Business debt, also known as liabilities, is defined as the obligation to pay money, deliver goods, or render service under an express or implied agreement.
A certain amount of business debt is expected and may be necessary in the modern business world. When combined with a regular and timely payment history, business debt liability can be a valuable part of establishing corporate credit ratings and making the right impression on customers and vendors. Debts in business may be the result of initial start-up costs, facility construction expenses or other business-related activities. Maintaining the right proportion of business debt liabilities in relation to assets and accounts receivable can provide significant financial advantages to companies in the business lending environment.
When considering debt in business, most lenders and financial advisors consider the proportion of debts to assets and the proportion of secured loans to unsecured loans. In most cases, secured loans are more likely to be approved by lenders than comparable unsecured arrangements. Secured business debts may include mortgages on office space, building construction loans, car and truck financing arrangements and any other loans that require collateral for final approval. In contrast, unsecured business debt may encompass corporate credit cards, lines of credit with vendors and suppliers and business signature loans. Unsecured credit lines and credit cards require a far greater confidence on the part of lenders that the small business will be able and willing to repay these debts in the future. Companies with little or no credit history or with significant negatives on their corporate credit report may find it difficult to obtain these lines of credit under normal circumstances.
CNF Exchange is an outstanding resource for both borrowers and lenders in the financial marketplace. By providing a venue where motivated borrowers and lenders can connect and forge new relationships, CNF Exchange can help companies acquire the funding they need for their ongoing operations while allowing private lenders to identify qualified borrowers and create added revenue streams for their financial institutions.