When talking about debt these days, it is almost always cast in a negative light: surging national deficit, underwater homeowners, shortsighted credit card spending, etc. This may have led to the belief that there’s no such thing as good debt. The saying "no debt is good debt," however, is not always true, especially when it comes to business.

1. Wasatch Peaks Credit Union
4723 Harrison Boulevard, Ogden, Utah 84403
(801) 627-8700
Experts Argue: Not All
Debts are Considered Bad
Debt

2. When talking about debt these days, it is almost always cast in a negative light:
surging national deficit, underwater homeowners, shortsighted credit card spending,
etc. This may have led to the belief that there’s no such thing as good debt. The
saying "no debt is good debt," however, is not always true, especially when it comes
to business.
Rather than seeing debt as a terrible way of obtaining money, experts think that it
can promote a positive perspective on the idea of acquiring loans.
Using Money to Make More Money
According to Eyal Lifshitz, CEO and Founder of a financial institution in California, not
all forms of borrowing are bad. He believes that businesses can use debt to generate
income. Instead of giving up equity to raise capital, the business can take on debt
and leave the equity intact.

3. When a business gives up its equity to an investor, a portion of the business is gone
forever. On the other hand, although the business will incur interest expense from
borrowing money, it’s only so the owner can pay it off once the business profits.
Financial expert Jennifer Pagliara says that debt can be a way of increasing one’s
earning potential. A good example is taking out loans for higher education. One can
borrow money to pay tuition and other expenses in exchange for possible higher
wages in the future. Over time, the possible return on investment in education will
be higher than the actual loan amount.

4. Sources:
 https://wasatchpeaks.com/
 https://www.entrepreneur.com/article/240191
 http://www.tennessean.com/story/money/2016/09/30/debt-good-bad-and-
ugly/91137804/
Nothing is Guaranteed
Despite the benefits offered by good debt, experts remind people that taking on
loans do not guarantee returns or profits. Some businesses unfortunately fail and
close down. In addition, graduates who have earned a higher degree may not
necessarily find a high paying job right away.
People shouldn't be afraid of debt if they use it the right way. Borrowers looking to
leverage the power of loans should use it wisely and responsibly.