 TITLE: What Is Debt Financing? CONTENT: When Is Debt Financing a Good Idea?\n-----------------------------------\nUsing borrowed funds to build a business works better for some business owners than for others. Debt financing might be a better idea for you if you fit the following:\n**You know exactly how the money will help.** The more definite you are about the scope and purpose of your proposed funds, the better. Flexing your credit to onboard additional staff so your accounting business can meet the tax-day rush? That's a defined use of funds with an identifiable payoff. On the other hand, borrowing money to cover expenses month after month—with no clear end or remedy in sight—is a bigger risk, both for you and a lender. To help ensure that you're not throwing good money after bad, take the time to delineate in as much detail as possible what you'll use the money for and how that investment will pay off.\n**Your business is already established.** It's certainly possible to get a loan to start a business. But you'll have an easier time—and more funding choices—if your business has a history. Your track record also makes taking on debt less risky for you. Revenue, expenses and operational needs are more concrete—and quantifiable—when your business is already up and running.\n**You have good credit or a viable source of funding.** Whether you've established business credit or hope to rely on your personal credit to secure a loan, good credit is a key asset for business borrowers. Again, this is a good time to check your business credit (if you've established it) and your personal credit score and credit report to help you assess your lending options. It's also a good idea to take stock of your available credit—and to investigate what your options might be for adding a line of credit or credit card to the business accounts at your bank. END