For millions of people, owning a business is part of the American Dream.  Perhaps you're inspired by the freedom of entrepreneurship, the chance to be your own boss, or simply want the opportunity to step away from corporate America and shine. While starting a small business can be an exciting adventure, building your own company takes more than a dream; it takes strategic planning and it takes capital.

One of the biggest challenges to opening a business is obtaining sufficient loans, which makes personal debt, such as credit cards, mortgage, and student loans, a potential obstacle. And unfortunately, according to the Small Business Administration, the failure rate of small businesses is 50 percent in the first five years, which makes financial institutions extra cautious when loaning money for a first-time business venture.

So how can you get ahead and achieve your dream?

Small businesses, which are typically defined as companies with less than 500 employees, rely heavily on personal investment and bank credit averaging about $80,000 per year. Since startups rely on about three-quarters of their financing through loans, credit cards and lines of credit, it's vital you are in the position to attain that kind of credit before taking the initial step.

First, take a look at your own finances. Do you carry significant debt? Do you have several credit cards with high balances and little open credit?  Have you been late with monthly payments?  

Before you fill out a loan application, make sure you are a strong candidate for financing your business by requesting your credit report. You are entitled to one free report every year from each of the national credit reporting bureaus: Equifax, Experian and TransUnion. If you discover erroneous information, be sure to contact the bureau and have it fixed immediately.

Once you have an idea how much debt you have, create a personal finance plan that will help lessen your monthly payment obligations and in turn, free up credit for your new business.

One option to help lighten your monthly load, if you intend to stay in your home long enough to justify the transaction fees, is to refinance your mortgage to a lower rate.  If you have a car or student loan, it's also worth requesting a lower rate to help reduce payments. If you have equity in your property, consider a Debt Consolidation Home Equity Loan or Line of Credit which allows you to roll your credit card, auto loan or other high-interest debt into your low-interest mortgage loan. While ultimately you still owe the same amount of money, you may create more breathing room with lower payments.

Another option is to make your personal debt payments more manageable through a debt consolidation. This process allows you to combine multiple bills and loans into one single payment. While it may take you longer to pay back a consolidation, the interest rate is typically lower than some credit cards, which will in turn reduce your monthly obligation. The money you save each month can be used to pay down other debt, which will ultimately put you in a better position to venture out on your own in business.  

Reducing your debt will not only increase your chances of securing the capital you desire, but give you that safety cushion while you build your business. Advisors suggest you not count on a return or income from your new business for at least the first six months. This possibility needs to be included in your business plan.

There will be many challenges you will face with a new business, from obtaining appropriate licensing and insurance, securing space and office equipment, having cash on hand for salaries and purchasing power for your inventory. Once established, it will be vital to have the capital to market and advertise your business and if you are strapped for cash, finding the money to compete in the market may be tough.

It's so important to find a way to reduce as much personal debt as possible so you can obtain the loans and credit you require to enter the market strong.