Rather than being, as many people think, a burden that lowers a business’s capacity to function, debt is one of the best methods of managing your finances and increasing your company’s wealth. If the exact reason for incurring debt and the uses for that debt are properly and specifically identified, they can improve the company’s financial structure.
In particular, debt can be used as an inexpensive substitute for equity capital (well below the 15 plus% cost of equity capital). Through such uses, it can not only enhance investor returns, but also solve liquidity fluctuations, while enhancing growth of the business.
This article looks at how debt can be used to replace equity capital. The discussion includes options for finding an appropriate form of debt, considerations for negotiating new debt, and suggestions for managing debt successfully.
Download a PDF of the complete article here: Using Debt to Replace Equity Capital in Improving Company Finances.