
The Story of a Real Utah Business Owner
To understand the impact of debt consolidation strategies, let’s start with a real-life example of a Utah business owner. We will call her Sarah. Sarah is the owner of a small retail store in Orem, Utah. She had a successful business that was doing well until the pandemic hit. The sudden drop in sales caused by the lockdowns and restrictions left Sarah struggling to keep her business afloat. To keep up with expenses, she took out a loan, opened a line of credit, and maxed out her credit cards. This helped her business survive, but now she is dealing with multiple debts with high-interest rates. Sarah is worried about the impact of these debts on her business and her personal finances. She seeks help from a financial advisor at GHC Funding, and they suggest two debt consolidation strategies- Debt Snowball and Debt Avalanche.
Debt Snowball vs. Debt Avalanche: What are They?
Debt Snowball: The Debt Snowball method is a debt repayment strategy that focuses on paying off the smallest debt first while making minimum payments on all other debts. Once the smallest debt is paid off, the payment amount is rolled into the next smallest debt, and the process continues until all debts are paid off. The idea behind this strategy is that the small wins of paying off debts one by one will provide motivation to keep going.
Need capital? GHC Funding offers flexible funding solutions to support your business growth or real estate projects. Discover fast, reliable financing options today!
⚡ Key Flexible Funding Options:
GHC Funding everages financing types that prioritize asset value and cash flow over lengthy financial history checks:
DSCR Rental Loan
- No tax returns required
- Qualify using rental income (DSCR-based)
- Fast closings ~3–4 weeks
SBA 7(a) Loan
- Lower down payments vs banks
- Long amortization improves cash flow
- Good if your business occupies 51%+
Bridge Loan
- Close quickly — move on opportunities
- Flexible underwriting
- Great for value-add or transitional assets
SBA 504 Loan
- Low fixed rates through CDC portion
- Great for construction, expansion, fixed assets
- Often lower down payment than bank loans
🌐 Learn More
For details on GHC Funding's specific products and to start an application, please visit our homepage:
Debt Avalanche: The Debt Avalanche method, on the other hand, focuses on paying off the debt with the highest interest rate first while making minimum payments on all other debts. Once the highest interest debt is paid off, the payment amount is rolled into the next highest interest debt, and the process continues. This strategy saves money in the long run by reducing the overall interest paid.
Which One is Best for Utah Businesses?
Both Debt Snowball and Debt Avalanche have their own benefits and drawbacks, and the best strategy for your business in Utah will depend on your specific financial situation. Here are a few factors to consider when deciding between the two:
- Credit Score Requirements: Debt Snowball does not have any specific credit score requirements, making it more accessible for businesses in Utah. However, for Debt Avalanche, a good credit score is essential to get lower interest rates on new loans.
- Approval Time: Debt Snowball is relatively quick to set up as it does not require any new loans. However, for Debt Avalanche, it may take some time to get approved for a new loan with a lower interest rate.
- Market Conditions: If interest rates are low, Debt Avalanche may be a better choice as it can save money in the long run. However, if interest rates are high, Debt Snowball may be more beneficial as it can provide immediate relief by paying off smaller debts.
- Challenges: Debt Snowball’s main challenge is staying motivated to continue paying off debts one by one. Debt Avalanche’s challenge is getting approved for new loans with lower interest rates.
Common Mistakes Utah Business Owners Make
Not Having a Plan: One of the biggest mistakes business owners in Utah make is not having a plan to tackle their debt. Without a plan, it is easy to get overwhelmed and make poor financial decisions.
Ignoring High-Interest Debts: It can be tempting to focus on paying off smaller debts first, but this may result in paying more interest in the long run. It is important to prioritize high-interest debts to save money.
Using Personal Credit Cards for Business Expenses: Many business owners in Utah make the mistake of using personal credit cards to cover business expenses. This can lead to high-interest debts and negatively impact personal credit scores.
Not Seeking Help: Some business owners may feel embarrassed or ashamed to seek help with their debts. However, seeking assistance from a financial advisor or debt consolidation company can provide much-needed guidance and support in managing debts.
Real Case Study: Utah Business in Orem
To give you a better understanding of how Debt Snowball and Debt Avalanche work in the real world, let’s look at a case study of a Utah business in Orem. This business has the following debts:
- Credit Card 1: $5,000 balance with a 15% interest rate
- Credit Card 2: $10,000 balance with a 20% interest rate
- Line of Credit: $15,000 balance with a 10% interest rate
- Loan: $50,000 balance with a 8% interest rate
If this business owner chooses to use the Debt Snowball method, they will start by paying off Credit Card 1, followed by Credit Card 2, then the Line of Credit, and finally the Loan. This will result in paying a total of $82,590 ($5,000 + $10,000 + $15,000 + $50,000 + $2,590 [interest]) over the course of the repayment period.
If they choose to use the Debt Avalanche method, they will start by paying off Credit Card 2, followed by Credit Card 1, then the Line of Credit, and finally the Loan. This will result in paying a total of $77,770 ($10,000 + $5,000 + $15,000 + $50,000 + $2,770 [interest]) over the course of the repayment period. This saves $4,820 in interest compared to the Debt Snowball method.
Frequently Asked Questions
1. Can I use Debt Snowball or Debt Avalanche for both personal and business debts?
Yes, both strategies can be used for any type of debt, including personal and business debts.
2. Will using either of these strategies affect my credit score?
No, using Debt Snowball or Debt Avalanche will not directly impact your credit score. However, missing payments or defaulting on loans can negatively affect your credit score.
3. Do I need a good credit score to use these strategies?
No, Debt Snowball does not have any specific credit score requirements. For Debt Avalanche, a good credit score is helpful in getting lower interest rates on new loans.
4. Is it possible to switch between Debt Snowball and Debt Avalanche if one is not working for me?
Yes, you can switch between the two strategies at any time if you find that one is not working for you.
5. How do I know which strategy is best for my business in Utah?
It is important to consider your specific financial situation, including credit score, interest rates, and market conditions, before deciding on a debt consolidation strategy. Seeking advice from a financial advisor can also help you make an informed decision.
Are You an SBA Real Estate Loan Expert?
Test your in-depth knowledge on using SBA Loans for owner-occupied commercial Real Estate acquisition. These questions delve into the critical details that can impact your business's growth and financial strategy.
Get a Free Rate Today
Compare our top-rated commercial and investment property loan programs below.
- No income verification
- 30-year fixed | Interest-only available
- Great for rental properties + STR
- Fast approvals
- Working capital + business acquisition
- Up to $5M
- Low down payment
- Long-term financing
- Owner-occupied CRE
- Low fixed rates | 25-year terms
- Great for business expansion
- Refinance available
- Best for stabilized properties
- Competitive rates
- 12–25 year terms
- Lower fees than private lenders
Compare Loan Types
Find the Right Financing for Your Real Estate or Business Project
| Loan Type | Best For | Rates | Terms | Highlights | Apply |
|---|---|---|---|---|---|
| DSCR Loan | Rental properties (LTR & STR) | 5.99%+ | 30-year fixed, IO options | No income docs, fast approvals, great for investors | Check My Rate |
| Construction Loan | Ground-up, fix & build, major renovations | 8%–12% depending on scope | 12–24 months interest-only | Flexible draws, great for builders & developers | Get a Quote |
| SBA Loan | Business acquisition, working capital, CRE | Prime + spread | 10–25 years | Lowest down payments, long terms, best for business growth | See My Options |
Ready to Tackle Your Debts?
If you are a business owner in Utah struggling with multiple debts, Debt Snowball and Debt Avalanche can provide a way to get back on track. At GHC Funding, we understand the challenges faced by businesses in Utah, and we are here to help. Contact us today to discuss your options and find the best debt consolidation strategy for your business. Let us help you on your journey to financial freedom.
Get a No Obligation Quote Today.
Use these trusted resources to grow and manage your small business—then connect with GHC Funding
to explore financing options tailored to your needs.
GHC Funding helps entrepreneurs secure working capital, equipment financing, real estate loans,
and more—start your funding conversation today.
Helpful Small Business Resources
