Debt is a two-edged sword. Used wisely and in moderation, it clearly improves welfare. But,

when it is used imprudently and in excess, the result can be disaster. For individual

households and firms, over borrowing leads to bankruptcy and financial ruin. For a country,

too much debt impairs the government’s ability to deliver essential services to its citizens.

Debt is cheaper than equity. Using the cash in your business to help grow it can be a slow process, because Ownership stays with you. Debt financing allows you to maintain complete control of your business – you are the sole decision-maker.

Leveraging the business using debt is a way consistently to build equity value for shareholders as the debt principal is repaid. Interest on debt is a deductible business expenses for tax purposes, making it an even more cost-effective form of financing.

Tax Benefits: Interest payments made on borrowed capital are generally tax-deductible, effectively lowering the cost of the debt.

Build and improve business credit. Using debt financing can help a business establish and improve its credit rating, having the ability to build your business credit is a major and crucial advantage to taking out a loan. From company ownership retention to improving the credit score.