Is Business Debt Good For a New Business?

[Spencer]

Business debts depends on the kind of business you run, if your business is new and you don't have any kind of proof of concept then it is not ideal to take on debts because repaying becomes an issue and you can end up making your business go bankrupt easily, especially if you take on bank loans, they have the right to liquidate your business totally.

But if your business is profitable, then you are at liberty to take on as much loan as you want to expand faster and grow faster too, it's very easy to achieve this with a debt.

 

[Mika]

Debt can be classified as good debt and bad debt. Good debt is the debt that you use on projects that generates income or use for building assets. Bad debt is the debt that you use on something that does not give you returns or you use it for liabilities. In the business world, you get a debt to build your business, you either use for product development or marketing, or on something that ultimately helps you grow your business. Therefore, business debt is basically a good debt

 

[Spencer]

Debt can be classified as good debt and bad debt. Good debt is the debt that you use on projects that generates income or use for building assets. Bad debt is the debt that you use on something that does not give you returns or you use it for liabilities. In the business world, you get a debt to build your business, you either use for product development or marketing, or on something that ultimately helps you grow your business. Therefore, business debt is basically a good debt

Business Debt is a good debt but the caveat there is that if your business is not profitable you are not advisable to get into debt for it, well you might even find it hard to get a loan if your business is not profitable as most banks have a very stringent rules they look at before they approve a loan to you.

So you're better off building your company's finance before you start looking for debts for expansion and it will be easier for you to payback because you already have a proven concept validated by the market you're serving.