1. Consider how much debt you should take on

If you are considering debt financing you should determine how much money you need and how much you can afford to repay each month. Businesses should also make a list of pros and cons as it relates to their business to help determine if they need debt financing to grow. While you may be able to make a hefty monthly payment, you may want to be conservative when it comes to how much you borrow. You want to avoid having an abnormal debt-to-income ratio, especially if you plan to use more debt financing in the future. If you are in a hurry to borrow money make sure to take a deep breath and make clear and well educated business decisions.

2. Take a look at your balance sheets and observe cash flow

You should keep in mind that debt financing can cost more than using cash. For example, if you borrow $5,000 you may end up repaying more like $5,700. This means you?ll need to factor in the additional costs into your business plan to determine if you can still be profitable. Debt financing can improve cash flow during seasonal slumps or help your business invest and grow. However, if you are trying to save a failing business with a serious cash flow problem, debt financing may not be the right answer.

3. Shop for the best interest rate you can get

Getting the best interest rate possible is important. However, you want to avoid applying to multiple places. While they may advertise entry level rates online, for a fair comparison you?ll want a personalized offer. Acorn Finance allows you to receive multiple debt financing loan offers without affecting your credit score.

4. Only borrow for essentials if your revenue is low

This recommendation is rather simple. If revenue is down and you are trying to solve a cash flow problem while staying afloat you should borrow as little as possible. When revenue returns to normal, you may want to use another debt financing loan to invest in more inventory or other areas that can help your business grow.

5. Don?t borrow if your business is not well-established yet

Businesses should have some consistency and proven revenues before using debt financing. Businesses that are not well established but need financing should consider crowdfunding or perhaps a personal loan. Acorn Finance can connect you with multiple personalized personal loan offers within seconds. Similar to a business loan, personal loans are issued as a lump sum and are repaid over a certain term with interest. Most lenders do not have spending restrictions for the funds.

6. Monitor your debt-to-equity ratio

When using debt financing it?s important to keep an eye on your debt-to-income ratio. Most lenders like to see a front-end ratio of 28% or lower. To determine your debt to income ratio you can divide total monthly recurring debt by monthly gross income.

7. Weigh your options between debt and equity financing

We strongly encourage business owners to always compare their options when it comes to financing. Businesses should compare debt and equity financing options. If you do not want to give up any ownership of your business equity financing may not be an option.

Conclusion

In conclusion, corporate debt financing can help businesses consolidate existing debt or receive funds to improve cash flow, purchase inventory, cover payroll, and more. There are a variety of debt financing options available such as SBA loans, term loans, equipment loans, and more. Navigating through debt financing options can be overwhelming. Acorn Finance provides business owners with a time-saving platform that can make securing debt financing easy. Simply start by submitting an application online that will not affect your credit score. After submitting the application a representative will contact you to answer any questions and help you select and finalize the loan offer you want to use. Acorn Finance partners with dozens of top-rated lenders encouraging them to send their most competitive offers to borrowers. Explore corporate debt financing options today!