Not All Debt is Bad Debt: How to Use Business Debt to Succeed

Not All Debt is Bad Debt: How to Use Business Debt to Succeed

When referencing “debt” as a whole, it’s often thought of as a bad thing in many financial conversations. However, in business, the right kind of debt can be leveraged to make more money and shouldn’t be avoided. When used wisely and strategically, secured debt like loans and credit cards can give your business the cash injection it needs at the right time to help catapult it to the next level. Here are a few of our favorite smart ways to use credit cards and business loans to grow your business:

Make investments that boost revenue

Whether you use a credit card or take out a loan, either can be beneficial to help you invest in products or tools that will allow you to increase your revenue. Perhaps you need to purchase new equipment to expand your business and serve more customers, or maybe you need to order more inventory than usual before a big holiday or annual sales event. Borrowing money to make even more money allows you to make the investments you need without cutting into your typical revenue and day-to-day budget.

Build credit for your business

Even if you’re not in need of the extra cash now, it’s great practice to use the credit you have available to you regularly and responsibly so that your business has a good credit history in case you ever were to need to access more capital unexpectedly. Building credit takes time, and if you’re met with an unexpected expense before taking the time to build business credit, it can present an obstacle. If you’re looking for a business card that you’ll love, we use and recommend the American Express Blue Business Cash Card. Use our referral link so we can both earn rewards if you are approved and get a card.

Have options in the event of cash flow gaps

To elaborate further on our point above, sometimes unexpected things happen. Whether you’re waiting on a client to pay a large invoice, have had to close your business for several days or weeks unexpectedly, or some other unforeseen circumstance, business credit cards and loans can help keep your cash flow running smoothly. Loans can be especially helpful for this, as you can repay them over time without taking a big chunk of your monthly revenue. 

Remember, debt should always be acquired strategically and responsibly, but when used correctly, it can help you confidently make great business moves. We hope you’ll consider using these tools wisely in the future to grow your business!