Debt financing has become a popular term with American businesses over the past year. Taking the step to acquire debt financing often allows an individual owner to have a more fluid role in the economy. Without bending to the needs and wants of investors and stockholders, a business can thrive essentially, from the inside out. There are obligations to repay the debts, but in a debt financing scenario business owners are able to retain their equity and to avoid having shareholders breathing down the business’ back with every move. Therefore, obtaining debt for a business can create a more relaxing growth situation and sometimes allows more creativity in which a business owner can choose his or her own personal style both aesthetically and financially. Oftentimes tax laws are favorable to individuals who finance through debt financing and therefore, some of the pressures of a business are lifted from a stressful environment to a more relaxed one, especially if lawyers in San Antonio are employed effectively to reduce risk and increase viability.
Businesses that obtain debt financing rather than equity financing do not often share profits with any entity or individual and therefore the profits remain entirely with the business apart, of course, from the amount that must inevitably be paid back to the loan holder.
There are several types of loans for debt financing, which allow the individual or group of business owners more options, as opposed to other ventures, which are generally more restricting. However, with these advantages come disadvantages as well. Borrowing money means that there is often no leniency when payment is due. The terms of the loan are always made clear and enforced as written. Alternatively, in equity financing situations the investors are often, if not always, more lenient on the business and its original owner. Some businesses tend to view the lack of flexibility on the repayment of the debt as a major downfall of debt financing because after a few months of slow revenues the debt may appear to be far more substantial than when profits are substantial. This is an aspect that many lawyers in San Antonio can help you understand.
A San Antonio attorney can help you determine if debt financing is right for your company. If you choose to use this form of financing, it is wise to retain the expertise of a lawyer and law firm with a reputation for handling debt financing with professionalism. Contact the law firm of Shumway Van at (210) 503-2800 for a free consultation and to determine if you have a potential need for an attorney to assist you with a financing process.