A growing business means growing needs! As your business thrives, you will ultimately need additional cash to keep it flourishing. Maybe you will need funds to buy inventory, buy equipment or hire more staff that will make your business operations smoother. In such situations that demand immediate funds, debt financing can come in handy.
Debt capital means that you borrow money from an outside source, with the promise to return it at a fixed rate of interest. The most familiar example of debt financing is a loan for business. But, there are other types of debt financing you can look into, like microloans, small business credit cards, and government incentives.
Joseph Stone Capital on advantages of debt financing for your business:
- Both the business loan interest rate and principal payments on your loan come under business operating cost. Thus, you can subtract them from your business income when you file your taxes. These tax deductions can even reduce your total interest payable. Calculate the disparity between your interest payments and tax savings in a year. You will realize that your load of repayment is decreased.
- While venture capitalists can help your business financially, they may impede in your business operations. But, if you choose for debt financing for your business, you get the funds and the freedom to make your business decisions. Your lender will charge you interest on what you have access to, but you can be sure they will not get involved in how you run your company.
- When you pay off your debt responsibly and timely, it reflects in your business credit report and enhances your business credit score. With a good credit score, you will find it simpler to get loans and other lines of credit approved in the future.
- To plan your repayment, you can use a business loan EMI calculator. Input your loan amount and tenure. The tool will calculate your EMI amount and the total amount payable. When you know in advance exactly how much you need to shell out each month, it makes financial planning simpler.
- Venture capitalists are very particular regarding the size of the business they want to invest in. But, debt capital makes working capital accessible to businesses of all sizes. So, no matter what stage your business is at, debt capital can help.
With debt financing, you can enjoy the liberty of making your business decisions, plan your finances, avail tax deductions, and build a high credit score. If you want to arrange funds for your business with a business loan, debt capital can help you. They offer unsecured loans so that you do not have to risk your business assets. Joseph Stone Capital rightly says that they offer you competitive interest rates and flexible repayment options. The good news is that there are a range of options for small business funding whether you want to go the route of debt financing or with a substitute form of financing. By choosing the right one for your business, you can help secure your present and pave the way for your future development.