Advantages of Leveraging Your Business

When you use debt to leverage your small business, it is true that it comes with some risks. However, you will find that most of the time the benefits are worth it, at least for some businesses. Understanding the advantages is going to help you determine whether it is something that you would want to do when you need to finance operations of your business and you do not want to go through other methods of getting the financing.

You Keep Your Business

You are going to have full ownership of your business when you leverage it, and that is one of the big advantages to financing with leverage rather than equity financing. You do not have to sell off any part of your business. You’ve worked hard for the company, and you probably do not want some other company or person coming in and making decisions about your business. Utilizing leverage for your business is going to give you quite a bit more control over your business.

Use Tax Breaks

You will want to speak with your accountant about all of the particulars, but you will find that when you leverage your business, you could get some tax breaks. You have to pay interest for the financing, and the IRS will let you deduct the interest from your returns, so this reduces your overall taxable income.

It’s Less Trouble

When you use other methods for your financing, such as equity financing, you have to worry about all of the other parties that are now taking part in your company, and you may have to share more information than makes you comfortable. By leveraging your business, you will find that it’s much easier and simpler to deal with. Rather than having to keep sharing your profits as you would with some types of financing, leveraging your business with a loan is much simpler. Even though it can be a slight burden on your finances for a while, you will be able to pay off the debt, and when you do, things will be able to get back to normal at your business.

What are your thoughts on equity financing for your business versus using leverage to finance your company during a rough patch? Different people will have different ideas and thoughts on the subject. Now is the time to speak up and share your opinion so everyone can make informed decisions.