Friday, September 14, 2018

Is Debt Good or Bad?


 Debt for business is far less ominous if used to gain leverage, for example: 


1) Debt may reduce your tax burden - Interest reduces your taxable profit, thus reducing your tax burden.  

2) Debt is normally less expensive than equity - Cost a portion of your business, either over a period of time or forever.  Also, you repay using profits to the equity holder with no other benefits. 

3) Debt requires discipline - There is an incentive or expectation to be thrifty and optimize income and manage expenses. 

4) Debt can be cheaper than an opportunity lost - Example, you need up buy more machinery that cost $100,000.  The profit from meeting demand / orders is $300,000, a $200,000 gross profit,  

Conclusion - Good debt is more often the better strategic choice when you can profit and open up new channels of business. This is financing that anyone can agree with. 

For all your financing needs, please contact me at: 
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I understand running a company successfully is very difficult, even more changeling when financing is required to grow or expand operation...