What are the benefits of debt financing?
• You may already have personal debt available, without any application or new disclosures to your lender. • Loans are readily available, guaranteed by the SBA, for modest loan amounts (four to five figures). • You usually need to create a business plan for a business loan, which requires you to think through and evaluate your business venture. • Leverage. You can use a small amount of your own money, partner it with a loan, and create a moderately large business venture. The potential return on your investment is higher, because you have invested less of your own money. • Interest, as of the date of the writing of this book, is relatively low compared to historical rates. • You can obtain a line of credit or credit card to only be used if you have short-term cash flow problems. Perhaps you will not even need to use it. What are the dangers of debt financing? • You may have to personally sign for the loan. If your business is organized as a sole proprietor, or if your business plan or
