The Four Rights of borrowing or getting into debt for business purposes.

Within the question we should ask ourselves about borrowing there are a number of details we should consider.


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1.The Right Reason.

  • Is this for productive business and not for personal reasons?
  • Will the things purchased with the loan make money imediately?
  • How is using the loan better than saving the cash and buying later?
  • Are all the the risks considered?

2.The Right Time.

  • Have we been in business long enough to know our business well enough?
  • How is this part of our business growth plan?
  • Can we demonstrate that this will definitely improve sales and lead to growth?
  • Will the purchased assets produce longer than the loan?

3.The Right Terms.

  • Do we know multiple lending options?
  • Do we know the true cost of the loan?
  • Can we explain all the terms and conditions of the loan?
  • Can we explain the pros and cons of each lender's offerings?

4.The Right Amount.

  • Have we produces a cash flow statement?
  • Will there still be surplus profit after meeting the payment obligations?
  • If business does not pick up immediately can the payments still be made?
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