Rules of Playing with Debt: Why to get into business debt and how to get out when things go wrong?

People across various geographical locations differ from one another in their tendency to save and borrow. Some never take loans at all, while others are indebted to almost obscene levels. Given that there is always a possibility of not being able to repay debt in case your business plan doesn’t work out, does it make sense borrow to expand your business? Have you considered that you can borrow against your business to take it to the next level? A very large number of successful businesses in the world have expanded on debt. From Goldman Sachs to probably your local transport tycoon, many businesses thrive on debt. Debt is not necessarily the last resort of an entrepreneur; there are some strong reasons for which a company must prefer debt even when it has other sources of capital available. On the other hand, aggressive debt backed expansions often land otherwise sound businesses in grave trouble. Here are the rules of playing with debt along with a case study of Vishal Retail.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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