You seldom hear the question, “Do you have enough debt?” The usual caution is having too much and being unable to make the payments. However, if your business is expanding, diversifying or transitioning to the next generation, debt is a tool to help you achieve your objectives. Attitudes about debt differ, but understanding it is key to using it properly.
Good debt or bad debt
There are countless stories about people maxing out their credit cards on consumer spending. If you’re using debt to buy fancy cars, a big boat or lavish holidays that you can’t afford, it’s a bad idea.
If interest payments on a loan are not tax-deductible, it’s a personal loan, not a business loan.