Where does the myth that 'debt is always dangerous for businesses' originate, and what’s the reality?
This myth likely stems from personal finance norms, where excessive debt is risky. However, in business, debt—when used strategically—can be a powerful tool for growth.
Leverage for Expansion: Businesses use loans to fund new locations, hire talent, or buy equipment that increases future revenue.
Cash Flow Cushion: Debt can help manage operational expenses during seasonal slumps or unexpected disruptions.
Opportunity Acceleration: Timely credit access allows companies to seize market opportunities faster.
Tax Benefits: Interest on business loans is often tax-deductible.
Credit Building: Responsible debt usage improves creditworthiness for future borrowing.
Debt becomes harmful only when mismanaged or taken without a repayment plan. Strategic borrowing, backed by cash flow projections, can boost resilience and scalability.
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