episode 23: build healthy debt, a pathway towards profit

Mark Fearon | Debt vs Taxes | Unsuitable on Rea Radio
Find out what Mark Fearon, CPA, CFMA, has to say about healthy debt and find out if it makes sense to take out a business loan to grow your business.

On this episode of unsuitable on Rea Radio Mark Fearon, CPA, CFMA, principal at Rea & Associates, joins Mark Van Benschoten to talk about the pros and cons of debt and whether a tax savings write-off is more valuable than the true cost of borrowing. Listen to find out why some debt can be considered healthy and how, sometimes, businesses can use new debt to achieve impactful business goals, such as leveraging assets, purchasing equipment or investing in key employees to drive efficiency and reduce operational costs. Additionally, listeners will learn about write off techniques that are available and how to use a debt strategy to help facilitate real business growth. This episode also serves as a cautionary tale, as listeners are encouraged to always borrow wisely – taking care to determine if your business could carry your debt load if an unexpected economic downturn were to take hold. What are you waiting for, start playing episode 23 of unsuitable on Rea Radio now!

financial calculators:

Equipment Buy vs. Lease: Should you lease your equipment or finance it? Find out with this calculator.

Investment Loan: This calculator helps illustrate the effect of using a loan to purchase an investment or appreciable asset. Using debt as leverage to purchase investments can magnify your return. The downside is that you also increase your risk.

Line of Credit Payoff: Use this calculator to see what it will take to pay off your line of credit, and what you can change to meet your repayment goals.

Loan & Credit Line Tax Savings: This calculator helps determine your tax savings on loans or credit lines with tax deductible interest payments.

Click here to find more helpful financial calculators for yourself and your business.

more resources:

How To Get Unstuck: Uncover The Secrets Of Business Growth – Some businesses become stuck and, after a few years, their owners start looking for a way out because they think that they have gone as far as they can – but that’s not always the case. Instead, consider your business’s lifecycle and the challenges that relate to each stage. Read on to learn more.

Debt vs. Taxes: Should You Pay Off Your Loan – Have you ever heard someone say they couldn’t afford to pay off their loan because they would lose the interest deduction on their tax return? Although it’s true that the taxpayer will be able to deduct their loan interest at tax time, there’s a lot more to consider – read on to learn more about the tax treatment of loans and interest to identify a repayment strategy that works best for you.

Don’t Shy Away From Business Debt – You know the satisfaction you feel when all of your debts have been settled and any extra cash flowing into your bank account is purely disposable income. Neither do I. But, contrary to popular belief, if you are a business owner, carrying a little extra debt could be a good thing – read on to learn more.

How To Ensure Your Plans Aren’t Bigger Thank Your Finances In Times Of Growth – Growth is the goal for many companies — whether you get that growth from adding another location, forming an alliance, adding services, diversifying into other areas or merging with/acquiring another business. But not all growth is good. Read on to learn more.

Keep Your Debt Covenants: Build Good Banking Relationships By Keeping Your Promises – The financial crisis has permanently changed the rules of lending and now, more than ever, banks depend on debt covenants to hold businesses accountable Read on to learn about some common examples of affirmative and negative debt covenants.

Should I Make A Big Purchase To Cut Taxes? – To determine whether purchasing equipment would be beneficial to your business from a tax perspective, your financial advisor has to know what your profits looks like. And while it may be easy to pull out your profit and loss statement to find the answer, you shouldn’t forget to review your balance sheet as well. Read on to learn what six items to focus on when it comes to maintaining your business’s balance sheet.

Checking The Pulse Of Your Business – A multi-disciplinary review of your business’ vital signs – from cash flow and financial statements, to the business segments and marketplace, to tax opportunities, to improving efficiencies in accounting processes, even a SWOT (strengths, weaknesses, opportunities and threats) analysis – can yield some surprising and important benefits. Read on to learn more.

official transcript

Read the full transcript of episode 23: build healthy debt, a pathway towards profit.