Debt is a Net Positive When It Serves a Useful or Necessary Purpose

Whether you’ve previously used debt in a business or for personal use, it’s not all bad. The difference that people often refuse to examine and determine is what is its useful purpose? How will the debt serve your requirements and make your business (or life) better? With this clarity, it’s possible to make smart decisions around money and debt.

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Here are some examples of making debt a net positive in a business setting.

Business Expansion

Wanting to expand a small business from a side hustle into something bigger that will support a full-time salary, and perhaps eventually a team, is positive and optimistic.

Unless you’re willing to take on partners who will happily interfere with the business operations and generally make life more complicated, you’ll need to find the funds another way. Certainly, with no money down business loans, it’s possible to expand without needing to give up equity and take on a partner to do so. Just for peace of mind, this is more pleasant.

Getting Over a Seasonal Decline

When you’re pushing hard on new projects and have spent liberally of the business’s resources, a steeper than expected seasonal decline can plunge it into trouble. All of a sudden, the business is struggling to breakeven and the latest sales push isn’t doing much to help the situation.

To keep the business operations going through a tough period and into a better one, it may be necessary to take out a short-term line of credit. This can be drawn down and repaid as the company’s revenues vacillate, reducing the cost of the financing. This surely is preferable over the business suffering and not surviving through the rocky period?

Funding a Special Project

When money is tight in the business, but you believe in a new idea for expansion, then you’re in a tough spot of a different kind. If only you had spare funds to invest in the project, the business could grow faster and avoid becoming stagnant.

When it comes to using no money down debt issuance for a useful purpose, there might be other factors worth reviewing. It does require that you do your due diligence on the business idea. It’s fair to say that 4 out of every 5 fanciful ideas from the CEO often end up being a waste of money – in hindsight, it was obvious that they were longshots, at best.

Subsequently, it’s beneficial to cast a critical eye over any expansion ideas to avoid major mistakes with borrowed money.

Upgrading Facilities

When your competition is stealing the march on you because their facilities are state-of-the-art and yours haven’t been upgraded in years, then that’s a problem. Sooner or later, they’ll start bringing out new services or product lines which will steadily take away your loyal customer base.

Investing through business lending to make specific upgrades and retain your competitive edge as a brand or to increase the profitability is worthwhile. It hopefully will ensure that it can continue to compete and not see your peers out-innovate your business.

As long as a no money down financing arrangement for your business is likely to be a net positive, then it’s worth strong consideration. Just don’t make the mistake of a loan failing to meet that standard, because that’s when it potentially becomes wasteful.

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