Hello, Im gonna get right to the point…
For context, I started my business in 2018. We’re an online supply company for a specific industry.
Revenue by year (Covid affected my industry from 2020-2022):
2018: $48,000
2019: $265,000
2020: $300,000
2021: $300,000
2022: $330,000
2023: $330,000
My total debt is $55,000 on a SBA line of credit. 80% of that is inventory, and roughly $11,000 was used to survive shutdowns during the pandemic. My debt has not increased because the cashflow and profits have been able to sustain the business. Keyword here is Sustain, not grow.
My question:
I recently got a new line of credit through the SBA for $80,000. I could use this to carry more products and brands to grow revenue but I don’t like the idea of taking on more debt. But it seems like a necessary evil. How would you proceed with these current circumstances? Note I have more debt than cash already, which is why I don’t want to take on more debt. But then I see companies like Amazon with $64B cash and $303B liabilities, so I don’t feel too bad 🤷♂️
Am I looking at debt the wrong way?
Thanks in advance!
Are you personally guaranteeing these loans with your SSN? Using debt to grow is a great strategy but you want your business to be at the point where it can borrow on its own with ONLY your EIN and not taking on the liability personally. That’s what I do for business owners every day.