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| Image courtesy of renjith krishnan / FreeDigitalPhotos.net |
When you are operating your own business, no words can send
shivers down your spine than the word debt.
Debt can be the downfall of any business and can become extremely
dangerous if not handled properly. Since
your business needs to grow, sometimes it is inevitable to avoid debt but if
you use the debt right, it will not cause problems for your company. Here are a few ways to use debt properly to
help your company continue to thrive.
Microloans
One type of debt that is available to many first time business
owners is going to be a microloan. These
microloans are great to help smaller companies that are in a pinch. With a wide range of values of the loans,
these microloans are great for getting a company trying to get a small loan
without having to cost them an arm and a leg in interest. These microloans typically come at a smaller
interest rate than a company credit card would.
These loans are great for small companies that need a little bit of
money to fulfill orders and other similar situations.
Asset Based Loans
Another type of debt that can help your company grow is going to
be asset based loans. These loans
usually come from finance companies rather than through banks and the loan
amount is based on the value of the company’s assets. These loans are great for companies that have
seen a boost in sales and are growing faster than they can pay to keep up. These loans help companies keep up with purchase
orders and are good for companies with a high inventory turnover.
Small Business Administration backed loan
The last type of debt that can help a company is a Small Business
Administration backed loan. These loans
are great for small businesses but have strict stipulations that need to be
followed by the borrower. These loans
are great for lenders because if the borrower is unable to pay, they can turn
to our federal government for repayment.
Debt is
sometimes necessary to help a company grow so don’t be afraid of it.
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